RETAILINGPrivate 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

The GapLimitedMarks & SpencerIKEA

Home Depot

% StoreBrands

National Brands

Macy’sTarget

Relative Advantages ofNational Brands versus Private Brands

Type of Vendor

Impact on Store National Private-Label

Brands Brands

Store loyalty ? +

Store image + +

Traffic flow + +

Selling and promotional + -expensesRestrictions -

+Differential advantages - +

Private Labels

Advantages

• Unique merchandise not

available at competitive

outlets

• Difficult for customers to

compare price with

competitors

• Higher margins

Disadvantages

• Need to develop expertise

in developing and

promoting brand

• Typically less desirable for

customers

National Brands

Advantages

• More desired by customers

• Don’t need skills and people

to develop and promote

merchandise

Disadvantages• Lower margins• Vulnerable to competitive

pressures

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

Price comparison of a National brand and a Store brand in US

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%

Store brand market share in some other countries

41

29

2422

20

12

0

5

10

15

20

25

30

35

40

45

Switzerland Canada Spain

Store BrandMarketShare

Private Labels in Hong Kong

Private label brands still have a long way to go in Hong Kong

The 17% growth of private label brands in Hong Kong in 2011 is way below Asian peers.

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.