Amazon offering cheaper grocery brand to rival Target, Walmart

Amazon, taking a page from Target and Walmart, has launched a private-label food brand as households remain constrained by the high cost of goods.

The announcement of Amazon Saver comes after Target launched dealworthy, its cheapest brand to date, in February, and Walmart’s introduction of bettergoods, its largest private food brand in decades, in April.

Amazon touted it as a “no-frills brand” that will help stretch grocery budgets as most items are priced under $5. Prime members will get an extra 10% off these products.

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The brand will be available in-store and online.

Amazon debuts a new private-label food brand called Amazon Saver. (Amazon)

The company has already started to roll out the new private label. The company plans to add more than 100 items to the Amazon Saver selection.

Amazon Saver will join the e-commerce giant’s growing list of private label brands such as Aplenty, Amazon Fresh, Amazon Kitchen, 365 by Whole Foods Market and Happy Belly.

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Companies have been trying to launch cheaper brands in order to entice shoppers and boost traffic at stores.

The move by Amazon demonstrates how it is trying to “help its customers stretch their dollars while striving to capture more market share,” according to Joe Feldman, managing director and senior research analyst at Telsey Advisory Group.

Feldman told FOX Business that the “grocery environment has seen a pickup in pricing intensity this year, along with a moderation in inflation, and even deflation in some categories.”

What we have seen is “retailers have been investing in price and private brands, which are generally priced below brands while contributing greater profits,” Feldman said.

These private brands generate loyalty and the “increased emphasis on product taste and quality has been well-received by customers,” he added.

After Walmart launched its private food brand, the company said last month it has “continued to see strong momentum in private brand sales, with grocery penetration up 30 basis points” during the first fiscal quarter.

Walmart launched a private-label brand called bettergoods in April. (Walmart)

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During an earnings call in AugustWalmart said it’s seeing “private brand penetration continue to increase” and that its “highly encouraged by customer uptake of our new food brand, bettergoods.”

Earlier this year, CFO John David Rainey told analysts that more than half of all customer grocery baskets over the last year have had a private brand in them.