Private label brands have transformed the retail landscape, capturing record sales of $271 billion in 2024—a significant 3.9% increase from the previous year. The rise of store brands has outpaced national brand growth, which trudged along at just 1% while private labels have enjoyed nearly 25% dollar sales growth over the past four years. Consumer perception has shifted dramatically with 69% of shoppers now viewing private label products as equal or superior to traditional name brands. This fundamental change in shopping behavior signals a permanent shift in consumer markets as retailers capitalize on shoppers’ quest for value without sacrificing quality.
The Evolution of Store Brands: From Budget Basics to Premium Products
Gone are the days when private label meant plain packaging and questionable quality. Today’s store brands have undergone a remarkable transformation, positioning themselves as legitimate competitors to national brands. “Private label is not the same as 10 or 15 years ago. Most private label (products) look like a national brand, taste like a national brand and have the quality of a national brand,” notes Sally Lyons Wyatt from Circana.
What’s driving this shift? The data from Circana shows that 59% of consumers believe private labels offer above-average value for their price, while 41% specifically purchase these products to save money. But it’s not just about price—quality has become a defining factor. Many shoppers initially try store brands to cut costs but continue buying them after discovering the products meet or exceed their expectations.
The pandemic accelerated this trend as supply chain issues forced consumers to try alternatives to their usual brands. When preferred products weren’t available, shoppers discovered that many store brands delivered comparable experiences at lower prices. This trial period created a permanent shift in buying habits that retailers are now capitalizing on by expanding their private label offerings.
I’ve noticed this trend myself when shopping at Walmart’s bakery section, where their private label baked goods have improved dramatically in recent years. The quality rivals specialty bakeries but at a fraction of the cost, making it easy to understand why consumers are making the switch.
Category Growth: Where Store Brands Are Winning
Private label growth isn’t happening uniformly across all departments. According to Circana’s market analysis, the refrigerated section leads with an impressive 7.5% growth, followed by general food at 4.3% and beverages at 4%. This pattern reveals where consumers are most willing to substitute store brands for national labels.
Perhaps most telling is that all ten food and non-edible departments tracked by Circana experienced dollar growth in private brand sales. This universal upward trend confirms that store brands are gaining ground across the entire grocery landscape, not just in isolated pockets.
Several emerging categories show particularly strong potential for private label expansion, including:
- Chocolate candy
- Sports drinks
- Carbonated soft drinks
- Salty snacks
These categories are approaching a 10% market share, signaling that even in traditionally brand-loyal segments, consumers are increasingly open to alternatives. I’ve experimented with making homemade energy bites as an alternative to store-bought options, but even I find myself reaching for private label snacks when time is short.
The beverage category demonstrates private labels’ ability to penetrate previously brand-dominated markets. Sports drinks, historically dominated by names like Gatorade and Powerade, now face competition from retailer versions offering similar electrolyte formulations and flavors at lower price points. This pattern repeats across product categories as store brands continue to close the quality gap.
Retailer Strategies: Building Brand Empires
Major retailers aren’t just participating in the private label trend—they’re driving it. Walmart recently launched its Bettergoods grocery line, while Target introduced Dealworthy, a value-focused brand aimed at budget-conscious shoppers. Amazon joined the movement with Amazon Saver, and Kroger expanded its portfolio with Field & Vine, a fresh produce brand.
These new launches represent just a fraction of retailers’ private label expansion. Kroger alone added over 900 new private label products in fiscal 2024, demonstrating the significant investment retailers are making in this space. Sally Lyons Wyatt from Circana predicts this trend will accelerate, stating, “I think we’ll see more retailers engaging with their own private label and using that as a lever.”
The strategy makes financial sense for retailers who can capture higher profit margins through private label sales compared to selling national brands. By eliminating the middleman and controlling production, retailers maintain greater control over pricing and quality while building customer loyalty to store-exclusive products.
Beyond creating budget options, retailers are now developing premium private label tiers to compete with specialty brands. Target’s Good & Gather Signature collection and Kroger’s Private Selection exemplify this approach, offering elevated products that compete on quality rather than just price. These premium lines help retailers capture different consumer segments and expand their influence across price points.
Challenges in the Private Label Landscape
Despite their growth trajectory, private label brands face significant hurdles. Sourcing ingredients and supplies at scale while maintaining consistent quality presents an ongoing challenge, especially for smaller retailers with limited buying power. Additionally, competing with larger companies that benefit from extensive research and development resources requires creative approaches to product development.
Identifying the optimal price point represents another complex challenge. Price too high, and the value proposition disappears; price too low, and consumers may question quality or retailers may sacrifice profits. This balancing act becomes particularly tricky in premium categories where quality expectations are higher.
For food retailers, creating distinctive flavors that appeal to diverse consumer preferences requires significant investment in product development and testing. I’ve seen brands like Our Place launch unique cookware to capitalize on food trends—private labels must similarly anticipate and respond to changing consumer tastes.
The product mix presents another strategic consideration. Retailers must determine which categories offer the greatest potential for private label success and which might be better left to national brands. This selective approach allows retailers to concentrate resources where they’ll generate the highest returns rather than competing across every category.
Innovation: The New Battleground
Gone are the days when private labels simply copied national brands. Today’s store brands increasingly lead with innovation, creating products that fill unmet market needs. Trader Joe’s exemplifies this approach with its constantly rotating selection of unique private label products that draw shoppers seeking novel food experiences.
Health and sustainability have become key innovation areas for private labels. As consumers increasingly prioritize clean ingredients, retailers have responded with private label lines centered around organic, natural, and environmentally friendly products. This trend aligns perfectly with consumer preferences for snacks with cleaner ingredients that don’t compromise on taste.
Technology-enabled personalization represents another frontier. Some retailers now use customer data to identify gaps in their product offerings that private labels could fill. This targeted approach creates products specifically designed for their particular customer base rather than trying to appeal to everyone.
Package design innovations help private labels stand out on shelves previously dominated by national brands. Modern, eye-catching designs signal quality and help overcome lingering perceptions that store brands are inferior alternatives. Many retailers now invest in premium packaging that rivals or exceeds the visual appeal of national brands.
The Future of Private Labels: What’s Next?
Looking ahead, private label brands appear positioned for continued growth and innovation. Premiumization will likely accelerate as retailers develop more sophisticated products that compete on quality rather than just price. These premium lines will help retailers capture a greater share of consumer spending across various price points.
International expansion presents another growth avenue. Many retailers are looking beyond borders to introduce successful private labels to new markets. Companies like Chi Forest expanding through Costco show how brands can leverage retailer relationships to reach new consumers.
Direct-to-consumer channels may emerge as the next frontier for private label growth. Some retailers already sell their private label products online beyond their own websites, recognizing the potential to reach consumers who might not regularly visit their physical stores. This approach could significantly expand the market for store brands.
The ultimate impact may be a transformed retail landscape where the line between national and private brands continues to blur. As store brands gain credibility and market share, consumers will increasingly make purchase decisions based on product attributes rather than brand ownership. For shoppers, this shift promises more choices, better value, and products increasingly tailored to their preferences and priorities.
Private label brands will remain a key competitive tool for retailers as they navigate changing consumer preferences and economic conditions. By maintaining quality while controlling costs, private labels offer retailers a way to differentiate themselves while building customer loyalty that extends beyond price alone. For traditional brands, this evolution represents both a challenge and an opportunity to redefine their value proposition in a marketplace where store brands have permanently altered the competitive landscape.
As consumers, we benefit from this competition through improved quality, greater variety, and more value across both national and private label options. The continued rise of private label isn’t just a retail trend—it’s a fundamental reshaping of how we shop and what we expect from the products we buy.