NIQ’s Lauren Fernandes on Private Label Growth and Brand Strategy

1. How are organizations adapting their product portfolios to address the increasing consumer acceptance of private labels, with 68% viewing them as good alternatives to branded products? 

While consumers are undoubtedly more accepting of private labels than ever before, recent NIQ sales data shows that the top 10 global brands are growing slightly faster than private labels. With that in mind, the conversation really shifts more to collaboration and coexistence, or the idea of working alongside fellow product players to drive overall category growth. There are a number of strategic efforts being adopted to help companies identify avenues for symbiotic growth. For instance, retailers and manufacturers are using advanced analytics to tailor their products finitely to emerging consumers' needs. They are also doubling down on the unique strengths their products bring to the table and refining pricing strategies to differentiate themselves in-market to avoid a race to the bottom through direct competition with other players.  

2. How are regional consumer preferences influencing how companies approach private label and branded product offerings, given the noted differences in markets like Egypt and South Korea?

There’s no one-size-fits-all strategy for success across all markets, and it’s extremely important for companies big and small to understand the country-level nuances that could tip the scales. A population that skews toward younger consumers, like in Egypt, may have less discretionary income than an older average population base, like in South Korea. Another consideration lies in comparing the relative maturity of private label growth and presence in a given market. Where we see markets in Europe lead the world in terms of consumer adoption and development of private label brand presence, markets like Egypt are only just beginning to see discount retail channels surge in influence, fueling private label product growth along the way. But amid the rise in value-seeking shopping behaviors, we must remember that “value” means different things to different shoppers. So, companies need to align their next moves to a granular and regularly updated read of what matters most to their target consumers.  

3. How are organizations leveraging the “brand halo effect” to boost the appeal of private labels situated near well-known brands? 

Retailers can harness the credibility of well-known brands to boost the appeal of their own private labels. The perception that a store brand can match the quality or perception of a premium name brand builds consumer trust and drives sales. There are many examples of retailer brands taking advantage of the “brand halo effect,” a few of which were executed to great success around the festive year-end period of 2024. In one instance, a popular UK discount retailer took inspiration from a popular soda pop brand by showcasing a holiday-themed beverage truck to surprise and delight local consumers. Harnessing the values of community building, festive spirit, and new product discovery, this discount grocer took product experience to new heights for UK consumers with its private label cola and giveaways promoting “middle aisle” offerings to prospective shoppers. If this retailer can achieve a comparable taste experience to consumers here, they could position themselves—and perhaps other products they carry—as trusted brand options consumers can turn to for their consumable needs. This is a great, festive example of a private label harnessing a known brand halo to drive interest in their product line. Additionally, leveraging the reputation of a well-known and trusted retailer itself can also come into play here, as 60% of global consumers trust store brands due to their retailer endorsement.

4. What innovative approaches are being implemented to co-promote private label and branded products effectively? 

Organizations are implementing several innovative approaches to co-promote private label and branded products effectively. This is where the rising world of retail media networks (RMNs) shines as a prime playground for collaborative, co-branded engagements with consumers. Companies need to maximize their reach across all the various channels through which consumers are seeking to buy products. RMNs provide brands with opportunities to showcase their products to highly targeted audiences—directly on the platforms where consumers make their purchasing decisions. In a time when collaboration between private labels and brands is so essential to growth, those that can harness their presence on RMNs stand to gain the most. For instance, RMNs can amplify overall growth potential for retailers, enable new data for precision targeting for manufacturers, and personalize shopping experiences for consumers. 

5. How are organizations preparing for potential shifts in consumer behavior that may further influence the balance between private label and branded product sales?

Collaboration between retailers and manufacturers will be key to weathering any challenges or shifts to consumer behavior that may lie ahead. Take, for example, a situation in which purchases of name brands unlock discounts or incentives toward private labels and vice versa. This type of mutual engagement encourages consumers to explore both product types, maximizes total category purchasing, and can enhance the appeal of both private labels and brands by mutual association.

In addition to co-branding strategies, organizations need to prepare to meet the expanding definition of “value” among their customers by continually adapting the assortment and product attributes featured on their packaging. In fact, the demand for more options exists for both private label and branded products. Six in 10 global respondents said they would buy more private label products if there were a larger variety available. Additionally, 54% of consumers around the world treat themselves by upgrading to premium brands, with Millennials (61%) and Gen Z (58%) leading the charge in selective splurging. Brands should adapt and home in on the combination of valued and desirable factors that are most likely to meet current shoppers' expectations.  

6. What long-term strategies could companies implement to ensure sustained growth and competitiveness in a market where both private labels and branded products are gaining traction?

Rather than pursuing avenues for direct competition, companies should emphasize collaboration and finding harmonious growth between private labels and branded products. Mutual success in this way will strengthen consumer choice, maximize overall category growth opportunities, and enhance shopper satisfaction in the selection and options at their disposal. 

For retailers, it will be essential to strengthen overall category traffic through prioritizing prominent placements of both name-brand and private label options, catering to a wide and diverse set of customers. Consumers must see and feel their needs being met through a store’s holistic assortment of retail-owned and brand-name offerings. For manufacturers, it will be essential to both justify brand worth to consumers and work collaboratively with retailers’ interests in mind.  It’s important to be clear and confident in one’s unique value proposition, owning price positioning and avoiding undervaluing price through excessive promotions. It’s also important to be a true partner in the co-creation of shopper journeys, infusing a name brand into cross-promotions that support private labels as well, but that couldn’t be replicated by private labels alone.   

It’s become a wild world for private labels and brands to navigate. But there’s never been a better time for organizations to rally together to find ways to grow the overall size of prize with consumers. Instead of struggling alone to survive, work collectively to find harmony on and beyond the shelf.