More higher-income shoppers are opting for private labels

Once seen as a budget-conscious trade-down for consumers, private label products are increasingly finding their way into the carts of higher-income shoppers.

According to a new study by consultancy firm Simon-Kucher, 44% of high-income shoppers (those making $5,000+ a month) are buying more private label products than they were a year ago, compared to 34% of consumers with lower incomes.

Of those higher-income consumers, 39% are regularly purchasing premium private label products, while 27% of consumers across income cohorts say they’ve purchased more premium private label products than last year.

Consumers’ perception of national brands is shifting: 55% believe these brands are overpriced and not competitive on quality, and 28% say brand names don’t play much of a role in their decision-making.

“It’s no longer about trading down. It’s shopping smart,” Michelle Leong, partner at Simon-Kucher, said in a statement, adding “higher-income consumers are no longer seeing a reason to pay a premium.”

Retailers like Walmart and Target have started “laddering” their private label brands to market to higher-income consumers and compete in categories where consumers tend to have more brand loyalty, EY Global Consumer Senior Analyst Jon Copestake previously told Retail Brew.

And even those lower-rung private labels are getting a more premium look.

Walmart last month announced plans to revamp its Great Value private label—the largest private label brand in the US in terms of household penetration, per Numerator. Spanning nearly 10,000 items across two years, it’s the retailer’s most comprehensive private label effort yet. The move comes as Walmart works to cater to its growing higher-income consumers base. CEO John Furner said in February that the bulk of its share gains have come from those earning more than $100,000 annually.

New England grocer Hannaford updated its private label assortment in March, with the new look emphasizing product quality, ingredient transparency, and consistency across its portfolio, the company said. Aldi also embarked on a packaging refresh last year.