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

Rising living costs continue to pressure household spending across the US. Supply chain issues, inflation, and higher daily expenses have pushed many consumers to reconsider how they shop.

TGM Consumer Sentiment Survey in the US 2024 shows that 69% of Americans are deeply concerned about the rising cost of everyday items (N=1,166). The concern is sharpest among Americans aged 55 to 64, who sit at the front line of household financial strain. Shopping behavior is changing as a direct response, with many consumers looking for cheaper alternatives to offset rising household expenses.

One notable trend that has gained considerable momentum is the proliferation of private-label brands. In the first half of 2023, ending June 18, private label dollar sales jumped 8.2% to an astounding $108 billion, according to Circana, a Chicago based market research firm. 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.

Households are dealing with unstable prices and the constant pressure to stretch their dollars without giving up product quality. Private label brands deliver on both demands at the same time, which explains their growing appeal. TGM data shows that 43% of Americans are willing to try private-label brands over the next three months when purchasing groceries and essential items (TGM Consumer Sentiment Survey in the US 2024, N=1,166). The figure stands out as the strongest preference signal among the options tested in the survey.

Some demographic groups respond more strongly to private label brands than the overall average. Americans aged 65 to 75 lead the move, with 51% expressing readiness to embrace private-label products (TGM Consumer Sentiment Survey in the US 2024, N=159). Similarly, the 35-44 age group follows closely behind at 48% (N=206). The pattern signals 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 is being defined by an active competition between private label brands and national brands. Both sides face real challenges and real opportunities as consumer behavior changes. Understanding the competitive landscape is essential for retailers and brand manufacturers preparing the next 2 to 5 year plan.

As private-label brands continue to gain traction and expand their offerings, they are entering categories traditionally dominated by national brands. Growing competition places more pressure on national brands to stand out through product innovation, quality improvements, and stronger customer loyalty. To hold market share over the long run, national brands need to invest in research and development, leverage their brand equity, and cultivate strong emotional connections with consumers. Additionally, both private-label and national brands also need to closely monitor consumer preferences, adjust strategies based on changing shopping behavior, and explore partnership opportunities that create additional value for consumers.