A private label, also called a private brand or private-label brand, is a
brand
A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...
owned by a company, offered by that company alongside and competing with brands from other businesses.
A private-label brand is almost always offered exclusively by the firm that owns it, although in rare instances the brand is
licensed
A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).
A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
to another company. The brand usually consists of
products
Product may refer to:
Business
* Product (business), an item that serves as a solution to a specific consumer problem.
* Product (project management), a deliverable or set of deliverables that contribute to a business solution
Mathematics
* Produ ...
, but can also encompass
services
Service may refer to:
Activities
* Administrative service, a required part of the workload of university faculty
* Civil service, the body of employees of a government
* Community service, volunteer service for the benefit of a community or a pu ...
.
Private labels typically involve
outsourcing
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...
, in which company A hires company B to provide them with a product or service, which is then offered under a brand name of company A. This is how the term ''private label'' is usually defined. However, it is also possible that company A
owns company B.
For example, in 2018,
The Kroger Company
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cinc ...
had 60% of its private brands produced by
third parties; the remaining 40% was manufactured internally by
plants owned by Kroger.
Private-label producers are usually anonymous, sometimes
by contract. In other cases, they are allowed to mention their role publicly.
The term ''private label'' originated in
retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
,
but has since been used in other industries as well. Probably the best known private-label brands are store brands, which are managed by
supermarket
A supermarket is a self-service Retail#Types of outlets, shop offering a wide variety of food, Drink, beverages and Household goods, household products, organized into sections. This kind of store is larger and has a wider selection than earli ...
and
grocery store
A grocery store ( AE), grocery shop ( BE) or simply grocery is a store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, a ...
chains. Examples are
Simple Truth by Kroger and
Great Value
Walmart, Walmart, Inc., like many large retail and grocery chain stores, offers private brands (also called house brands or store brands), which are lower-priced alternatives to brand, name brand products.
Apparel brands
Major brands
In March 2 ...
by
Wal-Mart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
.
Store brands compete with
national brand
A national brand is the brand of a product that is distributed nationally under a brand name owned by a producer or distributor as opposed to local brands distributed only in some areas of a country and to private labels that carry a brand owned b ...
s or name brands, like
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
or
Lay's
Lay's is a brand of potato chips, as well as the name of the company that founded the chip brand in the United States. The brand is also referred to as Frito-Lay because both Lay's and Fritos are brands sold by the Frito-Lay company, which has b ...
.
The term ''private-label product'' overlaps with the term ''
white-label product
A white-label product is a product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it.
The name derives from the image of a white label on the packaging that ca ...
''. They are sometimes used interchangeably, but they don't mean the same thing. A private-label product is created exclusively for a client, who sets specific demands on what the product or service must contain. A white-label product is not created exclusively for one company, and although white-label manufacturers might offer customizations to their products, these are usually limited. The specifications of a private-label product are set out by the client, whereas a white-label product is more generic and already designed.
Store brands
![Private label products in Swedish Hemköp store](https://upload.wikimedia.org/wikipedia/commons/3/3b/Private_label_products_in_Swedish_Hemk%C3%B6p_store.jpg)
In the
supermarket
A supermarket is a self-service Retail#Types of outlets, shop offering a wide variety of food, Drink, beverages and Household goods, household products, organized into sections. This kind of store is larger and has a wider selection than earli ...
and
grocery store
A grocery store ( AE), grocery shop ( BE) or simply grocery is a store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, a ...
industry, the term ''private label/brand'' is almost always used, even if the same product is sold non-exclusively to multiple
retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
ers with different packaging (''white label/brand'').
A store brand, also called a house brand or, in
British English
British English (BrE, en-GB, or BE) is, according to Lexico, Oxford Dictionaries, "English language, English as used in Great Britain, as distinct from that used elsewhere". More narrowly, it can refer specifically to the English language in ...
, an own brand, is a private-label brand
trademark
A trademark (also written trade mark or trade-mark) is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from others ...
ed and managed by a retailer.
This brand is almost always offered exclusively at the
chain store
A chain store or retail chain is a retail outlet in which several locations share a brand, central management and standardized business practices. They have come to dominate the retail and dining markets and many service categories, in many pa ...
that owns it, although in rare instances the brand is
licensed
A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).
A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
to another company. Examples of store brands are
Simple Truth by
Kroger
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cincin ...
,
Great Value
Walmart, Walmart, Inc., like many large retail and grocery chain stores, offers private brands (also called house brands or store brands), which are lower-priced alternatives to brand, name brand products.
Apparel brands
Major brands
In March 2 ...
by
Wal-Mart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
, and Specially Selected by
Aldi
Aldi (stylised as ALDI) is the common company brand name of two German multinational family-owned discount supermarket chains operating over 10,000 stores in 20 countries. The chain was founded by brothers Karl and Theo Albrecht in 1946, when t ...
.
Store brands can also be eponymous, or named after the store, such as Joe's O's cereal by
Trader Joe's
Trader Joe's is an American chain of grocery stores headquartered in Monrovia, California. The chain has over 569 stores across the United States.
The first Trader Joe's store was opened in 1967 by founder Joe Coulombe in Pasadena, California ...
. Store brands compete with
national brand
A national brand is the brand of a product that is distributed nationally under a brand name owned by a producer or distributor as opposed to local brands distributed only in some areas of a country and to private labels that carry a brand owned b ...
s, also called premium brands or name brands,
with its items sometimes being called brand-name products. Examples are
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
,
Lay's
Lay's is a brand of potato chips, as well as the name of the company that founded the chip brand in the United States. The brand is also referred to as Frito-Lay because both Lay's and Fritos are brands sold by the Frito-Lay company, which has b ...
, and
Kellogg's
The Kellogg Company, doing business as Kellogg's, is an American multinational food manufacturing company headquartered in Battle Creek, Michigan, United States. Kellogg's produces cereal and convenience foods, including crackers and toaste ...
. The general appeal of store-brand products is that they are usually offered at a lower price than their name-brand counterparts.
Most private-label store brand products are manufactured by
third parties, but some are made by companies owned by the retailer.
[: "The label owner may manufacture his own private label products or have them manufactured and packaged to certain specifications by outside sources, including imports."] For instance, a vice-president of
The Kroger Company
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cinc ...
stated in 2018 that approximately 60% of their private-label products are
outsourced. The remaining 40% is manufactured internally: in 2018, Kroger
owned 38 plants, including 19 dairy farms, 10 bakeries, and 2 butcheries, strategically spread across the US.
Similarly,
Safeway Inc.
Safeway is an American supermarket chain founded by Marion Barton Skaggs in April 1915 in American Falls, Idaho. The chain provides grocery items, food and general merchandise and features a variety of specialty departments, such as bakery, d ...
owned 32 plants as of 2012. Most retailers prefer to keep the identity of their suppliers private, and accordingly have
non-disclosure clause
A non-disclosure agreement (NDA) is a legal contract or part of a contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish ...
s in their contracts, making it difficult to determine the producer of a private-label product.
In a few cases though, the manufacturer is allowed to mention it publicly, is revealed through a
product recall
A product recall is a request from a manufacturer to return a product after the discovery of safety issues or product defects that might endanger the consumer or put the maker/seller at risk of legal action.
The recall is an effort to limit ruin ...
, or in rare instances, is stated on the product itself. For example, the bags of
Kirkland Signature
Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only big-box retail stores (warehouse club). As of 2022, Costco i ...
coffee by
Costco
Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only big-box retail stores (warehouse club). As of 2022, Costco i ...
feature the text "Custom roasted by
Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 c ...
".
Private-label brands emerged in the 19th century.
[.] Until the early 20th century, their general focus was on delivering quality at a price below that of the national brands. In the first half of the 20th century, the quality of private brands diluted and their standards dropped. In their competitive struggle against national brands, low prices were considered more important than quality. In the second half of the century, this trend gradually reversed. As quality and visual appearance improved, private labels rose to prominence in the 1970s and 80s. By the 1990s, they were increasingly seen as a threat to the established brands. Also, from the 90s onwards, a premiumization of store brands began to occur, giving rise to more expensive premium private labels.
Generic brand
Generic brands of consumer products (often supermarket goods) are distinguished by the absence of a brand name, instead identified solely by product characteristics and identified by plain, usually black-and-white packaging. Generally they imitat ...
s are often associated with store brands. Generic products were first introduced in the United States in 1977,
quickly winning market share from national and private-label brands. A 1981 academic article described them as products "without brand names, in very plain packages with simple labels and usually sold at prices below both the national and private brands with which they compete".
Packages of generic products often feature only the name of the type of product it contains, e.g. "Cola" or "Batteries".
Nowadays, the terms ''generic brand'' and ''store brand'' are sometimes used interchangeably.
The term ''generic'' can be used as a pejorative toward store brand items that are perceived as bland or cheap.
A private-label brand is often produced by the same company that manufactures the national brand of that product. Different brands target different consumers. For instance,
Kimberly-Clark
Kimberly-Clark Corporation is an American multinational personal care corporation that produces mostly paper-based consumer products. The company manufactures sanitary paper products and surgical & medical instruments. Kimberly-Clark brand n ...
makes
Huggies
Huggies is an American company that sells disposable diapers and baby wipes that is marketed by Kimberly-Clark. Huggies were first test marketed in 1968, then introduced to the public in 1978 to replace the Kimbies brand.
Products
Huggies carr ...
diapers, but also produces a Walmart budget version.
Allegedly, some store-brand items are identical to their name-brand counterparts: they are said to be literally the same product, except for the packaging and price.
In other cases, a manufacturer can have multiple formulas for one product, creating a private-label version using one method and the national-label version using another. In 2007,
a mass-recall of contaminated pet food products brought to light that more than 100 different brands of pet food, both premium- and private-label, were in fact produced by a single company:
Menu Foods Inc. in Ontario, Canada. The ingredients and recipes they used differed substantially among brands, depending on what their clients specified.
In fast food
Fast food restaurant chains sell their products under their private-label brands. Their core items are usually fries and meat-based items, but they might also offer brownies, muffins, cookies, and salads. These private-brand products are offered alongside national-brand products, such as
soft drinks
A soft drink (see § Terminology for other names) is a drink that usually contains water (often carbonated), a sweetener, and a natural and/or artificial flavoring. The sweetener may be a sugar, high-fructose corn syrup, fruit juice, a s ...
by
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
or
Pepsi
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.
History
Pepsi was ...
, and ice creams
co-branded
Co-branding is a marketing strategy that involves strategic alliance of multiple brand names jointly used on a single product or service.
Co-branding is an arrangement that associates a single product or service with more than one brand name, o ...
with
Oreo
Oreo () (stylized as OREO) is a brand of sandwich cookie consisting of two biscuits or cookie pieces with a sweet creme filling. It was introduced by Nabisco on March 6, 1912, and through a series of corporate acquisitions, mergers and split ...
or
M&M's
M&M's (stylized as m&m's) are multi-colored button-shaped chocolates, each of which has the letter "m" printed in lower case in white on one side, consisting of a candy shell surrounding a filling which varies depending upon the variety of M&M ...
.
In finances
A private-label credit card (PLCC) is a type of credit card that can only be used at a specific company or chain of companies. Since this is virtually always a retail business, they are also called store cards.
The retailer partners with a bank that issues the cards, funds the credits, and collects payments from customers. The cards themselves are branded with the logo of the store, but not the bank. Examples are the
Target
Target may refer to:
Physical items
* Shooting target, used in marksmanship training and various shooting sports
** Bullseye (target), the goal one for which one aims in many of these sports
** Aiming point, in field artillery, fi ...
Debit RedCard (issued by
TD Bank, N.A.
TD Bank, N.A. is an American National Association (Banking)#United States, national bank and the United States subsidiary of the multinational TD Bank Group (Canada), TD Bank Group. It operates primarily across the East Coast of the United State ...
), the
Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
Reward Card (issued by
Capital One
Capital One Financial Corporation is an American bank holding company specializing in credit cards, auto loans, banking, and savings accounts, headquartered in McLean, Virginia with operations primarily in the United States. It is on the list o ...
), and the
Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technology c ...
Store Card (issued by
Synchrony Bank). PLCCs also do not carry the logo of the
payment network
A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchange possible.Biago ...
(e.g.
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
or
Mastercard), but they do use that network for transactions.
Private-label store credit cards are sometimes compared to but not the same as
co-branded credit cards
Co-branding is a marketing strategy that involves strategic alliance of multiple brand names jointly used on a single product or service.
Co-branding is an arrangement that associates a single Product (business), product or Service (economics), ...
. These cards usually feature the logo of the payment network, and sometimes the logo of the bank. Unlike PLCCs, co-branded cards work like 'normal' credit cards, usable at any place where that type of card is accepted. For instance, warehouse chain
Nordstrom
Nordstrom, Inc. () is an American luxury department store chain headquartered in Seattle, Washington, and founded by John W. Nordstrom and Carl F. Wallin in 1901. The original Wallin & Nordstrom store operated exclusively as a shoe store, and ...
offers a Nordstrom Store Card (private-label) and a Nordstrom Credit Card (co-branded), both issued by
TD Bank, N.A.
TD Bank, N.A. is an American National Association (Banking)#United States, national bank and the United States subsidiary of the multinational TD Bank Group (Canada), TD Bank Group. It operates primarily across the East Coast of the United State ...
and using Visa's network.
In video games
In video games, a
ghost developer
Video game development (or gamedev) is the software development, process of developing a video game. The effort is undertaken by a video game developer, developer, ranging from a single person to an international team dispersed across the globe. ...
is a company that co-developed a game, but is not credited for it.
They are hired by
publishers
Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for free. Traditionally, the term refers to the creation and distribution of printed works, such as books, newsp ...
, other developers, or companies outside the gaming industry. These businesses prefer to keep this
outsourcing
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...
hidden from the public to protect their
brand equity
Brand equity, in marketing, is the worth of a brand in and of itself – i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the prod ...
, not wanting consumers or investors to know that they rely on external help. A 2015 ''
Polygon
In geometry, a polygon () is a plane figure that is described by a finite number of straight line segments connected to form a closed ''polygonal chain'' (or ''polygonal circuit''). The bounded plane region, the bounding circuit, or the two toge ...
'' article stated that the practice has existed since the early days of the gaming industry, and that it was sometimes referred to as "white-label development". In almost all cases, this is probably wrong: the correct term would be ''private-label development''. The amount of ghost development that game companies do varies greatly. For some, it is a vital part of their business. Other, mostly bigger studios, might only take on small private-label jobs to fill in gaps between projects.
An example of a well-known ghost developer is
Tose
() (also called Tose Software) is a Japanese video game development company based in Kyoto. It is mostly known for developing Nintendo's Game & Watch ports and remakes#Game & Watch Gallery series, ''Game & Watch Gallery'' series, various ''Drago ...
.
See also
*
Contract packager
A contract packager, or copacker, is a company that packages products for their clients. The packaging and labeling services can be used for many types of products including foods, pharmaceuticals, household products, and industrial products.
Fu ...
*
Rebadging
In the automotive industry, rebadging is a form of market segmentation used by automobile manufacturers around the world. To allow for product differentiation without designing or engineering a new model or brand (at high cost or risk), a manu ...
*
White-label product
A white-label product is a product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it.
The name derives from the image of a white label on the packaging that ca ...
References
External links
Private Label Manufacturers Association*
PLMA Trade ShowStoreBrands.com
{{Authority control
Brand management