PRIVATE labels, or generic brands, are rising in popularity as the cost of groceries remains high due to inflation.
A retail expert touched on why these private labels are so popular among retailers and consumers alike, giving name-brand products a run for their money.
Shoppers are increasingly turning toward private label brands as a cheaper alternative to name-brand products[/caption]
The U.S. Sun spoke exclusively with retail expert Mitchell Olsen on the history and popularity of private label products[/caption]
A private label is a product line that a retailer owns and sells under its own brand name, rather than an independent brand.
From Costco’s Kirkland Signature line to Walmart’s flagship brand Great Value, these products have become increasingly more relevant in recent years.
Their rise in popularity is mainly driven by factors such as inflation and an expanding emphasis on value-based shopping.
BY THE NUMBERS
Almost every household in the US buys at least one private-label grocery item instead of a name-brand product, per a new report by data analytics firm Numerator.
Nearly half of consumers admitted to purchasing private-label products this year to save money.
The report also found that Walmart’s Bettergoods and Target’s Dealworthy were the two fastest-growing private label brands in 2024.
Target’s Dealworthy and Walmart’s Bettergoods were two of the fastest-growing off-brand labels in 2024[/caption]
Both brands were launched this year and saw their sales volume increase by over 200%.
Target’s Bullseye’s Playground was next in line at 109%, followed by Aldi’s Choceur at 83%, and Dollar Tree’s B Pure at 75%.
The Numerator report also discovered that Aldi holds the largest private label presence, with generic products comprising 80% of its overall sales volume.
Aldi was followed by Trader Joe’s at 70% and Costco at 35%.
Although these off-brand products are flying off the shelves, some consumers believe they are not on par with name-brand products in terms of quality.
While 59% of shoppers feel private label brands provide “above-average value for their price,” only 27% said they are as good as name-brand competitors.
EXPERT OPINION
To delve more into the history and success of private label products, The U.S. Sun spoke exclusively with Mitchell Olsen, a marketing professor at the University of Notre Dame in South Bend, Indiana, who specializes in retail.
The expert first noted that despite their recent rise in popularity, these off-brand products are “as old as retailing itself.”
Olsen pointed towards several examples, including the private label whiskey Macy’s sold in the 1800s as well as the Craftsman brand of tools that Sears launched in the 1920s.
The retail expert shared how the generic private labels spread extensively in the 1970s, offering a lower-quality version of national brand alternatives at a lower price point.
These brands are spiking in popularity now because retailers are putting more resources behind them, according to Olsen.
Private Label Brands
Private label brands offer a lower-quality version of national brand alternatives at a lower price point. Here are a few examples of these brands:
Walmart:
- Great Value
- Bettergoods
- Sam’s Choice
- Equate
- Mainstays
Target:
- Dealworthy
- Wild Fable
- Room Essentials
- Threshold
- Good & Gather
Aldi:
- Clancy’s
- Milville
- Mama Cozzi’s
- Little Salad Bar
- Sundae Shoppe
“Instead of mimicking a leading national brand, they are creating their own premium store brands that offer shoppers something unique and of relatively high quality,” he said.
“Compared to generic private labels, premium store brands provide retailers with greater levels of differentiation, profitability, and shopper loyalty.”
Olsen further explored each reason why retailers are placing a greater emphasis on their private label brands.
In terms of differentiation and shopper loyalty, the expert pointed out that private labels are unique to each retailer and cannot be found anywhere else.
Because of this, off-brand items are a differentiating factor between retailers and can generate more shopper loyalty to a certain store than a national brand.
“Take Costco for instance – the ability to buy Ben & Jerry’s ice cream at Costco probably isn’t going to make me do more of my shopping at Costco, because I can buy Ben & Jerry’s at many different stores,” said Olsen.
“However, if I love Kirkland Signature’s vanilla ice cream, then I’m locked into Costco, because that’s the only place I can buy it.”
The expert also explained how private brands provide retailers with greater flexibility to create the products they want, “which can result in offerings that better align with the idiosyncratic needs of the retailer’s shopper base.”
This can also boost customer loyalty to certain retailers.
In terms of profitability, Olsen explained that private labels are typically more fruitful than name-brand items.
“In a low-margin industry like retail, it makes a big difference to the bottom line when you’re able to cut out a channel intermediary and have more direct control over your cost of goods sold,” he said.
The U.S. Sun previously spoke with Olsen on other topics, including how popular candy brands are at risk of elimination if Hershey is bought by Oreo and Cadbury-owner Mondelez.
The expert also discussed how restaurant chains are going under as consumers are starting to “push back” against the high cost of eating out.
