Private label has moved well beyond its historical role as a low-cost alternative to branded goods. With store-brand sales reaching record levels in 2025, the supermarket industry is witnessing a structural rebalancing of power — away from multinational brands and towards retailers themselves. What was once considered a defensive strategy during economic downturns has now become a long-term growth engine, reshaping margins, supplier relationships and consumer loyalty.
The latest data confirming private-label sales at unprecedented levels does not simply reflect inflationary pressure or cautious consumers. It signals a deeper shift in how shoppers perceive value, quality and trust in the supermarket environment.
From “Cheaper Option” to Strategic Asset
Historically, private label thrived during recessions and stagnated when consumer confidence returned. That pattern has broken.
Retailers across the US and Europe report sustained private-label growth even as inflation moderates and wages stabilise. This suggests that consumers who traded down did not trade back up. Instead, they recalibrated expectations — and found that supermarket-owned brands often matched or exceeded national brands on quality, packaging and innovation.
For supermarket groups, private label has become a strategic asset rather than a price weapon. Control over formulation, sourcing, pricing and shelf placement allows retailers to protect margins while offering competitive value. In an industry where net margins rarely exceed 2–3%, that control is decisive.
Margin Control in an Era of Volatility
One of the key drivers behind the private-label surge is margin stability.
Branded manufacturers have faced rising costs linked to energy, transport, labour and raw materials. Many responded with repeated price increases, shrinking pack sizes or both. Retailers, caught between supplier demands and price-sensitive consumers, increasingly turned to private label as a buffer.
Store brands allow supermarkets to:
-
Lock in long-term sourcing contracts
-
Reduce marketing and advertising costs
-
Avoid brand premium pricing
-
Respond faster to commodity price movements
In effect, private label has become a risk-management tool in an era of geopolitical uncertainty and supply-chain disruption.
Consumer Trust Has Shifted
Perhaps the most underestimated factor in private-label growth is trust.
Over the past decade, supermarkets have invested heavily in quality assurance, traceability and transparency. Shoppers now associate the retailer’s name on the pack with accountability. If something goes wrong, they know exactly who is responsible.
In contrast, many global brands have become distant, opaque and heavily corporate. Marketing messages often feel disconnected from everyday realities, particularly during periods of high inflation.
As a result, consumers increasingly trust the retailer they shop with weekly more than a brand they see advertised on television.
Premium Private Label: The Quiet Revolution
One of the most important developments highlighted by industry analysts is the rise of premium private label.
Retailers are no longer limiting store brands to entry-level price points. Instead, they are launching:
-
Organic and free-from ranges
-
Gourmet and chef-inspired lines
-
Regionally sourced and artisanal-style products
-
Health-focused and functional foods
In many cases, these ranges outperform branded equivalents in both quality perception and repeat purchase rates. For middle- and upper-income consumers, premium private label offers indulgence without brand inflation.
This strategy also allows retailers to segment their customer base internally, capturing value at multiple price points without relying on external brands.
The Brand Response: A Strategic Crossroads
For branded manufacturers, the private-label surge presents an existential challenge.
Traditional brand advantages — scale, marketing power and distribution reach — are no longer sufficient. Shelf space is increasingly contested, and retailers are prioritising own brands that deliver higher margins and greater strategic control.
Brands now face a choice:
-
Invest heavily in innovation and differentiation
-
Compete on price, risking margin erosion
-
Become private-label manufacturers themselves
An increasing number of manufacturers are quietly choosing the third option, producing private-label goods for retailers while maintaining a reduced branded presence. While this ensures volume, it weakens long-term brand equity and bargaining power.
International Perspectives: Europe vs the US
Private label penetration has historically been higher in Europe than in the United States, driven by strong discount chains and culturally ingrained value consciousness.
However, the gap is narrowing. US retailers, inspired by European models, are accelerating private-label development across categories traditionally dominated by brands, including health, beauty and ready meals.
European retailers, meanwhile, are refining private label through sustainability, ethical sourcing and local production — areas where regulation and consumer expectations are particularly strong.
For emerging markets and exporters, this trend creates both opportunity and risk. Private-label sourcing opens doors to large-volume contracts, but also places pressure on pricing and compliance standards.
Technology and Data: Fuel for Growth
The rise of private label is inseparable from advances in data analytics.
Retailers now use real-time sales data, loyalty insights and AI-driven demand forecasting to identify gaps in the market faster than brands can react. New private-label products can be developed, tested and scaled in months rather than years.
This agility gives supermarkets a decisive edge. They no longer wait for brands to innovate — they observe consumer behaviour and act directly.
As discussed at NRF 2026, agentic AI will further accelerate this process, enabling autonomous product optimisation and dynamic assortment decisions.
Risks and Limitations
Despite its success, private label is not without risk.
Over-expansion can lead to:
-
Assortment complexity
-
Cannibalisation of branded sales
-
Supplier dependency issues
-
Reputational damage if quality fails
Retailers must balance ambition with discipline. Private label works best when it complements — rather than completely replaces — strong brands that still drive traffic, innovation and category excitement.
A Permanent Shift, Not a Cycle
The record growth of private label is not a temporary reaction to inflation. It reflects a permanent shift in supermarket economics and consumer behaviour.
Retailers have rediscovered their power — not just as distributors, but as brand owners, innovators and value creators. For consumers, store brands now represent smart choice rather than compromise.
As the balance of power continues to tilt, one thing is clear: in the modern supermarket, the most important brand may no longer be on the shelf — but above the door.