Private Labels are soaring
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On August 1, AP News reported the closing of stores at the New York and Chicago Magnificent Mile shopping streets. Statistics show that in the US, 25% of shopping malls have disappeared in the last decade. Since online shopping has become popular, consumers are reluctant to go to shopping malls and supermarkets unless they have a unique buying experience or can attend a special event.

The private labeling (PL) war is in full swing in the US retail industry, as the "Apocalypse of Retailing" is being discussed. Supermarkets, drugstores, and convenience store chains are focusing their efforts on developing their own low-priced brands, such as Wal-Mart´s Great Value affordable packaged food and beverage and industrial products lines, Target´s Up & Up and Smartly´s skincare hygiene line. German chain Aldi is confronting Supermarket PL at a lower price than its dollarstore PL counterpart.

There is another reason why large retailers are rushing to develop PL products in the United States. Recently, the “dollar store” discount convenience stores have been rapidly increasing in suburban and rural low-income residential districts. Supermarket and hypermarket sales have declined by about $ 1 billion annually over the past three years, while dollar stores have expanded.

Rising rent and employment costs are increasingly hampering the operating results of supermarkets. Private labeling is the branding strategy of directly sourcing, planning, and selling products. Big marts are competing to offer their own brand-name products alongside professional manufacturers´ products.

The Own Brand or Private Brand, developed and distributed by supermarket chains, accounts for almost half of the total distribution. In the UK, where PL marketing is most active, the market share of supermarket brands is over 50%, 45% in Germany and the Netherlands, and 30% in Eastern Europe (Source: Nielsen, 2019).

Over the past few years, the quality of PL products has noticeably improved. Clever and novel product design and packaging communicate positive signals. The simple form and monochromatic minimalist products serve as visual therapy in the midst of material abundance.

Nowadays, online shopping is on the rise. Established large companies, convenience stores, and emerging startups have to focus more on distribution channels and lifestyle marketing experiments using e-commerce. On the macro level, consumer tastes and consumption patterns will be further segmented, and the retail industry will have to survive with more dynamic branding strategies.

Text by Jina Park.
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Launched in 2009, Amazonbasics products account for 85% of Amazon's own branded merchandise sales (as of 2017). Image: Amazon
Brandless, an online shopping mall that offers hygiene, beauty, and wellness products reflect social issues that young consumers value. Courtesy: Brandless
A low-end product doesn't have to be cheap and look cheap. Wal-Mart's Great Value low-cost branded food and household products were launched in 1993. In 2009, the design was renewed with white background and blue lettering. Courtesy: Walmart, 2009.
Warehouse-style displays twith self-branded items. Courtesy: Aldi
Up & Up (left) and Heyday, a consumer electronics brand, (right) are among the PL brands in the US supermarket chain Target. Courtesy: Target
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