Consumer behaviors are changing in the wake of lingering inflation. And while they’re hurting retailers and restaurants, grocery stores are poised to benefit.
While the Consumer Price Index reports that food costs are up across the board, the cost of food away from home, which includes restaurants, rose twice as much as the cost of groceries in February. Given that increase, consumers may be even less inclined to spend their money dining out.
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Plus, generally speaking, most consumers are well aware that it costs less to buy groceries and cook meals at home than to dine at restaurants. And given that a lot of people are trying to conserve costs, consumers may be allocating more of their money to their grocery lists to elevate the at-home dining experience.
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What this means, though, is that consumers, now more than ever, may be drawn to unique supermarket offerings. After all, nothing says “boring” like cooking the same old meals at home day in, day out.
One supermarket chain is taking steps to position itself as a food destination for shoppers who want to elevate their meal prep game and save money at the same time. This move could work to its benefit as inflation continues to hammer consumers and force them to change their priorities.
Kroger introduces trendy new private label products
Many people flock to Kroger to stock their pantries and fridges. But Kroger doesn’t exactly have the reputation of being an exciting place to shop. Rather, it’s the place people go to load up on grocery essentials.
Now, Kroger is introducing more than 900 new items to its private brands assortment this year. Some of the new items include:
- Salad kits with options like cheddar truffle, blueberry, and cheddar bacon poblano
- New muffin flavors such as banana bread, blueberry lemon, coffee cake, and triple chocolate
- Hatch chile kettle-style tortilla chips
- Black and chai instant mushroom tea blends
Not only is Kroger expanding its lineup into more unique offerings, but it’s being mindful of prices all the while. The new products “offer great flavors at a price point that fits any budget,” said Mike Murphy, Kroger’s group vice president of center store merchandising, in a statement.
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During Kroger’s most recent earnings call, the company’s management team noted that the store’s private brands were a margin enhancer. Now, Kroger is looking to build on that momentum.
“Our Brands is an important differentiator for our business, providing Kroger the ability to offer unique and high-quality products at an exceptional value,” interim CFO Todd Foley told investors. “We look to create destination items that can only be found at Kroger, differentiating ourselves from competitors and national brands.”
A strategic move for Kroger
Kroger’s private label expansion reads like a move that competitors Target and Costco have tried before—and have been successful at.
Target’s Good & Gather, Market Pantry, and Favorite Day brands are a big draw for customers looking for fun and innovative food products at competitive prices.
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Earlier this year, Target announced plans to add around 600 new items to its lineup, focusing on competitive pricing. Target is also introducing Good & Gather Collabs, featuring products created via partnerships with well-known chefs.
Costco’s Kirkland brand, meanwhile, has long been synonymous not just with quality and value but also with tasty food offerings that national brands often struggle to mimic. Some Kirkland grocery products, from the brand’s almond butter to maple syrup to bakery selection, have virtual cult followings.
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By beefing up its private label, Kroger is adopting a proven strategy to get customers to return. And it also builds on a strategy Kroger dove into last year, which had it launching its Field & Vine produce label and revamping its pet brand Abound with new packaging and more products.
In 2024, Kroger introduced 370 items in fresh categories across its store brand. Stocking its shelves with interesting new products is likely to serve the grocery giant well in the coming year, especially if inflation remains sticky and consumers are forced to ditch restaurants in favor of loaded shopping carts.
Maurie Backman owns shares of Target and Costco.
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