Retailers Expand Private-Label Push as Shoppers Continue to Trade Down

Retailers such as Target, Macy’s and Walgreens are taking a harder look at their private-label offerings, as PYMNTS Intelligence research shows that ongoing financial pressures are prompting consumers to seek low-priced alternatives to brand-name products.

Target, for its part, is taking its popular Up&Up brand, reformulating 40% of its products and adding “hundreds” of additional items, the retail giant announced Monday (Feb. 12). Bringing in $30 billion in annual sales (of which Up&Up accounts for about 10%), the retailer’s private-label brands are a huge part of the company and go a long way towards driving shopper loyalty.

“Our product teams combed through thousands of guest reviews to create new formulations, hundreds of new products and thoughtful packaging to make up&up even better — all while continuing to offer truly unbeatable value,” Rick Gomez, executive vice president and chief food, essentials and beauty officer, said in a statement.

Additionally, Macy’s is expanding its private-label apparel selection, recently announcing the launch of a sleep- and loungewear brand, State of Day, adding to the retailer’s existing portfolio of private-label apparel, accessories and home goods brands.

“State of Day is a testament to our commitment to deliver exceptional quality, style and value with our in-house brands,” Emily Erusha-Hilleque, the retailer’s senior vice president of private brands, commented. “We continue to build a relevant, design-led modernized portfolio, weaving customer insights with Macy’s rich heritage to meet our customers’ evolving preferences and lifestyles.”

Plus, some retailers are seeing their store brands take off like never before. Walgreens Boots Alliance shared recently that Walgreens’ Nice! brand has been seeing a sales lift from popular TikTok content that features one of its products.

“Walgreens sold seven times more Gummy Mango candy than average last week because of the TikTok spike,” says Ellen Idler, Walgreens associate category manager for everyday candy, as well as for Halloween and Valentine’s Day candy, said in a statement.

These moves come as a significant share of consumers trades down from their favorite brands to more budget-friendly alternatives. The PYMNTS Intelligence report “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which is based on a survey of more than 2,000 U.S. consumers, revealed that 35% have sacrificed product quality by switching to cheaper, lower-quality goods. 

Additionally, consumers do not see their financial challenges ending any time soon. PYMNTS Intelligence’s recent study “New Reality Check: The Paycheck-to-Paycheck Report: The Pessimism About Pay Rises Offsets the Effect of Falling Inflation,” which drew from a census-balanced survey of more than 4,300 U.S. consumers, found that 83% are at least somewhat concerned about current and near-future economic conditions. 

In fact, some reports show name-brand companies losing share to these private-label competitors as consumers continue to seek more affordable options.

The shift towards private-label offerings by retailers like Target, Macy’s and Walgreens reflects a strategic response to the evolving consumer landscape shaped by ongoing financial pressures. With consumer concerns about economic conditions persisting, the demand for lower-priced options is expected to remain strong, driving further growth in the private-label category.

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