How Private Label Brands Are Killing Name Brands
A quiet trend is reshaping retail shelves worldwide. Private label brands are capturing unprecedented market share from established brands,
A quiet trend is reshaping retail shelves worldwide. Private label brands are capturing unprecedented market share from established brands, fundamentally altering the balance of power between retailers and manufacturers. The transformation represents one of the most significant shifts in consumer goods economics in decades, with implications that extend far beyond individual product categories
The Numbers Don’t Lie: Market Share Massacre
The scale of private label growth represents one of the most significant shifts in modern retail history. Private label brands have surged from 17.7% market share in 2019 to over 21% by early 2025, with projected sales approaching $277 billion this year – nearly triple the growth rate of national brands.
In specific categories, the takeover is even more dramatic. Current data shows bakery products maintaining 56.7% private label penetration, while general merchandise categories like office supplies, home and garden, and tools continue expanding their private label shares beyond 40% in many markets.
The unit sales figures for 2025 tell an even starker story. Private label brands now command over 24% unit market share globally, meaning nearly one in four products sold carries a retailer’s name rather than a traditional manufacturer’s brand. Industry analysts project this could reach 27% by year-end as inflationary pressures continue driving consumer behavior.
The European Invasion Model
European retailers pioneered the private label revolution that’s now spreading globally. In Europe, private label penetration reached 38% in 2023, compared to only 19% in the United States. This gap represents both the scale of opportunity ahead and the existential threat facing American national brands.
European discounters like Aldi and Lidl didn’t just create cheaper alternatives – they invested heavily in quality and innovation. Spanish supermarket chain Mercadona operates 23 “co-innovation centers” that conducted 11,000 consumer testing sessions in 2023, leading to 500 product improvements and 314 new products. This level of investment rivals or exceeds what many national brands dedicate to R&D.
The European model proves that private label brands can achieve premium positioning. Leading European retailers now launch more new products per year than US players, demonstrating how store brands have evolved from generic knockoffs to innovation leaders.
The Amazon Data Advantage and UK Supermarket Domination
Amazon represents the most sophisticated threat to national brands, leveraging vast data resources to identify and target successful products. Amazon’s AmazonBasics brand grabbed nearly a third of the online battery market within just a few years, outselling both Energizer and Duracell on the platform.
The UK market demonstrates the full potential of private label dominance. British supermarkets have achieved some of the highest private label penetration rates globally, with major chains like Tesco, Sainsbury’s, and ASDA successfully challenging multinational giants like P&G and Unilever across multiple categories.
UK retailers succeeded by treating private label brands as genuine brands rather than generic alternatives. They invested in distinctive packaging, marketing campaigns, and quality standards that rival or exceed national brand offerings, proving that store brands can win on merit rather than just price.
The Margin Revolution
The economics driving the private label revolution are simple and devastating for national brands. While national brand gross margins typically hover between 25-35% for grocers, private label margins can exceed 40%. For retailers, this represents pure profit improvement without requiring additional floor space or marketing investment.
Target’s success illustrates this financial transformation. The company’s largest private label brand, Good & Gather, generated more than $3 billion in sales with around 60% of products priced under $5. Nearly 40% of all Target grocery trips now include at least one Good & Gather item, and customers who buy Good & Gather make four times the number of trips and spend eight times the amount.
The profit advantage extends beyond simple cost savings. Private label brands offer retailers complete control over pricing, quality, and positioning, allowing them to respond quickly to market trends and consumer preferences without negotiating with external brand manufacturers.
The Trust Transfer Phenomenon
Perhaps the most damaging trend for national brands is the fundamental shift in consumer trust. Traditional brand loyalty, built over decades through massive marketing investments, is being transferred to retailers themselves.
Research shows that more than half of consumers rank private label brands as a very important factor in their store choice. This “retailer halo effect” means that customers who trust Trader Joe’s overall experience become primed to embrace Trader Joe’s branded products across all categories.
Younger consumers accelerate this trend. Gen Z and Millennials, who grew up with highly designed retail brands, show less attachment to legacy consumer goods names. Their purchasing decisions weigh quality, price, packaging, and ethics over brand nostalgia, creating perfect conditions for private label adoption.
The Global Battlefield
The private label revolution continues expanding globally in 2025. Recent NIQ data shows private label brands maintaining 5.6% value sales growth worldwide, with emerging markets leading the charge. Middle East/Africa markets show continued acceleration at 35%+ growth, while Latin American expansion reaches 15% as local retailers invest heavily in store brand development.
As we enter 2025, half of global consumers say they’re buying more private label products than ever before. In Germany, 61% of consumers reported buying more private label brands, while markets like Saudi Arabia (59%), India (56%), and Colombia (56%) all exceeded the global average of 50%.
European markets continue leading private label adoption, with penetration rates exceeding 30% of total retail sales in many countries. This success provides a roadmap for private label expansion in developing markets worldwide.
The Manufacturing Secret
Current research shows that more than 70% of private label suppliers are national brand manufacturers themselves – companies like Kellanova producing store brand alternatives to their own Pop-Tarts, or Kraft-Heinz manufacturing private label products that compete directly with their branded offerings.
This cannibalization accelerated in 2025 as manufacturers face capacity pressures and margin squeezes. Nearly 30% of private label supply arrangements now occur in categories related to, but not identical to, the supplier’s national brand categories, allowing manufacturers to capture revenue streams while technically avoiding direct self-competition.
The Innovation Acceleration
Private label brands have shattered the old model of simply copying national brand formulas. Leading retailers now treat private label brands as genuine innovation platforms, developing products that national brands haven’t considered or can’t execute profitably.
Target exemplifies this approach with brands like Good & Gather Plant Based, which launched with internationally influenced flavors and clean ingredient formulations. Walmart’s Bettergoods brand attracts higher-income households and Gen Z shoppers seeking better quality in dairy, canned goods, and condiments.
These innovations often appear faster than national brand alternatives because private label brands face fewer corporate bureaucracy layers and can respond immediately to consumer trends identified through retailer data and customer feedback.
The National Brand Response Crisis
National brands face an unprecedented challenge requiring fundamental business model changes. Many are responding through premiumization strategies, investing heavily in luxury formulations and premium positioning that private label brands cannot easily replicate.
The “squeeze” on mid-market brands has become particularly severe. Brands positioned between premium and value face the greatest threat, as private label brands capture the value segment while premium brands maintain differentiation through innovation and brand equity.
Some national brands are fighting back through direct-to-consumer channels, subscription models, and exclusive retail partnerships. However, these responses often prove insufficient against the combined power of retailer data, manufacturing efficiency, and consumer price sensitivity that drives private label success.
The most successful national brand responses involve doubling down on innovation that private label brands cannot easily replicate – proprietary technology, complex supply chains, and brand storytelling with decades of equity. Those failing to adapt face gradual market share erosion and potential irrelevance in an increasingly retailer-controlled landscape.
The New Retail Reality
Private label brands are projected to capture an additional 7% of US dollar market share from national brands by 2030, reaching 24% of total sales across major categories. The global private label market is expected to exceed $2.27 trillion by 2033, representing the most significant restructuring of consumer goods industries in modern history.
For entrepreneurs and business leaders navigating 2025, this transformation creates both unprecedented opportunities and existential threats. Retailers with strong private label strategies continue capturing increasing market share and profitability, while national brands must innovate faster and more meaningfully than ever before to justify their premium pricing and shelf space.
The era of automatic brand loyalty has ended. Welcome to the retailer-controlled marketplace of 2025, where private label brands aren’t just competing with national brands – they’re systematically replacing them across entire categories.
Sources:
Dartmouth Tuck School of Business
