This article was compiled with the help of generative AI based on data and analysis that is original to EMARKETER.

Private label brands are no longer just the cheaper alternatives sitting on store shelves. They've evolved into strategic assets that build customer loyalty, boost retailer margins, and increasingly compete with national brands on quality and design, not just price.

"Previously, private label felt really much like a generic copy of the national brand, whereas … now they have their own look, their own feel," said analyst Arielle Feger on a recent episode of "Behind the Numbers."

While affordability remains central to private label's appeal—with 65% of consumers associating private label with being "budget friendly," according to Numerator data—retailers are increasingly using these brands to differentiate themselves and create exclusive products that keep customers coming back.

The strategic value of private label

For major retailers like Walmart, Target, and Amazon, private label brands deliver multiple benefits beyond just sales revenue.

"They can generally enjoy higher margins on the private label goods than on selling products that they get from other brands at wholesale," said analyst Sky Canaves. "And then they really allow the retailers to expand their product assortment, fill in gaps that are not being met by national brands."

Perhaps most importantly, private labels build customer loyalty.

• When consumers develop an affinity for a retailer's exclusive brand, they must return to that specific store to purchase it again—creating a powerful competitive advantage.

Private label's continued growth trajectory

Private label brands have been on a growth streak, particularly since the high inflation period of 2021-2022.

• Private label grocery brand growth reached 3.9% in 2024, significantly outpacing national brand growth’s 1.0%, according to the Private Label Manufacturers Association (PLMA)—which doesn't even keep pace with inflation.
• This growth pattern may continue as economic pressures persist.
• While private label brands face the same tariff challenges as national brands, they often have more flexibility in their supply chains and can adapt more quickly to changing market conditions.

From generic to premium: The expanding private label spectrum

Today's private label landscape spans from budget basics to premium offerings, with retailers developing sophisticated brand architectures to target different consumer segments.

• Walmart's Bettergoods exemplifies this trend toward premium private labels. Launched in April 2024, the brand grew roughly 200% by the end of the year and has already achieved 20.6% household penetration, according to Numerator data.
• "Walmart consumers [seem to] have an appetite for things that are more premium," said Feger, pointing to the brand's success despite its relatively recent launch.
• Bettergoods features premium branding with lowercase typography and bright colors, yet maintains Walmart's value proposition with most products priced under $5—making premium products accessible to a broader audience.

Innovation and collaboration in private label

Retailers are getting increasingly creative with their private label strategies, moving beyond simple national brand alternatives to develop unique offerings.

• Target's Good Little Garden represents the retailer's first standalone floral brand, strategically launched ahead of Mother's Day to establish Target as a destination for flowers.
• Ace Hardware's Loud Mouth Barbeque sauce demonstrates how retailers can extend into adjacent categories that complement their core offerings—connecting grilling equipment sales with barbecue sauce in a logical brand extension.
• Costco's Kirkland beer collaboration with Deschutes Brewery shows how co-branding can elevate private label products, combining Kirkland's trusted reputation with craft brewing expertise.

Social media's amplifying effect

Perhaps no retailer has leveraged social media for private label success better than Trader Joe's, which has built a cult following for its almost exclusively private label assortment.

• The retailer recently created a frenzy with the release of $2.99 mini tote bags that generated long lines and social media buzz—despite Trader Joe's not investing in traditional advertising.
• "Trader Joe's doesn't really do marketing or advertising, so it's kind of purely organic and it's taken on a life of its own," said Canaves. However, she noted that "all of the big retailers have existing brand fandoms online," with creators who review products and share what's new in stores.
• This organic social media presence represents a significant opportunity for retailers to amplify their private label offerings through creator partnerships and community engagement.

Listen to the full podcast episode.

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