Differentiation, loyalty, and growth: winning with private brands

Every year, dunnhumby’s Global Partner Summit (GPS) brings together senior executives from across the retail world to explore some of the critical issues facing the industry. In this new six-part series, we’re bringing you insights from some of GPS 2025’s most engaging discussions.

Our first look back at GPS comes from Siro Descrovi, dunnhumby’s Customer Strategy Consulting Manager. Read on to learn about the rapid evolution of private brands – and how forward-thinking retailers are using them to build loyalty and drive growth.

Private brands have come a long way. Once seen simply as a low-cost alternative to national brands, they’ve now become something much more significant, shaping the way that people shop and – in turn – how retailers compete.

Let’s start with the numbers. In the first half of 2024, private brands accounted for 23% of sales in the FMCG space¹. Western Europe leads the way here (39%), though Eastern Europe (15%) and North America (14%) appear to be catching up fast – and understandably so. Over the past few years, a perfect storm has gathered around private brands, with growth being driven by everything from hyperinflation and the pandemic to the rise of the discounters.

At this year’s Global Partner Summit, Sara Caggiati, Marketing Director of Coop Italia, and I looked at how private brands are continuing to evolve – and why they’ve come to have such great influence on customer loyalty and commercial success.

From value to values

The first thing to know here is that private brands aren’t just an “acceptable” substitute any more. In fact, for many shoppers, they actually add more to their lives.

Take one recent Ipsos study, for example, which asked respondents which issues were most important to them when shopping for grocery products. While private brand and non-private brand buyers were unanimous on the need for “low prices”, those in the former camp were significantly more likely to be on the lookout for goods that “make life easier” or “improve [their] mood”². For those who buy them, private brands make life simpler and more enjoyable.

Little wonder, then, that there are real commercial implications at play here too. Data from dunnhumby’s most recent Retailer Preference Index (RPI) studies across Latin America, North America and Europe show that with higher private label maturity of the market (identified via private label market share) we see higher and significant connections between customers satisfaction of retailers’ private brands and their share of wallet with them³. To put it simply, the more customers shop private label in a market, higher is the impact of private label investments with customer loyalty.

That message has clearly made it through. Once seen primarily as a category management issue, private brands have now become a boardroom priority. According to a study from Deloitte, nearly a third of retailers are considering acquisitions as a way to boost their private brand portfolios in 2025⁴. McKinsey, meanwhile, notes that retail CEOs see private label as their fourth most-pressing priority at present⁵. Private brands are now a strategic imperative.

Brand roles reimagined

For retailers, private brands aren’t just a way to drive growth – they’re a way to address weak spots, too.

As part of our investigation into private brands, we analysed almost 50 retail innovations from the past year⁶. In doing so, we found that different formats are leveraging private brands to strengthen their overall offering. Quality-led banners, for instance, are being used to prove value to customers; price-led stores, meanwhile, are focusing on broader issues like health, quality, and sustainability. Private brands innovation has been used to strengthen their weaknesses.

We have also observed how private brands and loyalty initiatives are connecting more. Some retailers (like the USA’s Giant Food and Chile’s SMU) are using their loyalty programmes to grow sales of their private brands, offering points and discounts. Others (such as Tesco in the UK and H-E-B in Mexico) have inverted that dynamic, using private brands to build uptake for their loyalty programmes. Tesco’s Clubcard Plus scheme gives shoppers 10% off selected private brand lines, as does H-E-B’s app.

For the world’s most forward-thinking retailers, private brands are no longer just products – they’re platforms for loyalty and differentiation. Coop Italia, for example, even used their brands for social impact in their latest initiative “Una spesa per dire basta”, using their private pasta brand on an initiative against violence on women, a value close to the heart of their customers.

What’s next? The next 12 months from the customer perspective

We know how retailers are using private brands to innovate, but what do customers want here? Our most recent Consumer Pulse study gives us at least some of the answers to that question – and the focus is firmly on food⁷.

The Pulse shows us that customers are increasingly looking for plant-based and meat-free options (34%), health and wellness focused foods (32%), and sustainable choices (26%). And with private brands now firmly embedded in many people’s shopping routines, it’s only logical to assume that they’ll be looking to those lines to deliver on their expectations here. What began as a search for affordability is rapidly becoming a values and lifestyle driven choice.

For retailers that want to deliver on those expectations – and use their private brands as a strategic asset – dunnhumby can help. Today, creating a private brand that truly resonates means being able to understand what customers value most, where gaps in the proposition are, and what role each brand in your portfolio plays. This is where dunnhumby’s world-leading data science and customer insight capabilities come in, helping retailers to analyse their private brands through the shopper lens.

Today, private brands are no longer just competing with national equivalents. Instead, they’re playing a huge role in helping to define what “great” now looks like when it comes to a retailer’s proposition and for retailers to show to their customers that they know them and are able to act on their needs. The retailers that win here will be those that use data and insight to elevate their private brands – to lift them from “good alternative” to first on the list.

Sources

•  ¹ IGD Research, Data prepared for PLMA by NielsenIQ
• ² Ipsos Omnibus Survey conducted July 8-9, 2022 among 1,006 U.S. adults
• ³ dunnhumby RPI Retail Preference Index across 10 markets with national representative sample and at least of 200 reviews per retailer. Europe (France, Germany, Italy, Spain, the Netherlands, United Kingdom), Latin America (Colombia, Brazil) North America (USA, Canada)
• ⁴ Deloitte, “2025 Retail Industry Outlook,” Jan 21, 2025 (from EMarketer report on Private Brand)
• ⁵ McKinsey & Company, EuroCommerce, and europanel - The State of Grocery Retail Europe 2025
• ⁶ dunnhumby analysis on 46 cases of innovation in the last year from Edge, IGD
• ⁷ dunnhumby Consumer Pulse Report July 2025