In 2010, private and exclusive brands accounted for a third of total sales at Target , and today they claim over half of Kohl's product portfolio.
Private Brands Evolve From Generics to Must-Haves
The private-brand concept has been a consistent driver of sales for discount retail giants for decades, but over the years it has been adapted to suit shifting consumer demands. Today, private brands have evolved from generic value products into must-have exclusives at many discounters, and marketing budgets played a big role in that evolution.
It started with that wardrobe staple: jeans, or as they used to be called, dungarees. In the "60s and "70s, private brands were essentially private-label generics, many of which started in the denim category. Value gave retailers an edge -- that is , until every store began to offer the same value brands at the same prices. In the "90s, however, the concept of new and exclusive private brands took off when retailers learned that "value" can also be defined as having distinct products that serve as differentiators, driving store traffic and loyalty.
Regarding the transition from developing "copy-cats" of national products to more exclusive products in the "90s, Tina Wilcox, CEO and creative director of retail branding shop Black, said, "The retailers started [private brands] in an era where there wasn't the kind of keen focus there is today on national brands. The more consumers started to embrace the whole notion of brand loyalties, the more it started to weaken those [generic] private-label brands and assortments."
Zain Raj, CEO of agency network Hyper Marketing, noted that when retailers realized that national brands were gaining clout, "they created newer brands that would stand side-by -side with national brands and be credible."
Target 's Archer Farms and Walmart's Sam's American Choice line are just two examples. Today, private brands have become so prevalent and popular that they're "forcing the national brands to fundamentally find other ways beyond product and price to differentiate," Mr. Raj said.