Summary

In the 19th century, merchants in the mail-order and wholesale business introduced their own private-label products. The goal was to provide valuable and cheaper alternatives to premium-priced national brands, who significantly marked up their products. In the Mad Men era of the 1950s, national brands built their empires by investing in packaging design, branding, and marketing, which caused the status of private labels to fall. The monotone messaging and aesthetics of private labels didn’t help, nor did their plain names like “Organic Ketchup” or “Great Value.”

When these products sat next to their branded counterparts that featured more creative packaging and had worked for years to get into the hearts of consumers, the picture became even bleaker. Private labels often grow when the economy is struggling, and recede when it is performing. Accordingly, they began to grow again in the late 80’s and 90’s as the recession of the early 90’s took the United States by storm. The category’s growth then halted in the late 1990s as private label products felt severe price pressure and companies lowered prices to compete, which reduced quality. This tarnished private labels’ image even further and reduced sales.

Over the past few years, however, private labels have improved their standing. They are growing at faster rates than name brands—a 4.6% increase from 2015 to 2016 vs. 1.1% increase for national brands. Retailers are infusing private labels with an identity and creating experiences around them, while new players such as Amazon and Buzzfeed are reinventing what private label means today. As a result, the definition of private label is shifting and the lines that divided private label and name brands in the past are increasingly blurry.

This report looks at:

  • What’s happening with private labels and why does it matter for the larger consumer ecosystem?
  • What does the rise of private labels mean for you and how should you leverage it?
  • What should brands, investors, and real estate developers do to harness the evolution of private labels?

Featuring case studies on Amazon, Brandless, Buzzfeed, Costco, MeUndies, MoveButter, Sephora, Target, Tide

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