Key takeaways
- Private label products have a 24% value share of food and beverage aisles, and store brands set an all-time unit share record of 23.8% in the first half of 2026.
- BJ’s is removing roughly 20% of its club assortment and Kroger is taking its opening price point brand from about 130 items to 1,000.
- The majority of shoppers say they would keep buying store brands even if grocery prices decreased. So the share you’ve lost isn’t temporary.
On August 21, BJ’s Wholesale Club told investors it will cut about 20% of the items it carries. Legacy clubs typically have roughly 7,500 SKUs, and the company plans to bring it down to between 6,000 and 6,500 over the next couple of years. Meanwhile, Kroger shared that it’s expanding SmartWay, its opening price point private brand, from about 130 items to 1,000 over the next year or so.
So while one is subtracting, the other is adding new private label items that will need a manufacturer.
Volume is flat and item counts are falling
US retail food and beverage sales grew 2.2% in the first half of 2026, but all of it came from price, according to Circana’s latest global outlook. Volume was flat. Circana expects 2% to 3% growth through 2027, down from a rate of nearly 7% between 2019 and 2024, and calls it a period of rationalization.
US grocery units were down 1.8% year over year in June, roughly two percentage points worse than the same month a year earlier, while prices have risen by 33% since 2019. More than half of consumers (56%) said they’re trading down to lower-priced brands.
Most of that trade-down went to private label. US private label CPG sales hit $330 billion, with a 24% value share of food and beverage aisles. PLMA’s midyear report notes that store brand unit share reached an all-time high of 23.8%, with store brand units up 0.2% while national brand units fell 0.5%.
Volume is flat, private label continues to take unit share, and retailers are carrying fewer items. Something comes off the shelf, and in a lot of categories it will be a branded item.
BJ’s already tried this once
BJ’s has downsized SKUs before, and it didn’t go well. CEO Bob Eddy said the company cut SKUs, lost the sales that went with them, and then added SKUs back.
This time, it’s about reducing “unnecessary choice,” such as carrying the same soda in three package formats, or the same body wash in several scents.
Duplication and slow sales put different products at risk. If your slowest item is the only one of its kind on that shelf, it may be safer than its numbers suggest. But if you have three similar items in one category and all three sell reasonably well, the buyer may decide that two are enough. If you show up to that review without a recommendation, and they’ll pick the two that stay.
Rank your portfolio before the buyer does
The ranking is already underway inside category management systems you can’t see. You can run your own version first:
- Sort items by velocity per facing. A facing measures space by package width. Evaluating items by velocity and contribution margin per facing reveals true profitability relative to shelf space, whereas total volume hides efficiency.
- For anything near the bottom of that list, ask, “Does the item pull a buyer into the category, or does it mostly split volume with something else you already make?” Items that split their own line’s demand are the easiest cuts, so volunteer them before the buyer assigns them.
Most mid-market processors don’t buy syndicated category data. If you’re one of them, pull your shipment history by customer, your trade spend by item, and the shelf diagram from your last reset. Those will get you close enough to rank your own portfolio. Your version will be rougher than the buyer’s, but it gives you a position to argue from.
Proactively offer two or three items to retire alongside supporting data and a specific trade request for shelf space. Retailers making assortment cuts must fill those spaces, and prepared suppliers have a better chance of securing the remaining space.
What keeps a product on the shelf
Lindsey Perry, bakery sales manager at Roche Bros Supermarkets, said that 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.
“A brownie is a brownie; a cookie is a cookie,” Perry said, and while three similar items cover a category, five near-identical ones mostly confuse the shopper. This is the same duplication logic BJ’s is applying, from a buyer at a regional chain.
And when a manufacturer trims ingredient quality under cost pressure and the customer notices the product has changed, Perry said, the customer stops picking it up. So the shelf eventually audits every input cost decision.
The 870-item opportunity
Kroger’s SmartWay expansion needs roughly 870 items sourced, formulated, and running inside a year. Its Our Brands penetration rose about 50 basis points last quarter, and Private Selection grew more than 14%. So private label is creating manufacturing work while also taking branded shelf space.
Whether it’s worth pursuing comes down to terms. The retailer owns the shelf and sets the price, so a private label book built on purchase orders with no volume commitment and no ingredient pass-through gives you the volume without much protection. The same book with multi-year terms, minimum volumes, and a pass-through clause behaves a lot more like contracted revenue. It’s a contract question as much as a capacity question, and it belongs in the same conversation where you decide which branded items you’re willing to give up.
Pursuing private label manufacturing is primarily a contract decision. Because retailers control shelf placement and pricing, contract terms determine your risk. Operating strictly on purchase orders without volume guarantees or ingredient cost pass-throughs forces you to bear all market risks. Securing multi-year agreements with minimum volumes and pass-through clauses turns that work into reliable contracted revenue. Evaluate these contractual terms during the same review process that determines which branded SKUs to discontinue.
FMI’s 2026 private brands research found that 94% of shoppers would keep buying store brands even if grocery prices decreased, with 92% now keeping store brand products at home, up from 89% a year earlier. And 39% cite quality as a reason for buying, up from 30% in 2023.
This isn’t a temporary trade-down, and consumers are unlikely to come back when things are less expensive. They’ve moved on, and the next category review will price that in whether or not you arrive with your own ranking.
