Behind the Boom in Private Label Consumer Goods

Understanding the Shift: What Is Driving Private Label Growth?

Private label consumer goods, once perceived as the lower-cost alternative to brand-name products, have transformed into a powerful force in retail. More than ever, consumers are reaching for store-brand options not just for price but for quality, innovation, and value alignment.

Retailers have taken notice. From grocery chains and pharmacies to beauty supply stores and home goods retailers, the emphasis on building proprietary product lines has intensified. Chains like Trader Joe’s and ALDI have long mastered the art of private labeling, with many customers unaware they are purchasing store-branded items at all. Today, even mass retailers like Target and CVS Health have developed expansive private label portfolios that span every category imaginable.

This evolution did not happen overnight. It is rooted in a confluence of changing consumer behavior, cost dynamics, retailer strategies, and a new level of confidence in quality from non-branded goods.

Consumer Confidence Is Rewriting Loyalty Norms

One of the most pivotal factors in the rise of private label goods is the erosion of blind brand loyalty. Today’s shoppers—especially Millennials and Gen Z—are more informed and more discerning. Rather than buying based solely on name recognition, many evaluate based on value, ingredients, sustainability, or ethical sourcing. If a store-brand product checks those boxes and costs less, it becomes the preferred choice.

A study by Daymon found that over 80% of shoppers now view private labels as equal to or better than national brands in quality. This is not a minor shift—it is a fundamental change in how consumers perceive and engage with products on the shelf.

Strategic Moves by Retailers: More Than Just Cost Savings

Private label products offer more than improved margins. They give retailers greater control over pricing, supply chain management, and even product development timelines. By eliminating some of the complexities that come with carrying third-party brands, companies can respond faster to market demand or disruptions.

Retailers are also using private label products to differentiate themselves in crowded markets. Wegmans, for instance, has built a cult following not only through its customer service and store experience but also through its high-quality private label offerings. Its sauces, pasta, and frozen items are staples in many Northeast households.

Costco is another example with its Kirkland Signature line. What began as a budget-conscious alternative has evolved into a badge of trust. Many loyal Costco shoppers choose Kirkland products even over name-brand equivalents, often praising their consistency and value.

Supply Chain Access and Innovation in Product Development

Retailers have invested heavily in developing supply chains that can support in-house brands. This is where the shift becomes even more pronounced. Years ago, private label products were manufactured by anonymous suppliers with little oversight or innovation. Today, retailers work directly with contract manufacturers to create products with specific ingredients, performance features, or sustainability standards.

This has opened the door to innovation. Beauty retailers like Ulta and Sephora are launching proprietary skincare and cosmetic lines that compete directly with premium brands. These products are not designed to simply mimic the competition—they are built with proprietary formulas, trendy packaging, and in many cases, clean ingredient lists.

Meanwhile, food retailers are leaning into customer data to develop recipes and product variations that address emerging health trends, dietary restrictions, and cultural preferences.

Economic Conditions and Price Sensitivity

Periods of economic uncertainty often create an ideal climate for private label expansion. During inflationary cycles or when household budgets are tight, consumers are more open to experimenting with alternatives to their usual brands.

The pandemic accelerated this trend. Supply chain shortages made some name-brand products temporarily unavailable, giving store brands an opening. Once consumers tried these options and found them satisfactory—or even preferable—they often did not switch back. That brand trial created a long-term habit change.

Retailers, for their part, have taken advantage of these moments by offering targeted promotions or placing private label items at eye level to increase adoption.

The Role of Digital Commerce in Elevating Store Brands

E-commerce has given retailers another tool to promote private label lines. On their own websites and apps, stores can prioritize private label search results, bundle products, or showcase favorable reviews. They control the shopping environment in ways they cannot on third-party marketplaces.

Subscription models and auto-replenishment programs also favor private labels. Chewy, for instance, has developed its own line of pet products that customers can subscribe to for regular deliveries. That kind of repeat behavior builds familiarity, reduces churn, and strengthens the private label’s foothold in the consumer’s daily life.

Additionally, private label goods often offer better margins when sold through digital channels, especially when eliminating intermediaries. That profit flexibility allows for more investment in advertising, packaging, or product upgrades—further enhancing the perception of quality.

Challenges in Brand Building Without a Brand

While the advantages of private labels are clear, the path is not without challenges. One key limitation is the absence of long-standing brand equity. Without a decades-old advertising footprint or instantly recognizable logo, private labels must work harder to build trust and emotional connection.

Retailers have responded by borrowing from the playbook of traditional branding. They invest in storytelling, professional packaging design, influencer marketing, and social media campaigns to give their private label products distinct identities.

Thrive Market, an online grocery membership platform, has built a robust private label offering by curating wellness-focused products under its own name. The brand narrative is heavily values-driven, and it resonates with a demographic that prioritizes health and sustainability.

Still, private labels must compete on product quality and repeat satisfaction, since impulse purchases driven by legacy brand trust are less common.

Expansion into Premium Categories

A notable development in recent years is the movement of private label products into premium categories. Once restricted to budget-friendly items, private label goods are now appearing in skincare, electronics accessories, organic food, and performance wear.

Marks & Spencer in the UK offers high-end apparel and gourmet food under its own label, rivaling established designers and specialty brands. In the U.S., Whole Foods Market has expanded its 365 brand to include premium items that support the store’s broader value proposition.

Consumers are increasingly comfortable with the idea that a private label product can be both cost-effective and luxurious. That mental shift opens the door for retailers to reimagine what their store brands can represent—and at what price point.

Opportunities for Entrepreneurs and New Entrants

The private label boom has also created opportunities for smaller companies and startups. Entrepreneurs who once might have tried launching an independent consumer brand now consider co-developing private label goods with retailers.

There is less risk involved when leveraging a retailer’s distribution, audience, and logistics infrastructure. In return, entrepreneurs can bring fresh product ideas, niche expertise, or new technologies to a market-ready platform.

Some contract manufacturers are even functioning as innovation hubs—helping retailers and founders test product iterations quickly before rolling them out at scale.

There is also growth in private label services, including product testing labs, packaging firms, and design studios that specialize in retail-owned brand creation.

Key Takeaways

The surge in private label consumer goods is more than a reaction to price sensitivity—it is a long-term shift that is reshaping how retailers build customer relationships and how consumers make purchasing decisions. As national brands lose their monopoly on trust and loyalty, the playing field has opened to innovative, efficient, and quality-focused alternatives.

Retailers are no longer just selling products—they are becoming product creators. They are rethinking the in-store experience, adjusting supply chains, and investing in brand-building initiatives typically reserved for legacy companies. For entrepreneurs, the trend presents both a challenge and an invitation: adapt to a changing landscape or find ways to contribute to it.

Private label is no longer a quiet corner of the shelf. It is a front-row player in the consumer goods space, and its influence is only growing.