With inflation-weary consumers increasingly looking for value-priced brands that also feature upscale benefits, private store brands are having a real moment at retail.

Target’s Good & Gather store brand has risen to become its top-selling private brand since its launch in 2019. Offering 2,500  products, more than half of which are priced under $5, the Good & Gather brand generated nearly $4 billion in sales for Target last year. No surprise that the brand has been slated for continued expansion.

At Costco, its signature store brand Kirkland represented a whopping $56 billion in revenue last year. Fun fact: If Kirkland were a standalone company, it would be larger than both Nike and Coca-Cola.

The list of retailers with private label products goes on and on, which is why U.S. sales in the category hit a record $271 billion in 2024. And they show no signs of slowing down.

What’s behind the broad and growing appeal for private label products? It’s a mix of a lot of value and a little magic.

Value
In a period where consumers remain uneasy about household spending and the future of the U.S. economy, consumers are attracted to products that are easy on the pocketbook. In  the food and beverage category —products American households can’t live without — a lower price point appeals to shoppers and is an effective way for retailers to gain market share among consumers.

Upscale image
This is a bit of the “magic” we referenced earlier. In-store, private-label brands tap into shoppers’ desire for “premiumization” — products produced with high-quality ingredients, beautiful packaging and other upscale attributes such as being organic or locally sourced.

These private label products are also typically priced less than traditional brands. So, a consumer is standing in the coffee aisle at Target, choosing a bag of their morning cup of Joe. Good & Gather’s packaging is eye-catching, their ingredients seem upscale (Coconut flavor? Fancy!) and the price point is a few dollars below other popular brands. Instead of paying $10 for a pound of regular old coffee, they’re paying $6 for a pound of the upscale Good & Gather brand, a pretty simple choice to make.

Enhanced brand differentiation
Target is the only retailer to carry Good & Gather products. Customers can’t find the brand at other grocery stores, which creates an incentive for them to come back and expand their brand loyalty. This loyalty spills into other areas of the store itself. If a customer has, for example, enjoyed Good & Gather coffee, why wouldn’t they try Good & Gather half-and-half to splash into it? They begin to associate the label with quality, value and taste, and when they spot it in the frozen dinner or baby food aisles, they just might give it a try.

The “in on the secret” factor
There’s always been a sense of mystery around private label brands. Who really produces them? The truth is that Kimberly-Clark, the manufacturer of Huggies diapers, also produces Costco’s Signature Kirkland diapers. Kirkland batteries? Reportedly, they’re made by Duracell. Their coffee? If it tastes like Starbucks…

This creates a buzz, because not only are private label brands moving upscale, they are also an affordable alternative to major brands. If consumers can buy essentially the same diapers under the Kirkland brand that they’d pay a premium for with Huggies, that’s a huge value and an insider secret.

Private labeling is a strategy that retailers are getting behind. It creates excitement, insider status, value for shoppers and consumer loyalty. Is it right for you? What will it do for your specialty products?

Is it right for you? To learn more, reach out to us at Wilks Group.