Behind the Numbers: An EMARKETER Podcast
Episode: Price Wars: Attack of the Private Labels | Reimagining Retail
Release Date: May 7, 2025
Host: Sara Lebo
Guests: Ariel Fager, Skye Canaves

Introduction

In the latest episode of EMARKETER’s podcast Behind the Numbers, host Sara Lebo delves into the evolving landscape of private label brands in retail. Titled Price Wars: Attack of the Private Labels, the discussion centers around how private labels are transforming from mere cost-effective alternatives to strong, branded competitors in the market. Guests Ariel Fager and Skye Canaves join Sara to explore this dynamic shift, its implications for retailers, and the broader impact on consumer behavior.

Defining Private Labels: Beyond Affordability

Sara Lebo initiates the conversation by questioning whether private labels are still synonymous with affordability or if they have transcended into distinct, branded entities.

Sara Lebo [01:01]:
"Private label has meant low cost products that can replace national brands. But as retailers work to build brand loyalty, differentiate themselves and boost sales, we've seen a lot more private labels with their own really strong branding."

Skye Canaves [01:35]:
"Private label brand products are typically priced lower than their national brand competition. On average, the price gap is around 20% in the CPG categories and that's held over time."

Ariel Fager [02:42]:
"65% of consumers associate private label with the phrase budget friendly. So I think the perception is there, even if prices are similar to national brands, they’re still viewed as more affordable."

While affordability remains a core attribute, private labels are increasingly adopting unique branding and packaging, distancing themselves from purely generic images. This strategic branding enhances their appeal and consumer recognition beyond just being cost-effective options.

The Strategic Importance of Private Labels to Retailers

Private labels offer several advantages to major retailers like Walmart, Target, and Amazon, beyond just lower prices.

Skye Canaves [03:15]:
"Private labels allow retailers to enjoy higher margins than selling products from other brands at wholesale. They also help expand product assortments and fill gaps not met by national brands, encouraging customer loyalty."

Sara Lebo [03:58]:
"Loyalty is a big one. If a consumer likes even one private label product, they're likely to return to your store to purchase it again, even if they shop elsewhere for national brands."

Private labels serve as exclusive offerings that can only be found at specific retailers, fostering a unique brand identity and encouraging repeat business. Additionally, they provide retailers with greater control over product quality, pricing, and margins.

Navigating Tariffs and Supply Chain Challenges

The episode addresses the impact of tariffs on private labels, especially in the context of recent global economic uncertainties.

Skye Canaves [05:02]:
"It depends on the retailer and where they're sourcing from. Many private labels in CPG and supermarkets are produced domestically, but they might still face tariffs on raw or packaging materials. Retailers like Target are shifting manufacturing from China to Latin America to mitigate high tariffs."

Ariel Fager [05:49]:
"Private labels might have more flexibility and agility in adjusting their supply chains compared to national brands, but they still face similar challenges."

Despite the pressures from tariffs, private labels have adapted by diversifying their manufacturing sources and maintaining relative price advantages. During high inflation periods, private labels have shown resilience, often outpacing national brands in growth rates.

Skye Canaves [06:27]:
"Private label grocery brand growth was 3.9% versus national brand growth at 1% in 2024, even while not keeping up entirely with inflation for national brands."

Private Label Penetration Across Categories

While private labels have made significant inroads in many product categories, some areas remain challenging.

Sara Lebo [08:42]:
"Is there any category that private label has struggled to penetrate?"

Skye Canaves [08:42]:
"Beauty is a big one. There are few private label beauty brands in the US, though some like number seven from Boots are expanding internationally. Pet food and baby food also show lower private label penetration due to trust concerns."

Ariel Fager [10:10]:
"Pet food and baby food require higher trust from consumers, which can be a barrier for private labels. However, brands like Costco’s Kirkland are making strides by leveraging retailer trust."

Categories that rely heavily on brand loyalty and consumer trust, such as beauty and pet food, pose challenges for private labels. Nonetheless, strategic collaborations and leveraging retailer credibility are beginning to overcome these barriers.

Building Trust and Consumer Perception

Trust in private labels is closely tied to the reputation of the retailer itself. High-trust retailers can transfer that trust to their private label brands.

Sara Lebo [11:37]:
"People trust big retailers, and that trust extends to their private label products. For example, I trust pharmacy private labels like ibuprofen because I trust the pharmacy."

Ariel Fager [11:57]:
"67% of consumers trust Costco’s Kirkland brand, showcasing how retailer reputation can bolster private label trust."

Skye Canaves [10:37]:
"Consumers trust retailers like Trader Joe’s and Costco enough to try their private label products, especially when backed by the retailer’s quality assurance."

By maintaining high standards and leveraging their established reputation, retailers ensure that their private label brands are perceived as reliable and of high quality.

Spotlight on Private Label Excellence: Unofficial Awards

The episode culminates with Sara Lebo presenting five unofficial awards recognizing standout private label brands. Each award highlights innovation and strategic excellence within the private label sector.

1. Niche Category Innovator: Good Little Garden by Target

Sara Lebo [12:30]:
"Good Little Garden is Target's first standalone floral-owned brand."

Ariel Fager [12:35]:
"It's interesting how Target is branding their flowers distinctly, moving beyond generic in-store offerings."

Target’s initiative to create a specialized floral private label brand demonstrates innovation in a traditionally generic category, enhancing the shopping experience and offering consumers a unique product line.

2. Vertical Integrator: Loudmouth Barbecue by Ace Hardware

Sara Lebo [14:10]:
"Loudmouth Barbecue is Ace Hardware’s foray into barbecue sauces, a category beyond their typical offerings."

Skye Canaves [14:10]:
"Ace Hardware expanded into a new category by developing their own branded barbecue sauce, showcasing a playful and memorable brand name."

By venturing into non-traditional categories, Ace Hardware exemplifies vertical integration, broadening their product range and enhancing brand diversity.

3. Premium Player: Better Goods by Walmart

Sara Lebo [16:08]:
"Better Goods is Walmart’s premium private label, offering high-quality products at accessible prices."

Ariel Fager [16:22]:
"Better Goods grew 200% in the 12 months ending December 31, 2024, indicating strong consumer acceptance."

Walmart’s Better Goods line successfully bridges the gap between premium quality and affordability, appealing to a broader demographic and driving significant growth.

4. Collaborating King: Kirkland Beer by Costco and Deschutes Brewery

Sara Lebo [18:35]:
"Kirkland Beer, a collaboration with Deschutes Brewery, highlights Costco’s strategic partnerships."

Skye Canaves [19:35]:
"The co-branding with Deschutes adds prestige to Kirkland Beer while maintaining value pricing."

Costco’s collaboration with a reputable brewery enhances the appeal and credibility of their private label beer, blending quality with value.

5. Viral Social Award: Trader Joe’s Private Label Success

Sara Lebo [21:05]:
"Trader Joe’s has created a cult following, exemplified by the frenzy around their mini tote bags."

Ariel Fager [21:05]:
"Trader Joe’s organically generates buzz through unique products and minimal advertising, leveraging social media trends effectively."

Trader Joe’s mastery of social media-driven marketing and unique product offerings, like their coveted tote bags, underscores their dominance in creating viral private label successes.

Conclusion

The episode wraps up with Sara Lebo emphasizing the significance of private labels in today’s retail environment. As retailers continue to innovate and invest in their private label offerings, these brands are not only surviving but thriving, reshaping the competitive landscape and consumer expectations.

Sara Lebo [23:39]:
"Thank you to our listeners and our editing team. We'll be back next Wednesday with another episode of Reimagining Retail."

Overall, Price Wars: Attack of the Private Labels provides a comprehensive analysis of the strategic movements within private label branding, highlighting how retailers are leveraging these brands to enhance loyalty, diversify offerings, and navigate economic challenges.