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Joining the Innovation Game: The Changed Nature of Private Label

By: Sara Mason
Posted: May 4, 2011, from the May 2011 issue of GCI Magazine.

In a market where value has become a key factor in any purchase, private label is enjoying an enviable position. According to the Private Label Manufacturers Association (PLMA), private label now holds its strongest competitive position ever. This is especially true in European markets. In fact, private label now accounts for one of every two products sold in the U.K. and Switzerland.

In a series of reports on consumer attitudes and behavior toward store brands, PLMA has found that shoppers bought more store brands at the onset of the recession, even in categories where they were once loyal to national brands. Since then, buyers have continued to purchase more and more store brands and expect to keep doing so even after the economy rebounds. Research revealed that the percentage of shoppers who identify themselves as frequent buyers of store brands is at an all-time high, more than 57%, and 76% of consumers across all income levels who changed their shopping habits during the recession say they will continue to buy more store brands even as the economy returns to normal.

But the underlying strength of private label has been building for more than two decades, and that is not recession related. Private label developers are upping the ante on product development and providing increasingly sophisticated products that cater to the growing demand of consumers. Whereas private label was once a “generic” product in bland packaging, today we can see a fourth generation of private label beauty products, where clients such as Boots and Sephora are seeking out innovation from contract manufacturers.

“Private label has now joined the innovation game,” said Karen Young, founder of The Young Group. “Not only are they surviving but they are thriving, because they are no longer the lowest common denominator.”