THE BUZZ
Private Labels on the Rise
Yield More Profit and Greater Customer Loyalty
Owners want more profit. That explains their growing interest in finding and adding private label brands. True private label brands offer owners unique products and higher value products.
The word that best represents a "true" private label is "Special." The company and its products offer special features and benefits to the customer that are not available elsewhere. Their focus is on providing "value." True private labels rarely make the mistake of competing solely on price. They usually leave the price wars to generic brands and "me-too" brands.
On the retail side, the private label product segment is still relatively small in the food and beverage store market, but the trend is steadily growing in stores and on the www. This segment represents up to 20% of food, personal care, and nutrition products sold in retail stores. It is about 25% over all.
Private Label Growth
Current private label food and beverage market in the U.S. is expected to grow to $67 billion this year. - Datamonitor
Virtually every U.S. household purchased at least one private label product last year. - AC Neilsen product database
What is driving this trend? Several things. First is the profit. Retailers reported an average of 26% profit margin on private label items compared to 5% on name brand products.
Private Label items can give customers new or extra reasons to choose one store over another that carries only the same selection of name brand products. This difference can help the store grow customer loyalty. Loyal customers spend 80%+ more than other customers.
