The Growth of Private Label and Store Brands
The retail industry has seen a major shift in recent years, with the rise of private label and store brands. These brands, once seen as lower quality alternatives to well-known, name brand products, have now grown in popularity and demand. In fact, private label and store brands have become major players in the market and are giving traditional brands a run for their money. In this article, we will explore the growth of private label and store brands and the reasons behind their success.
What are Private Label and Store Brands?
Private label brands are products that are produced and marketed by a retailer, rather than an external manufacturer. These products are sold exclusively by the retailer and carry their own brand name. On the other hand, store brands are owned and marketed by a specific retail chain or store, and are only available at that particular store.
The Growth of Private Label and Store Brands
Private label and store brands have experienced significant growth in recent years. According to a report by the Private Label Manufacturers Association (PLMA), private label sales reached $118.4 billion in 2018, accounting for 17% of the total retail market in the United States. This represents a steady increase from 2013, where private label products accounted for 15% of the market.
Similarly, store brands have also seen a rise in demand. A report by IRI found that store brands accounted for 23.2% of total dollar sales in the grocery market in 2019, a significant increase from 19.1% in 2013.
Why are Private Label and Store Brands Growing in Popularity?
There are several factors that have contributed to the growth of private label and store brands. One of the main reasons is the increasing quality of these products. In the past, private label and store brands were seen as lower quality alternatives to well-known brands. However, with advancements in technology and production methods, private label and store brands have been able to improve their quality and offer products that are comparable, if not better, than traditional brands.
Another factor is the lower cost of private label and store brand products. These brands are typically priced lower than name brand products, making them an attractive option for cost-conscious consumers. In addition, retailers are able to offer these products at a lower cost because they do not have to pay for marketing and advertising expenses like traditional brands do.
Lastly, consumers have become more open to trying new and different products, including private label and store brands. With the rise of e-commerce and online shopping, consumers have more access to various brands, making it easier for them to experiment with different options.
The Impact on Traditional Brands
The growth of private label and store brands has certainly had an impact on traditional brands. To compete against these brands, traditional brands have had to adjust their prices and marketing strategies. Some have even started producing private label products for retailers.
In addition, traditional brands are now facing increased pressure to differentiate themselves from private label and store brands to maintain their market share. This has resulted in more innovation and product developments from traditional brands, ultimately benefiting consumers with more choices and better products.
In Conclusion
The growth of private label and store brands is evident in the retail industry. These brands have gained significant traction in recent years and are expected to continue rising in popularity. With their competitive pricing and improved quality, private label and store brands are giving traditional brands a run for their money. As a result, the retail landscape is becoming more diverse and dynamic, offering consumers a wider range of options to choose from.
