Private label now accounts for 24% of the value share in U.S. food and beverage aisles, and store-brand units hit an all-time high of 23.8% in the first half of 2026, according to industry data.
Retailers reshape assortments
BJ’s Wholesale Club announced on Aug. 21 that it will trim roughly 20% of its SKU count, cutting the legacy assortment from about 7,500 items to between 6,000 and 6,500 over the next few years.
The two moves illustrate opposite strategies: one retailer is shedding products, the other is adding dozens of new store-brand SKUs that will need manufacturers to supply them.
Market pressure and consumer habits
U.S. grocery sales rose 2.2% in the first half of 2026, but the gain came entirely from higher prices; volume was flat. Circana projects 2%-3% growth through 2027, down from the near-7% annual rise seen between 2019 and 2024.
In June, grocery unit sales fell 1.8% year over year, while prices have risen 33% since 2019. More than half of shoppers—56%—report trading down to lower-priced brands, and the majority of that shift landed on private label products.
Suppliers should begin ranking their portfolios before retailers do. One practical method is to sort items by velocity per facing, the amount of shelf width each product occupies, then weigh that against contribution margin. This highlights true profitability relative to shelf real estate, rather than total volume alone.
Items that merely split demand with a sister product are prime candidates for removal. If a supplier can present two or three SKUs for retirement, backed by data and a specific trade request, they stand a better chance of retaining the remaining space.
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Retailers making assortment cuts must fill the vacated slots, and prepared suppliers are more likely to secure those positions.
Duplication, speed and the data gap
Retail buyers are targeting “unnecessary choice,” eliminating duplicate formats such as multiple soda package sizes or several scent variations of the same body wash. When three similar products each sell reasonably well, the category manager may still decide that two will satisfy shoppers, freeing space for higher-margin items.
Many mid-market processors lack access to syndicated category data, yet they can still build a useful ranking. Pulling internal shipment histories, trade-spend records, and the most recent shelf diagram from a store reset provides a practical proxy for the buyer’s analysis. Even a rough internal scorecard lets suppliers approach the review armed with evidence rather than speculation.
Quality signals and contract levers
Repeat purchase data has become a core health check for products. Lindsey Perry, bakery sales manager at Roche Bros Supermarkets, said the test she uses is repeat purchase. Items shoppers buy once and never again are failures in her data, even when the launch week seemed strong. She added that when manufacturers trim ingredient quality to cut costs and customers notice the change, shoppers stop picking it up, prompting an automatic shelf audit.
The economics of private-label production hinge on contract structure. Purchase-order arrangements without volume guarantees or ingredient-cost pass-throughs leave manufacturers exposed to price volatility. By contrast, multi-year agreements that embed minimum-volume commitments and cost-pass-through clauses convert the relationship into a more predictable revenue stream.
Its “Our Brands” penetration rose about 50 basis points last quarter, and “Private Selection” grew more than 14%. Each expansion adds manufacturing demand but also squeezes space from established national brands, making the terms of each deal a decisive factor for suppliers.
