Amazon Bets On $5 Private-Label Groceries To Win Over Inflation-Weary Shoppers

Core Insights - Amazon is consolidating its grocery brands into a $5-and-under essentials line to attract cost-conscious shoppers and gain traction in the low-margin grocery sector [1][2] Group 1: New Product Offerings - Amazon Grocery merges Amazon Fresh and Happy Belly private labels into a cohesive essentials collection featuring over 1,000 items, primarily priced under $5 and rated 4 stars or higher [2] - New offerings include bakery cinnamon rolls, pizza dough, lemonade, and bottled water, with deli meats, canned beans, and frozen vegetables expected soon [3] Group 2: Market Context and Consumer Behavior - Amazon's private label sales increased by 15% year-over-year in 2024, indicating stronger demand for in-house brands amid a 2.9% annual inflation rate [2] - Consumer perception of value has significantly declined, with only 32% of consumers feeling they receive high value from a typical grocery bag as of May 2025, pushing them towards value-seeking options [4] Group 3: Competitive Landscape - Amazon has faced challenges in the grocery sector since acquiring Whole Foods for $13.7 billion in 2017, with competitors like Walmart and Costco maintaining dominance through scale [5] - The store-brand segment has seen significant growth, with sales reaching a record $271 billion in 2024, up $9 billion from the previous year and over $51 billion, or 23.6%, since 2020 [5]