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Please explain the evolution of private label brands.

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yacel0762 | Valedictorian

Posted August 17, 2013 at 4:14 PM via web

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Please explain the evolution of private label brands.

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K.P.L. Hardison | College Teacher | eNotes Employee

Posted August 30, 2013 at 7:55 PM (Answer #1)

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The evolution of private label brands can mean one of two things or both. Firstly, it can mean the historic development over time from their first introduction the the present. Secondly, it can mean the changes in market response during recent time periods where present performance is compared to recent past performance to identify trends in the market and peaks or slumps in market share and customer satisfaction. Let's briefly look at both.

Private labels are labels that are used by supermarket chains to identify store-offered non-brands of a product that competes with the same brand name product. Present day examples of private labels are (1) Nature's Way Organics offered by Shaws markets in the Northeast and by Vons and Safeway market in the western states and (2) Essentials offered by Albertsons markets. One of the original private labels was Lucerne from Safeway that dates back at least to the 1950s.

The historical evolution is that private "generic labels" that had plain white boxes--with no logos or color images--and plain black printing were introduced in response to a string of recessions in the 1970s and 1980s. This is the first major step in the historic evolution of private labels: While some stores already had private labels, like Lucerne, recessions drove the introduction of even lower priced generic products--with no label except "generic"--in American grocery supermarkets.

The 1990s saw the rise of private labels, with more detailed packaging and presentation, in response to the 1990-91 recession and the growing "designer" milieu. This rise through the 1990s in private labels marks the second major step in the historic evolution of private labels.

In respect of the evolution of market response and product performance, in 2000, private label brands had 18 percent of the market share (NPD Group / National Eating Trends). Market share rose between 2002, with 19 percent, and 2011, with 27 percent market share. This also marks the third step in the historic evolution of private label brands.

The evolution represented by present market conditions continues the market and performance evolution and marks the fourth step in the historic evolution of private labels. NPD reports that intention to purchase private labels has dropped from 34 percent in 2009 to about 25 percent in 2012. NPD suggests this indicates a lessening dependency upon the low-cost high-value benefits of private label brands (possibly also a lessening regard for ingredient purity). NPD also reports a drop in satisfaction with private label brands from 32 percent in 2009 to 24 percent percent in 2012.

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