Retailers make private label brands for a variety of reasons, including to boost profitability and sometimes as a negotiating tool against brands. The low point of private label came during the 1970s, Durham said, when stores seeking to cut costs and rolled out generics with basic white backgrounds and black letters identifying the product - beer, soap, cola, beans and other staples.
A store that didn't carry major labels would likely get crushed, which gave manufacturers immense leverage.Īdditionally, many store brands were also considered dull, cheap knockoffs of national brands. Most customers were fiercely loyal to specific brands, not retailers. These manufacturers flooded the airwaves and newspapers with advertisements extolling the advantages of their products. Heinz, Campbell Soup and Johnson & Johnson had power over stores. These private labels were the exception, however.įor most of the 20th century, national brands such as Jell-O, H.J. Its Kenmore line, which started as a sewing machine brand in 1913 before branching into vacuums and other home appliances, became the leading home appliance brand in the United States. A few years later, Sears launched its first Craftsman wrench, according to Durham. In 1925, Sears created the Allstate brand for car tires. retailer was more successful developing its own brands than Sears, Roebuck. Montgomery Ward developed its own line of aspirin in wooden containers, while the Great Atlantic & Pacific Tea sold branded spices with the slogan "Take the Grandmother's Advice, Use A&P Spices." A&P later developed Eight O'Clock Coffee, one of the most famous private labels of the period. Customers could bring back the jugs for refills, according to Christopher Durham, the president of the Velocity Institute, a trade association for private brands. Macy's sold stoneware whiskey jugs under its own name. Store labels have been around since the early days of retail and the emergence of consumer brands in the 19th century. So does Henkel, the manufacturer of Purex and Dial. Georgia-Pacific, the maker of Brawny and Dixie, also produces store brands. Kimberly-Clark, the maker of Huggies diapers, produces Kirkland Signature diapers for Costco and Duracell produces Kirkland Signature batteries, Costco executives have said. "Manufacturers don't want it to be known because it undermines the power of their own brands."īut there are some exceptions. Steenkamp, a marketing professor at the University of North Carolina who studies private labels and branding. "Most manufacturers aren't open about it," said Jan-Benedict E.M. Other brand manufacturers will produce private labels as an incentive for retailers, hoping they'll be rewarded with better shelf space and placement for their own national labels. To generate additional profit, some will use that extra capacity to make private labels. In the late 1990s more than half of brand manufacturers were estimated to make private goods as well.Īlthough store brands ostensibly compete with manufacturers' national brands, manufacturers often have excess capacity on their production lines.
Many leading national brand manufacturers create private labels for multiple retailers. And manufacturers, likewise, have little incentive to reveal that they're creating similar products to their name brands under a different label sold on the cheap. Retailers aren't typically forthcoming about the companies that make their brands.
Store brands can be anywhere from 10% to 50% cheaper.īut the origins of store brands remain largely secretive. grocery industry, according to IRI.Īs prices surge, store brands - also known as private labels, white labels or generic brands - have become an even more attractive option for inflation-fatigued shoppers who are looking to switch from pricier name brands. They have become forces in their own right and make up around 21% of sales in the $1.7 trillion U.S. Store brands have never been more popular.
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