Retail Marketing and Branding: A Definitive Guide to Maximizing ROI, 2nd Edition

CHAPTER 6

PRIVATE LABEL BRANDING

Gabriele Bavagnoli, Lars Köster

Private labels used to be positioned at the bottom of both the shelf and the price range, often as quick fixes to accommodate dips in consumer spending during periods of recession. Those days are gone. Private label brands are here to stay, and they have conquered new territories beyond “no frills.” The latest generation of private labels is, in fact, venturing into premium segments as well as consumer niches. While this promises higher returns and greater opportunity for differentiation, it also means that retailers find themselves competing head to head with brand-name manufacturers. To tackle this twofold challenge, this chapter presents a simple, yet systematic framework that helps retailers to answer three basic questions.

• What is the most promising private label branding strategy?
• Which categories have the highest potential?
• Which capabilities do retailers need to deliver on their private label strategy?

Private labels are here to stay: their share is growing across countries, sales channels and product categories

The share of private labels, or PL, is growing in most major European markets and in the US. With a PL share of more than 42 percent, the UK has the most developed PL market in Europe, followed by Spain with 38 percent (Exhibit 6.1). Spain in particular has seen spectacular PL growth in previous years (e.g. +13.3 pp share gain between 2007 and 2010), whereas in Germany PL have stagnated in 2008/09 ...