Retailer Corporate Strategies in Private Label

February 2024

Although inflation eased slightly in 2023 in many markets, global inflation rates remained high by recent historical standards. As a result, price-conscious consumers powered private label sales to record highs in 2023, and market conditions in 2024 appear favourable for another banner year for store brands. This report explores the recent gains made by private label products through the lens of six retailers that have made private label an integral part of their corporate identities.

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Key findings

Due to the ongoing cost-of-living crisis, private label sales hit new highs in 2023

Emphasising the value proposition of their private label lines allows retailers to play to their strengths

The affordability of private label goods becomes particularly appealing during times of economic stress. As a result, retailers are taking active measures to emphasise the value proposition of their store brands by highlighting their competitive prices, introducing economy-focused private label lines, and implementing loyalty programmes that offer store brand discounts.

Retailers are increasingly moving to position select private label lines as “powerhouse” brands

Thanks to substantial improvements over the last 25 years, store brands today can often compete with name brands on quality. As a result, many retailers are taking the logical step of positioning select private label lines as name brands in their own right. This strategy enables these powerhouse private label lines to compete more effectively against established brands.

Price-competitiveness is likely to remain private label’s biggest advantage in 2024 and beyond

Despite a recent uptick in consumer confidence, the global rate of inflation is expected to continue to outpace real disposable income growth in 2024. Additionally, warning signs in the commercial property sectors of China and the US indicate that a recession could be on the horizon. As a result, retailers must strive to keep prices on store brands competitive.

Asia Pacific and the Middle East and Africa are becoming more important for global private label sales

Historically, private label penetration has been low in Asia Pacific and the Middle East and Africa. However, many major retailers in these regions are now investing heavily to enhance the quality and expand the variety of their store brand products. This has led to a notable surge in private label sales in these regions, cementing them as a new store brand battleground.

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Introduction

Scope

Executive summary

Companies profiled in this briefing

Global trends in private label

The visibility of private label products is increasing across the global retail sector

The ongoing cost-of-living crisis has propelled private label sales to new heights

Macroeconomic conditions in 2024 are expected to be favourable for private label sales gains

Today, two important trends are having an outsized impact on the private label space

Emphasising the value proposition of store brands gives retailers a leg up as inflation bites

Retailers are highlighting the low prices of their store brands to accentuate their value

Retailers are positioning some of their store brands as powerhouse brands in their own right

Retailers are keen to establish their private label lines as name brands in their own right

Strategies of leading retailers

Albertsons: Private label overview

Albertsons’ private label strategy in context: Emphasising the value proposition

Albertsons’ private label strategy in context: Private labels as powerhouse brands

Alibaba (Freshippo): Private label overview

Alibaba (Freshippo)’s private label strategy in context: Emphasising the value proposition

Alibaba (Freshippo)’s private label strategy in context: Private labels as powerhouse brands

Coles Group: Private label overview

Coles Group’s private label strategy in context: Emphasising the value proposition

Coles Group’s private label strategy in context: Private labels as powerhouse brands

E Leclerc: Private label overview

E Leclerc's private label strategy in context: Emphasising the value proposition

E Leclerc's private label strategy in context: Private labels as powerhouse brands

Falabella: Private label overview

Falabella’s private label strategy in context: Emphasising the value proposition

Falabella’s private label strategy in context: Private labels as powerhouse brands

Woolworths Holdings: Private label overview

Woolworths Holdings’ private label strategy in context: Emphasising the value proposition

Woolworths Holdings’ private label strategy in context: Private labels as powerhouse brands

Key takeaways

The outlook for private label

Private label lessons for retailers

Private label lessons for brand manufacturers

Appendix

Appendix: Private label brands for Albertsons

Appendix: Private label brands for Alibaba (Freshippo)

Appendix: Private label brands for Coles Group

Appendix: Private label brands for E Leclerc

Appendix: Private label brands for Falabella

Appendix: Private label brands for Woolworths Holdings

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Retailing

Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.

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