More and more consumers are realizing the cost-savings of buying store-brand items, and more and more savvy retailers are realizing the returns. In fact, private label goods account for roughly 45% of products sold in Europe, and 25% of products sold in the U.S. And the number is increasing.
While private-label goods have historically focused on low-emotional involvement goods such as flour and sugar, consumers are increasingly turning to store-brands for items as diverse as sheet sets, paint brushes, office supplies, and other products. This vertical and horizontal expansion of private label goods offer retailers a rare
Retailers enjoy tremendous benefits from private labeling. Instead of marketing being a pure cost, retailers can market themselves with their private-label product and simultaneously achieve product profits. As many retailers have discovered, including Trader Joe’s, Costco, and Wal*Mart, private label goods allow a retailer to establish customer loyalty by having an exclusive offering of a high-quality and economical product.
