The image of private label products has improved markedly in recent years, as many retailers have diligently worked to ensure that their store brands can compete with name brands not just on price, but also on quality. This briefing looks at the growing importance of private label through the lens of eight specific retailers, all of which have all made their store brands a central pillar of their corporate identities.
This report comes in PPT.
In times of financial hardship, consumers often turn to private label goods in order to cut back on spending, a behaviour observed during the economic downturn of 2008-2009. Though the contours of consumer behaviour during the COVID-19 pandemic have been somewhat different, private label sales have again posted substantial gains.
Although private label goods have historically competed primarily on price, the quality of these products is now comparable with name brand analogues in many cases. As a result, a significant share of consumers now purchasing store brands for the first time will continue to use these private label goods.
Private label goods have traditionally been most visible in home essentials product categories. In recent years, however, many retailers have successfully expanded their private label portfolios into apparel, consumer electronics and other new categories.
A growing share of the world’s population is mindful of the impact that their consumption behaviour has on the environment and society. Retailers are successfully utilising sustainability and ethical labels on their private label offerings to signify to this consumer segment that they share these values.
The use of sustainability and ethical labels is especially visible in the efforts of retailers to add more organic, non-GMO, plant-based and other specialised packaged food products to their private label assortments, as sales of these products are growing rapidly due to the rise of healthy eating and alternative diets.
Due to COVID-induced lockdowns and social distancing, consumers around the globe are now eating more at home. Sales of private label goods designed to support home dining have skyrocketed, as retailers have rushed to embrace this trend. As the pandemic fades, however, this trend is likely to dissipate gradually.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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