From Price Play to Growth Strategy: The Rise of Private Labels

Private labels used to be seen mostly as the bargain-bin versions of national brands. That perception has begun to shift and in recent years has reached a tipping point.

Sales of store brands increased $9 billion to a record $271 billion in 2024 compared to 2023, according to the Private Label Manufacturers Association (PLMA). This represents a 3.9 percent rise in sales across all outlets over the course of 2024 vs. the same period in 2023, while national brands grew just 1 percent in sales. Over the past four years, annual store brand sales have climbed by over $51 billion, a 23.6 percent gain.

This steady growth shows that what began as a response to inflation has evolved into a lasting structural shift in how consumers shop and how retailers compete. This shift also has significant implications for manufacturers, who must adapt production planning, sourcing, and innovation pipelines to keep pace with retailer-driven demand.

Younger generations are accelerating this shift. Gen Z and millennials, in particular, see private labels as authentic and trustworthy, often linked to values like sustainability, transparency and quality. According to PLMA survey data, more than half of Gen Z shoppers prefer private labels in categories such as snacks, beverages, and wellness products. For them, private labels aren’t just cheaper alternatives but credible brands that can feel more relevant than traditional national players.

Both groups expect more than low prices; they want brands that reflect their values, and they reward retailers that deliver on sustainability, innovation, and digital engagement. Private labels that meet these expectations are well positioned to capture loyalty early and keep it for the long term.

Balancing the Brand Equation

The rise of private labels presents a strategic challenge for retailers: how to grow their own brands while maintaining critical partnerships with national manufacturers. This balance plays out across assortment strategy, shelf allocation, and promotional investment.

The most successful retailers are taking a nuanced approach, expanding private labels in categories where differentiation and loyalty matter most, while continuing to rely on national brands to anchor choice and variety. Retailers that can shift dynamically between these levers will be better positioned to capture customer loyalty without eroding supplier relationships.

Private labels also give retailers greater control over margins and assortment differentiation. By owning the brand, retailers can adjust price points, introduce premium or value tiers, and tailor offerings to local markets in ways national manufacturers may not. For manufacturers, this creates additional complexity: they must adapt production lines to handle a broader mix of products while still maintaining efficiency.

Building Loyalty Beyond Price

The ultimate test for private labels is whether they can evolve from price-based substitutes into long-term loyalty drivers. That requires consistency and trust. Stockouts or uneven quality can undo years of investment in private brand credibility.

Retailers that approach private labels with the same rigor as national brands, applying disciplined category management, ensuring reliable availability, and investing in brand-building are seeing them transform into true destination brands. These programs are no longer just margin protectors but engines of growth and differentiation.

Shoppers who switch to private labels for value will only stick if the experience is consistent. That means retailers must strengthen supply chain coordination and quality control to ensure products are on shelves and meet expectations every time. For manufacturers, this reliability depends on agile production planning, resilient sourcing, and close collaboration with retail partners.

Where Private Labels Go From Here

Private labels’ trajectory suggests that their role will only expand in the coming years. The retailers that succeed will be those that recognize that private labels aren’t a side bet but a central pillar of brand strategy. By redefining value, balancing national brand relationships, and delivering consistency at scale, they can turn private labels into one of their most powerful levers for growth.

Looking forward, innovation will be key. Expect to see private labels expand into premium and niche categories, with more emphasis on sustainability-driven products and digital-first brand building. Manufacturers will play a critical role here, from sourcing responsibly to managing shorter production runs and supporting retailers’ efforts to differentiate through exclusive product development.

Companies that treat private labels as evolving, customer-centric brands rather than static low-cost alternatives will unlock not just short-term sales but lasting loyalty.

Dr. Madhav Durbha is group vice president, CPG and manufacturing, RELEX Solutions, a native AI platform for end-to-end planning.