With nothing more than a passing glance, one grocery store is the same as another: They offer the same basic merchandise at roughly the same price, and they all face the same headwinds and ride the same tailwinds.

They're not all the same, though. There are enough nuanced differences to make some of these names markedly better investments than others.

For instance, Kroger (KR -0.75%) is headed into 2023 arguably better equipped than any of its rivals to capitalize on what could be one of this year's most important dynamics. That's the growing appreciation of lower-cost, high-quality private-label foods. You know them better as generics.

Yep, that's Kroger's own product

In a purely technical sense, these store-managed consumer goods are still generic foods. Be careful of referring to them as such, however.

Gone are the days of plain black-and-white packaging of subpar products. Most private-label brands increasingly look -- and taste -- like the national third-party brands they're competing against. That's the point.

In fact, there's a good chance you're using such a product without realizing it's a house brand. Walmart's Great Value, Target's Good & Gather, and Kroger's Simple Truth and Private Selection are all actually owned and operated by the retailer promoting them.

Sales of this sliver of grocery stores' inventories have outgrown other brands for several years now, according to the Private Label Manufacturers Association, as these companies figured out how to better source, package, and price their own products. The tables temporarily turned in 2021, with disruptions stemming from the pandemic rattling availability of certain goods at times.

The tide's turning back in favor of private-label groceries, though. The Private Label Manufacturers Association says sales of store brands were up 10.6% through November last year, on pace to break a record and outpacing the Information Resources' estimated growth of 5.8% for national brands.

Kroger did much of that heavy lifting. While it doesn't offer a great deal of detail regarding its store-owned business, the grocer did report 10.4% year-over-year sales growth for its private-label portfolio in the third quarter of last year, improving on Q2's growth of 10.2% and Q1's pace of 6.3%. 

It matters simply because private-label sales account for roughly one-fourth of the company's total food sales, which is well above the industry average of less than 20%.

And this company-specific math is about to matter a lot more.

Right place, right time, right product, right price

Chalk at least some of last year's private-label strength up to a weakening economy, paired with rising prices. It's forced most families to rethink their spending habits.

Barbara Connors, vice president of strategy and acceleration at retail data science company 84.51, says since March of last year -- when inflation was at its worst -- more than 65% of consumers cited inflation as a key concern.

And these consumers have put their money where their mouth is -- so to speak. The Food Industry Association's 2022 FMI Power of Private Brands report points out that 40% of consumers are purchasing more private-label goods since the pandemic took hold, with three-fourths of them planning on continuing these purchases going forward. In a similar but separate report, the Ibotta Performance Network indicates a little over 71% of consumer goods categories saw U.S. shoppers shift from a national brand to a private-label brand in 2022.

The paradigm shift may well accelerate if things get any worse, too. Market researcher GlobalData suggests 61% of U.S. consumers will switch to a private-label product should inflation persist (presumably within product categories they haven't already made such a change), jibing with Deloitte's recent estimate of 65%.

Kroger is perfectly positioned for such a shift. In September, the grocery officially unveiled a new private label called Smart Way, which is a value-oriented line of packaged foods. 

And this lineup could be particularly well received by the most value-conscious of consumers. As of August, 32.6% of lower-income families say price is more important than a brand name, according to data from consumer market research firm Numerator. That's the highest this figure's been since the pandemic took hold in early 2020.

Kroger isn't stopping there, however. Look for even more store brands in the foreseeable future. At the end of this month, the company will be holding its first-ever Our Brands Innovation Summit to complete the "ongoing mission of Kroger's Our Brands portfolio by partnering with select suppliers to provide high-quality, innovative items that meet current and future market trends."

Best of the best

Don't misread the message. If you're looking for a top growth stock, Kroger isn't it. Even in a good year, single-digit growth is the norm within the food retail arena. Being the best in the business inherently means breakneck, double-digit growth. 

If you're looking for a top stock from a typically safe and stable sector, though, Kroger delivers, bringing a respectable dividend yield of 2.3% to the table with it. Indeed, in light of brewing economic turbulence -- being potentially followed by a shift from growth stocks' leadership to leadership from value stocks like Kroger later this year -- you could certainly do a lot worse.