Private Label
What is a Private Label?
A private label is a brand owned by a retail company, such as Lidl or Aldi, and is sold exclusively through that retailer. It is also occasionally referred to as a “store brand” or “retailer brand”. Private labels are produced on behalf of the retailer. They allow the company to manage its assortment more strategically, optimize margins, and differentiate itself from the competition.
What is the difference between a store brand and a private label?
The terms “store brand,” “retail brand,” and “private label” are often used interchangeably. However, in practice, there are differences. Store brands also include generic product lines that are manufactured for retailers but do not establish their own brand identity. Private labels, on the other hand, are strategically developed brands with a clear positioning, examples include Walmart’s Great Value or Aldi’s Specially Selected. Since the distinction is blurry, consumers typically find it more relevant to differentiate private labels from traditional manufacturer brands.
What is the difference between private labels and branded products?
Branded products are developed by independent manufacturers who build their own brand identity and market their products through various distribution channels, such as multiple retailers or directly to end customers. Private labels, however, are owned by retailers and are sold exclusively within their own sales networks. In terms of pricing, private labels are typically positioned below comparable branded products, as they usually forego expensive advertising. While traditional branded products focus heavily on brand image, marketing, and recognition, private labels often emphasizes functional benefits and strong value for money.
Which products are considered private labels?
Private labels can now be found in nearly every product category across global markets. Selected international examples include:
- Groceries: Kirkland Signature (Costco, USA)
- Drugstore and cosmetics: No7 (Boots, UK)
- Household goods and cleaning products: Great Value (Walmart, USA)
- Textiles and fashion: F&F (Tesco, UK)
- Electronics and technology products: Insignia (Best Buy, USA)
The range of private labels now goes far beyond basic groceries, offering consumers budget-friendly and reliable alternatives in nearly all areas of daily life. These store-owned brands have become global players, adapting to regional markets while delivering consistent value.
What are the advantages of private labels for retailers and consumers?
Private labels offer an alternative to manufacturer brands and deliver benefits for both retailers and consumers.
For retailers, they offer the opportunity to generate higher margins, as there are no licensing fees or external pricing regulations. Retailers retain full control over their assortment, design, and brand positioning. Their exclusive availability within the retailer’s own distribution channels enables clear differentiation from competitors—an especially important strategic advantage in highly competitive markets.
Consumers also benefit from private labels. They enjoy attractive price-performance ratios, which are particularly appealing to price-sensitive target groups. Private labels often serve as a high-quality alternative to well-known branded products—typically without notable sacrifices in function or taste. Many consumers appreciate their reliability: private labels often provide consistent quality at stable prices, building trust and simplifying the purchase decision.
What challenges are associated with private labels?
Despite their advantages, private labels face specific challenges. Since they generally do not rely on traditional advertising campaigns, building a strong brand identity is particularly demanding. Private labels must stand out through convincing product quality and excellent value for money. Additionally, although production is often outsourced to external partners, the retailer assumes full responsibility for the safety, quality, and traceability of the products. In the event of product recalls or quality issues, the negative feedback directly impacts the corporate reputation.
How do private labels affect customer loyalty?
Private labels can play a significant role in fostering customer loyalty, especially when they deliver consistent quality and stable pricing. Customers who have positive experiences with private label products often develop trust in the store brand and return regularly. For price-conscious shoppers in particular, private labels are a strong incentive to buy from a specific retailer like Walmart or Aldi. This creates real added value: shopping remains affordable without sacrificing quality.
Contact
Would you like to schedule a non-binding consultation on this topic? Our experts are available by phone at +49 89 273 73 54 00 or by email at info@biesalski-company.com. You can also find more information about Biesalski & Company’s services in the area of Insights.
