Branded vs. Store Brands: The Rise of Private-Label Brands in the US

The global community has been grappling with various challenges, ranging from supply chain disruptions to inflationary pressures, resulting in widespread concerns regarding escalating costs. According to the TGM Consumer Sentiment Survey in the US 2024 , a staggering 69% of Americans express deep concerns about the continuously increasing costs of everyday items. This anxiety is particularly pronounced among individuals aged 55-64, who find themselves at the forefront of financial strain. Consequently, there has been a discernible shift in shopping behaviors, with many seeking alternatives to mitigate the impact of increasing expenses.

One notable trend that has gained considerable momentum is the proliferation of private-label brands. During the first half of 2023, culminating on June 18th, private label dollar sales experienced an impressive 8.2% surge, soaring to an astounding $108 billion, as reported by Circana, a prominent market research firm headquartered in Chicago. Despite a marginal 0.5% decline in store brand unit sales during this timeframe, they outshone national brand unit sales, which plummeted by 3.4%. This shift underscores the evolving perception of private label brands, once perceived as generic substitutes, now commanding significant consumer attention and loyalty across diverse industries.

Private-label brands, often referred to as store brands, are products developed and sold exclusively by a specific retailer under their own brand name. Unlike traditional brands, which are manufactured by third-party companies and sold to multiple retailers, private-label brands are controlled entirely by the retailer, giving them greater flexibility and control over pricing, quality, and marketing strategies.

As consumers grapple with fluctuating costs and seek novel ways to stretch their dollars without compromising on quality, the allure of private-label brands has become increasingly palpable. The survey reveals that 43% of Americans are willing to try private-label brands over the next three months when purchasing groceries and essential items. This preference stands out prominently among the various options presented to respondents in the survey.

Notably, certain demographic groups show heightened receptivity to this trend. Individuals aged 65-75 exhibit a particularly strong inclination, with 51% expressing readiness to embrace private-label products. Similarly, the 35-44 age group follows closely behind at 48%. These findings suggest a growing openness to exploring alternatives beyond traditional national brands, driven perhaps by factors such as value-consciousness, perceived quality improvements in private-label offerings, or a desire for variety and novelty in their purchases.

The future of the US retail market will be shaped by a dynamic interplay between private-label and national brands. Understanding the challenges and opportunities that lie ahead is essential for both types of brands to thrive in the evolving consumer landscape.

As private-label brands continue to gain traction and expand their offerings, they will increasingly encroach upon the territory traditionally dominated by national brands. This intensified competition will compel national brands to differentiate themselves through innovation, product quality, and brand loyalty. To maintain market share, national brands must invest in research and development, leverage their brand equity, and cultivate strong emotional connections with consumers. Additionally, both private-label and national brands must remain attuned to evolving consumer preferences, adapt their strategies accordingly, and foster collaboration and partnership opportunities to unlock new growth avenues and create value for consumers.