Retail and consumer goods
Private label (own brand)
Products sold under the retailer's own brand rather than a manufacturer's.
Last reviewedWhat does Private label (own brand) mean?
Private label products carry the retailer's own brand, such as Kirkland Signature at Costco, but are usually made by a contract manufacturer. They are usually priced below the leading brand, yet often give the retailer a higher percentage margin, because there is no brand marketing to pay for. Example: a branded pasta sells for 2.00 and gives the retailer 0.50 of margin (25 percent); the own-brand pasta sells for 1.60 and gives 0.56 (35 percent). Private label is strongest in Europe, where discounters such as Aldi and Lidl sell mostly own brands, and it is a major threat to branded consumer goods companies.
Where does it come up in case interview prep?
- How retail works and makes moneyLesson in Retail
- Retail players, trends, and how to crack retail casesLesson in Retail
- Distribution, promotions, private label, and innovationLesson in Consumer packaged goods (FMCG)
- Consumer goods players, trends, and how to crack the casesLesson in Consumer packaged goods (FMCG)
Related terms
- Gross profit and gross marginRevenue minus the cost of goods sold, as an amount or a percent.
- CommoditizationWhen products become interchangeable and compete mainly on price.
- Trade spendThe money brands pay retailers and distributors to stock, display and discount their products.
- Modern tradeOrganized retail chains such as supermarkets, hypermarkets and e-commerce.
- Like-for-like sales (LFL)Sales growth from stores open in both periods, leaving out new and closed stores.
- Sales per square metreStore sales divided by selling space: how productive the space is.
- Shrink (shrinkage)Inventory lost to theft, damage, errors or spoilage.
- MarkdownA lasting price cut to clear stock that is not selling.