What are private label (store brand) products?
Private label products are those created by a third-party manufacturer but sold under a retailer's own brand name. This practice allows the retailer to have complete control over various aspects of the product, including its specifications, packaging, and overall presentation. Private labeling is prevalent in numerous industries, such as cosmetics, household cleaners, and food items. By opting for private labeling, businesses can benefit from increased profits, decreased competition, and other advantages.
There are four main types of private labels: generics, copycats, premium store brands, and value innovators. These categories cater to different market segments and consumer preferences. Some well-known examples of private label brands include Costco's Kirkland Signature, Trader Joe's exclusive products, Morphe cosmetics, AmazonBasics, and Stone & Beam furniture.
Private label products offer several benefits to retailers. They provide adaptability, allowing businesses to quickly respond to market trends and customer demands. Additionally, private labeling often results in lower product and operating costs, as retailers can control production and eliminate expenses related to branding and marketing. This approach also helps build customer loyalty, as high-quality and affordable private label products can create a positive image for the retailer, leading to repeat business and long-term success.
Some successful companies that use private labels include IKEA, which offers assemble-your-own home and office furniture; Original Use, a young men's street clothing brand; Tesco Everyday Value, featuring pre-packaged grocery store items; Universal Thread, a women's denim line; Prologue, a working women's clothing brand; Heyday, a consumer electronics company; and Smartly, which sells everyday consumer products.
In conclusion, private labeling is a growing trend among both online and offline retailers, as it allows them to control production, pricing, product descriptions, and branding. By understanding the most lucrative sectors for private labeling and selecting the right product categories, businesses can potentially achieve significant success in this competitive market.