The six drivers of private brand innovation

Retailers are winning with private label. Once considered by many shoppers as little more than a low-cost alternative, private label is now driving sales, engagement, and loyalty in equal measure.

As shown in our recent private brands report, a revolution in retail has been quietly taking place across Europe due to the cost-of-living crisis. Private label sales have surged in recent years, with own-brand lines enjoying a compound annual growth rate of (CAGR) of 3.21% from 2018 to 2022.

Volume sales aren’t the only factor at play here, however. Customers have also started to put much greater emphasis on private label when it comes to their shopping preferences, too. In the results of our Retailer Preference Index (RPI) studies for France, Italy, and Spain, we’ve seen private label become a significant driver of choice.

In France, for example, private label goods have a major impact on customers’ perceptions of value for money. Simply, stores that have a good own-brand offering are seen to deliver better value overall. And in Italy and Spain, private label is more important still; shoppers say the price, quality, and range of a retailer’s own-brand goods is one of the main things they consider when choosing where to shop.

This line of thinking has real world impact, too. Those retailers with the best reputation for private label in Italy – Coop, Esselunga, and Conad – sit at the top of overall RPI rankings. The same is true in Spain, where Lidl, Carrefour, and Mercadona lead the way both in private label and overall performance.

With our RPI rankings gauged partly on customer spend, it’s clear private label can now have a significant impact on a banner’s fortunes.


From private label to private brand: an evolution in thinking

The market for private label goods is evolving. To maximise sales, engagement, and loyalty around these goods, however, retailers need to think of them in terms of a private brand, not just a label. That means they must give them distinct brand attributes and support them with a cohesive and strategic marketing effort.

There are many examples of retailers that have benefitted from a private brand mindset, with North American retailer H-E-B being a particular stand out. H-E-B retained the #1 position from Amazon in our annual grocery RPI ranking in 2023, not least for its private brand offering. Among its peers, H-E-B ranked highly for customer perceptions private/store brands they love and came in top for private/store brands seen to save them money.

Again, that has commercial impact: the top quartile retailers for “private brands that customers love” have an average five-year sales CAGR of 8.6%, compared to 4.7%, 2.8%, and 1.3% for the second, third, and fourth quartile private brand retailers respectively.

So, what does it take to transition from a private label to a private brand? At their core, retailers must rethink their approach to private label. Crucially, customers needs must be at the centre of everything—from buying to marketing—to make the transition successful and drive innovation.

Across our research into this area, we have identified six drivers for private brand innovation, each of which tackles issues that customers consider essential and helps retailers break away from the traditional private label norms.

  1. Value
    Unsurprisingly given the cost-of-living crisis, value is one of the most important issues for shoppers. A private brand is a great opportunity to strengthen a retailer’s value message. Kroger’s Smart Way economy brand is an excellent example of this approach in practice, bringing 16 legacy brands together into a single, easy-to-find range.
  2. Health
    Health remains a key issue for consumers and some retailers have created healthy private brand options through vegetarian, vegan, natural, and organic lines. Examples of retailer success stories include Lidl’s vegan and organic private brand lines, Marks & Spencer’s Plant Kitchen range, and Penny’s in-house Naturgut line.
  3. Sustainability
    Interest in sustainability is increasing, and many shoppers now consider environmental and social impact when deciding where to shop. From a packaging perspective, retailers should consider using recycled materials and smart refills for their private brands. Mercadona led a significant packaging review across its private brands after setting its sustainability goals.
  4. Quality
    There was a time when low cost was invariably associated with low quality. That is no longer the case. Retailers can successfully break that connection and raise the image of their private brand, creating new ones more focused on the quality. In the UK, Tesco’s Finest line proves the point. It features restaurant-quality meal boxes that include detailed ingredients and recipe cards.
  5. Category Extension
    Private brand has long focused on food. Yet, consumers are keenly looking for value, health, sustainability, and quality in non-food products. Increasingly, retailers are extending their private brands to outlying lines, homewares, and fashion. Coop Italia has grasped the category extension opportunity, launching categories such as baby food, pet food, and alcoholic beverages.
  6. Brand Activation
    Retail media is a great way to promote private brands, with seasonal activations critical. In Europe, Lidl uses fixtures and self-standing units in stores to boost private brand activation below the line. In Canada, meanwhile, Loblaw showcases its private brand products twice a year, including during the holiday trading season.


Based on current trends—economic as much as retail—there is still plenty of opportunity for private brand development. Three recommendations in particular can increase the appeal of any retailer’s private brand:

  1. Establish the role of each of your private brands.
  2. Build a dedicated brand marketing team.
  3. Execute the brand strategy across the “7Ps” – people, product, price, promotion, place, packaging, and positioning.


For more information on creating a private brand strategy of your own, please read our full study here.

The latest insights from our experts around the world

Disaggregating Forecasts
AI's Regulatory Crossroads: Innovation vs. Control
Why you need a demand model
customer first data science analytics & machine learning services
Ready to get started?

Speak to a member of our team for more information