Private label brands now account for 24% of the value share in U.S. food and beverage aisles, marking a lasting change in consumer shopping behavior. The trend has reached new heights, with store brands hitting an all-time unit share record of 23.8% in the first half of 2026, while national brand units declined by 0.5% over the same period. According to Circana and the Private Label Manufacturers Association, these figures confirm what retailers have observed for years: consumers are consistently trading down.
Retailers are taking decisive action in response. BJ’s Wholesale Club has announced plans to reduce its assortment by about 20%, cutting its typical 7,500 SKUs down to 6,000–6,500 over the next two years. CEO Bob Eddy described the move as eliminating “unnecessary choice,” targeting duplicative items such as multiple soda formats or redundant body wash scents. Meanwhile, Kroger is expanding its SmartWay opening-price-point brand from 130 items to 1,000 within a year, creating a surge in demand for new private label manufacturing capacity.
The shift is reshaping the industry in two key ways. Private label is not only displacing branded goods but also demanding new production from suppliers. Kroger’s Our Brands penetration increased by 0.5% last quarter, and its Private Selection line grew by 14%. However, the retailer’s push requires 870 new items to be sourced, formulated, and launched within 12 months—a tight timeline that forces manufacturers to decide whether to compete with retailers on their own terms.
Grocery sales stall as trade-down becomes permanent
U.S. retail food and beverage sales rose by just 2.2% in the first half of 2026, but this growth came entirely from price increases. Volume remained stagnant, and Circana projects further slowdown, with growth expected to fall to 2% to 3% in 2027, down from nearly 7% between 2019 and 2024. Grocery units dropped by 1.8% year-over-year in June, a decline twice as steep as the same month last year, while prices have climbed 33% since 2019. More than half of consumers (56%) now routinely trade down to lower-priced brands, and the majority say they would continue doing so even if grocery prices fell.
This is not a temporary response to inflation. 94% of shoppers say they would keep purchasing private label if prices dropped, and 92% now consistently buy store brands at home—up from 89% a year earlier. The change is structural. Retailers are filling shelves with their own brands while reducing the number of items they carry, leaving branded manufacturers with less space. For suppliers, the question is no longer whether private label will continue growing but which of their SKUs will remain on shelves after the next round of cuts.
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Retailers cull SKUs using sales velocity metrics
Retailers use category management systems to evaluate products based on velocity per facing, a measure of sales efficiency relative to shelf space. Items that divide demand within their own category face the highest risk of removal. Manufacturers’ best strategy is to identify weak performers early and propose their removal, supported by data on trade spend and shelf diagrams. Lindsey Perry, bakery sales manager at Roche Bros Supermarkets, explains the logic: “A brownie is a brownie; a cookie is a cookie.” Too many similar items create confusion, and even strong initial sales do not guarantee repeat purchases.
BJ’s has previously downsized its assortment. After cutting SKUs in the past, the company lost sales and later reinstated many of the removed items. This time, the focus is on eliminating redundancy—items that sell slowly but are not the only option in their category may survive, while brands with multiple near-identical products face greater risk.
Private label wins on quality, not just price
The shift toward private label extends beyond price considerations. Research from FMI in 2026 found that 39% of shoppers now cite quality as a reason for buying store brands, up from 30% in 2023. This suggests private label has evolved from a budget alternative into a preferred choice for an increasing segment of consumers. For manufacturers, the competition for shelf space now includes meeting evolving expectations for quality and consistency, not just cost.
BJ’s Wholesale Club’s latest announcement on August 21 reflects this broader industry trend. The company plans to reduce its typical 7,500 SKUs to between 6,000 and 6,500 over the next two years, focusing on eliminating redundancy such as carrying the same soda in multiple package formats or the same body wash in several scents. The goal is to simplify the shopping experience by removing choices that do not drive additional sales. This approach aligns with strategies at regional chains like Roche Bros Supermarkets, where repeat purchase rates determine whether an item remains on the shelf.
