A private label brand is a product that’s manufactured by one company but sold under another company’s name, usually the retailer’s. When you buy a carton of Kirkland Signature almonds at Costco or a bag of Good & Gather coffee at Target, you’re buying a private label product. Costco and Target didn’t grow the almonds or roast the coffee themselves. They contracted a manufacturer to make it, put their own brand on the packaging, and sold it exclusively in their own stores.
We sometimes hear these called store brands, own brands, or (less flatteringly, and increasingly inaccurately) generics. That last term is worth dropping early, because it carries a lot of baggage from decades ago when store brands really were the plain white box on the bottom shelf. As we’ll get into, that’s not really where the category lives anymore.
Private Label Versus National Brands
The opposite of a private label is a national brand (sometimes called a manufacturer brand): a product like Coca-Cola, Tide, or Cheerios, made and marketed by the company whose name is on the label, sold through many different retailers. Coca-Cola doesn’t just sell through one grocery chain. It sells through all of them, and it controls its own brand, advertising, and pricing.
A private label product, on the other hand, only exists at the retailer that commissioned it. We can’t buy Kirkland Signature anywhere except Costco, because Costco owns the brand even though it didn’t manufacture the product. This is worth sitting with for a second, because it’s the core of the whole idea: the retailer becomes the brand owner, not just the store the product happens to sit in.
What Does Private Label Actually Look Like Today?
The stereotype of private label is the bargain bin, the no-frills bag of pasta with plain typography and a low price. That version still exists, but it’s only one tier of what’s now a pretty wide range.
Trader Joe’s has probably done more than any other retailer to change how people think about this. Almost everything on Trader Joe’s shelves is a private label product, yet the brand has a devoted following built on quality and novelty, not just low price. Costco’s Kirkland Signature line has gone the same direction: it’s often positioned as equal to or better than the national brand equivalent, at a lower price, across categories from clothing to electronics to food.
Target’s Good & Gather and Walmart’s Great Value sit in the middle of the market, competing directly with national brands on everyday grocery items. And at the value end, chains like Aldi build almost their entire business model around private label, stocking a small number of SKUs, most of them their own brand, to keep costs down.
So when we talk about private label today, we’re really talking about a spectrum: value tier, mainstream tier, and premium tier, not one single positioning.
Why Do Retailers Bother Making Their Own Brands?
It would be simpler for a retailer to just stock national brands and take a normal retail markup. So why go to the trouble of developing, manufacturing, and marketing an entire product line of their own?
The biggest reason is margin. A retailer selling a national brand is splitting the profit pool with the manufacturer, who has its own costs (advertising, R&D, its own margin requirements) baked into the wholesale price. When a retailer sells its own private label product instead, it cuts out a layer of that markup and usually earns a meaningfully higher margin on the same shelf space, even while charging the customer less than the national brand.
The second reason is control and differentiation. If every grocery store carries the same national brands at similar prices, there’s not much reason for a shopper to prefer one store over another. A private label line that shoppers actually like, and can only get at that retailer, gives the store something distinct to offer. It’s part of why Trader Joe’s inspires the kind of loyalty that gets people driving past a closer supermarket to shop there instead.
The third reason is bargaining leverage. A retailer that can credibly say “we’ll just push our own brand instead” has more negotiating power with national brand manufacturers over price, promotional support, and shelf placement. That threat is real precisely because private label has gotten good enough to be a genuine substitute in the shopper’s mind, not just a cheaper backup.
How Big Has This Gotten?
Private label has been growing steadily for years, and the growth has kept going even as national brands have struggled to keep pace. According to the Private Label Manufacturers Association (PLMA), US private label sales reached a record $282.8 billion in 2025, up 3.3% from the year before. National brand sales grew only 1.2% over the same period, meaning store brands grew almost three times as fast.
Store brands now hold 21.3% dollar share and 23.5% unit share of US retail, both up from around five years earlier. Growth wasn’t evenly spread across categories either. Refrigerated products, beverages, and pet care were among the strongest performers by dollar sales, suggesting shoppers are increasingly comfortable trusting a store brand even in categories where quality perceptions used to matter a lot.
Part of what’s driving this is economic. When household budgets are tight, shoppers who might normally buy on brand loyalty alone start comparing prices more carefully, and private label is usually priced well below the national brand equivalent for a comparable product. But price alone doesn’t explain the premium tier’s growth. Kirkland Signature and Trader Joe’s aren’t winning shoppers purely on being cheap. They’re winning on being perceived as genuinely good, which is a different and harder thing to build.
What Does This Mean for National Brand Marketers?
If we’re marketing a national brand, private label growth is a real competitive threat, and it’s worth thinking about how we respond to it rather than just hoping shoppers stay loyal out of habit.
One response is to justify the price gap more explicitly, through advertising, product innovation, or features the private label version genuinely can’t match. If our product is basically identical to the store brand next to it, we’ve made it very easy for the retailer’s private label to win on price with no real cost to the shopper. If we can point to something meaningfully different, whether that’s ingredients, performance, or brand experience, we’ve given the shopper a reason to pay more.
Another response is to accept that we can’t win every segment of the shelf, and instead defend the parts of our business where brand loyalty is strongest, while conceding ground on the most price-sensitive, most commoditized products. That’s a harder conversation internally, because it usually means accepting some volume loss rather than fighting for every sale.
We also have to remember that the retailer selling our product is, in many cases, also our competitor now. A grocery chain that sells our cereal on one shelf and its own private label cereal right next to it has a real incentive to promote its own product harder: better shelf placement, its own in-store signage, sometimes a deliberately tighter price gap. That’s a genuine channel conflict, and it changes how we negotiate with retailers, not just how we advertise to shoppers.
What Do Retailers Have to Decide When Building a Private Label Line?
From the retailer’s side, launching or expanding a private label line isn’t a simple decision either. A few questions come up again and again.
The first is positioning. Are we building a value line to compete on price, a premium line to compete on quality, or both, the way Costco and Target do with tiered private label ranges? Getting this wrong, say, launching a cheap-looking product line and expecting shoppers to pay a premium for it, undermines the whole effort.
The second is sourcing. Do we manufacture in-house, or contract an outside manufacturer, sometimes the very same manufacturer that makes the national brand version? This happens more than people realize. It’s part of why Kirkland Signature products often taste or perform similarly to well-known national brands: in a number of cases, they’re made in the same facilities.
The third is how much we risk cannibalizing (eating into) the sales of national brands we also stock and profit from, since we still earn a margin, just a smaller one, on the national brand sitting next to our own. Some retailers manage this carefully, using private label to fill gaps rather than replace their best-selling national brands outright. Others, like Trader Joe’s, go almost all in on their own label and accept that trade-off entirely.
And the fourth is brand architecture: do we put the store’s own name on everything (Great Value, Good & Gather), or do we create standalone brand names that don’t obviously read as store brands at all? Both approaches show up across the industry, and the choice affects how much of the retailer’s own reputation gets attached to the product’s success or failure.
Key Points to Take Away
- A private label brand is owned by the retailer selling it, even though it’s usually manufactured by a separate company, and it’s typically only available at that retailer.
- Private label ranges from value tier to premium tier, so it’s no longer accurate to think of store brands as automatically cheaper or lower quality than national brands.
- Retailers build private label mainly for margin, differentiation from competitors, and negotiating leverage with national brand manufacturers.
- US private label sales hit a record $282.8 billion in 2025, growing almost three times faster than national brands, according to PLMA.
- National brand marketers need to justify their price premium clearly, since an undifferentiated product makes it easy for shoppers to switch to the cheaper private label version.
- Retailers building a private label line have to decide on positioning, sourcing, how much cannibalization of national brands they’re willing to accept, and whether to brand it under the store’s own name.
