Private label products have officially outgrown their reputation as “cheaper alternatives.” In 2024, U.S. private label sales reached $271 billion, according to data from the Private Label Manufacturers Association (PLMA), a record milestone that outpaced national brand growth for the first time in decades.
What began as a response to inflation is now a structural change in consumer behavior and retail strategy. Retailers and manufacturers alike are rethinking how private labels fit into the broader competitive landscape, with implications that stretch from consumer perception to production planning and supply chain design.
Why Shoppers See More in Private Label
Younger generations, particularly Gen Z and millennials, are fueling this shift. Unlike older consumers who often viewed private labels as cost-cutting measures, younger shoppers embrace them as credible brands in their own right. More than half of Gen Z shoppers, for example, prefer private labels for categories like snacks, beverages and wellness products, not just because they’re affordable but because they often align with their values on quality, transparency and sustainability.
Retailers that invest in private label innovation are capitalizing on this loyalty. Beyond low prices, they’re building assortments that feel curated and differentiated. In many cases, private labels are becoming destination drivers, bringing customers into stores and digital channels because of exclusive offerings that can’t be found elsewhere. Some grocers now see 30%–40% of their sales come from private label portfolios, while apparel and beauty retailers use private brands to establish distinctive identities in crowded markets.
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Balancing Brand Partnerships with Private Label Growth
For retailers, the rise of private labels isn’t about choosing one brand type over another; it’s about recalibrating assortment strategies. Shelf space allocation, promotional calendars and supply chain priorities now need to balance the proven pull of national brands with the loyalty-building power of private labels.
The balancing act is not always simple. Strong partnerships with national brands remain critical for maintaining customer choice and category breadth. At the same time, manufacturers are under pressure to adapt production lines and scheduling to support both private label and national brand demands. This creates operational complexity, as they must meet varying product specifications, packaging needs and delivery timelines without sacrificing efficiency or quality.
We’re already seeing leading retailers rethink category management with more granular planning capabilities. Optimizing private label ranges by region or channel allows retailers to maximize customer relevance while still protecting supplier relationships.
For manufacturers, this means investing in flexible production planning and supplier collaboration to meet diverse retailer needs. With advanced forecasting and AI-enabled replenishment, it’s now possible to adapt shelf space and product mix in real time, rather than relying on static planograms.
Building Long-Term Loyalty in Private Label Programs
The biggest test for retailers is whether they can transform private labels from inflation-era substitutions into enduring brands. That requires more than adding SKUs; it demands operational excellence behind the scenes.
Supply chain resilience plays a central role here. Stockouts and inconsistent quality can erode trust faster than any marketing campaign can build it. Retailers investing in demand-driven planning and supplier collaboration are setting themselves apart, ensuring their private label assortments remain as reliable as they are appealing.
Manufacturers that support private labels are adopting modern planning tools to move away from manual spreadsheets and toward AI-driven demand planning. These shifts are helping reduce stockouts, improve service levels and align production with demand. The result is greater consistency on the shelf, which becomes a competitive advantage in building loyalty at scale.
Sustainability is also a differentiator. From reducing waste in fresh categories to eco-friendly packaging, private labels can connect brand identity to consumer values in ways national brands sometimes can’t match. For example, retailers that showcase locally sourced products under private labels resonate with environmentally conscious consumers while also differentiating assortments. Manufacturers play a key role here as well, adjusting sourcing strategies and production methods to meet sustainability targets while keeping costs in check.
Technology as an Enabler of Private Label Success
Behind every successful private label program is a supply chain capable of supporting it. Advanced analytics and AI-enabled planning tools are giving retailers and manufacturers better visibility into demand signals, production capacity and supplier performance. With these tools, they can:
- Spot shifts in demand by customer segment, channel or region.
- Align purchasing and production with forecasted demand to avoid waste and stockouts.
- Adjust quickly to disruptions with real-time changes.
Manufacturers in particular benefit by being able to update production schedules on the fly, make better use of labor and materials and manage multiple product portfolios across national and private brands. This flexibility is essential for scaling private label offerings without overextending capacity or compromising quality.
Retailers that use these capabilities can run their private label programs with the same discipline and agility as multinational brand owners. By treating private labels as brands in their own right, supported by data-driven planning and manufacturing collaboration, they create competitive advantages that extend well beyond price.
The Next Era of Growth
Private labels are no longer a fallback option; they are growth engines reshaping retail strategy. The retailers that win in this new era will be those that treat private labels with the same rigor as national brands: strategically planned, insight-driven and backed by resilient supply chains supported by agile manufacturing.
The result won’t just be higher margins. It will be stronger loyalty, deeper customer relationships and a brand identity that stands out in a crowded market. For consumers, this means more choices that feel authentic, affordable and aligned with their values. For retailers, it signals a chance to transform private labels into one of the most powerful levers for long-term growth.
As competition intensifies, the difference between private labels that thrive and those that fade will come down to operational excellence, consumer insight and the ability to deliver a consistent brand promise at scale. That requires close collaboration between retailers and manufacturers, and the use of modern planning technologies to ensure that what’s promised to the customer is consistently delivered.
Dr. Madhav Durbha is the Group VP of Manufacturing Industry Strategy at RELEX Solutions. With over 25 years of deep supply chain expertise, Durbha has a proven track record of developing impactful strategy and driving collaboration across functions. His prior experience includes leadership positions at i2, Blue Yonder, Kinaxis, LLamasoft and Coupa. He obtained his Bachelor of Technology from Indian Institute of Technology, Madras and his Ph.D. in Chemical Engineering from the University of Florida.
