RETAILING
Private Label
What are Private
Labels?
• Private Labels are Retailers own, control, and exclusively
sell store brands
• Private Label are a ‘Good Alternative’ to Other Brands,
Offering the Same Quality & Value
• Private labels are regarded as good Value for Money,
and
Quality on Par with the Big Brands.
Journey of Private
Labels
• The origin of private label can be traced back to the ‘60s and
‘70s where the offering was cheaper, generic products.
• In 1970’s they were in the form of black and white labelled
products.
• The major improvement in packaging was the first step in
the
success of private label.
• Traditionally, private label products have focused on the low-
end price point. Now, some retailers will offer private label
products across multiple price points including a premium line.
• The popularity of private label is creating an additional
challenge to name brand producers who need to recover
expensive advertising and marketing costs.
Who Makes Private Label
Products?
• Private label products are made by several types of
manufacturers.
• Some large brand manufacturers use their excess
capacity and expertise to produce private label products.
• These products may be sold into food service venues or
retail locations.
National Brands vs. Private
label
• Manufacturer (National) Brands
• Designed, produced, and
marketed by a vendor and sold
by many retailers
• Private-Label (Store) Brands
• Developed by retailer and only
sold in retailer’s outlets
Spectrum of
National vs. Private
Label
% Store National
Brands Brands
The Gap Limited Macy’s Home Depot
Marks & Spencer Target
IKEA
Private
Labels
Advantages Disadvantages
• Unique merchandise not • Need to develop expertise
available at competitive in developing and
outlets promoting brand
• Difficult for customers to • Typically less desirable for
compare price with customers
competitors
• Higher margins
National
Brands
Advantages Disadvantages
• Lower margins
• More desired by customers
• Vulnerable to competitive
• Don’t need skills and people pressures
to develop and promote
merchandise
Most Recognized Apparel
and Accessory Private Label
Brands
Examples of
Private-Label
Brands
Examples of
Private-Label
Brands
Private Label
Options
• Bargain Branding
• no-frills product at a discount price.
• Copycat Branding
• imitates the manufacturer brand in appearance and trade
dress
• Premium Branding
• private label at a comparable manufacturer-brand quality.
• Parallel Branding
• private labels that closely imitate the trade dress and
product attributes of leading manufacturer brands.
Consumers perception about Private
Labels
Some Categories More Suitable
than Others
• Categories preferred for Private Labels
• Dog food
• Kitchen towels
• Sugar
• Flour
• Paper products
• Plastic wraps
• Water
• Rice and cooking products
• Categories less preferred for Private Labels
• Shampoo
• Baby food
• Pasta sauce
Preference of Private
•Labels
Two thirds of global consumers consider supermarket
own, or ‘Private Label’, brands to be a good alternative to
other brands
• The market shares of store brands vary by product class
and across countries
• Global average who considers Supermarket Own Brands
as a good alternative to other brands – 68%
• Europe: 78%
• the Pacific: 78%
• North America: 77%
• South Africa: 72%
• Latin Americans: 64%
• Asia: 51%
Benefit to
Consumers
• Good Alternative to name brands
• Quality as good as name brands
• Good value for money
• Good for people on tight budgets who can’t afford the best
• The cost savings for the typical consumer is large
Benefit to
Retailers
• Significantly bigger margin on those sales.
• Significant source of additional profitability.
• Gives the retailer the flexibility to more easily align a
specific customer need with a specific product.
• The packaging and labels can be custom tailored to
meet
customer needs
• Allows more control over pricing strategies.
• Gives freedom for retailers to create their own marketing
plans and to control their own inventory in stock.
• Promote stronger customer loyalty toward retailer store.
