The Shrinking Shelf: How Private Label Growth Is Impacting Emerging CPG Brands

Walk into any major retailer today, and you’ll notice a shift. Retailer private labels are slowly squeezing out the once diverse selection of branded products. Kroger, Walmart, and Target are each expanding their in-house brands, from snacks to skincare to sports gear. And it’s not just anecdotal. Private labels now account for 19.1% of total grocery sales in the U.S., with some categories seeing more than 25% penetration.

This trend poses a real challenge for emerging CPG brands. Retailers give their products prime shelf space, often pricing them 20-30% lower than national brands. The message is clear: if you're not delivering something unique and compelling, you risk getting sidelined.

How This Impacts Small Brands

Imagine launching a premium protein bar line. You get a small test in 300 stores. Sales are steady, but in six months, you learn that the retailer is launching their protein bar at a lower price—using eerily similar ingredients. Suddenly, your reorders slow down. Your brand, which was meant to be a category disruptor, is now battling for survival.

This isn’t just a "what if" scenario. In categories like dairy, frozen foods, and beverages, retailers aggressively push their products, leveraging insights from branded suppliers to develop their offerings.

How to Compete Against Private Label

• Differentiate or die. If your product doesn’t have a compelling reason to exist, private label will eat your lunch. Focus on unique flavors, clean ingredients, sustainability, or functionality that store brands can’t easily replicate.

• Own your brand story. Private labels are generic by nature. To build consumer loyalty, your brand must be memorable, relatable, and emotionally engaging.

• Strengthen your retail relationships. A good broker (yes, like Woodridge) helps suppliers maintain strong buyer relationships and fight for their space. Retailers won’t always tell you when planning a private label launch, but a well-connected broker can pick up on market signals early.

• Diversify your sales channels. Avoid being overly reliant on one retailer. Grow your eCommerce, DTC, and alternate retail partnerships to reduce risk.

Retailers will always prioritize profit margins, and private label is one way they increase them. The brands that survive will make themselves indispensable to buyers and consumers alike.

Don’t let private labels squeeze your brand out. If you need a strategy to stand out, strengthen your retail relationships, or secure your shelf space, Woodridge Retail Group can help. Contact us to discuss how to keep your brand in the game.