The Rise of the Private Label
Over the past two decades, private label consumer good sales have dramatically increased, causing a shift in the merchandise allocation of retailers and the subsequent panic of brands. Private label products encompass generic versions of popular branded goods produced by the retailer. Simply walking down the aisle of your local CVS or supermarket, you will find private label versions of Band-Aids, Coca Cola, makeup, medicine, and so much more.
But why buy private labels when the brands you know and love are available, positioned right next to them on the shelf? The entire demand for such goods lies in one important characteristic: these products are usually priced drastically cheaper than their branded counter parts. However, up until recent years, many consumers have been wary to buy these products as they were not made as well as the products offered by brands.
Today, all bets are off. Private labels offer comparable, the same, or even better value than branded products, which has led to their dramatic increase in demand. Of course with this change in demand comes a change in the merchandise allocation in many stores across the United States and the World. In supermarkets, drug stores, and convenience stores a like, consumers can witness more and more shelf space being taken up by private label products. This shift has many brands panicking in which according to Harvard Business Review, about half of U.S. brands have inconspicuously began creating their own private label products in order to compete.
This is a tactic that all brands would be wise to explore being about 15% of U.S. supermarket sales and about 50% of European supermarket sales came from private labels in the late 90s alone (numbers that has undoubtedly increased in today’s market).
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