Private Brands

Opportunity Awaits for Private Brands in China

Private brands are consumer brands that are developed by retailers specifically to compete with national brands. Typically, private brands are comparable to national brands in quality, but because the retailer does not face the overhead of national advertising and promotion expenses that a national brand does, retailers are frequently able to offer private brands at substantially lower prices. While the market for private brands is well-established in Europe and the United States, it’s still an evolving concept for China, but it presents huge potential for retailers’ revenue growth.

The path to global success for private brands has been forged through years of trial and error. The first misconception that private brands have had to overcome is that lower prices mean lower quality. The U.S. was a relatively early adopter that faced a lot of growing pains when both packaging and product quality were initial barriers to widespread acceptance. The eventual growth and success of the private brand market can be directly attributed to an increase in the quality of product and a stronger emphasis placed on attractive product packaging.

When those hindrances were removed, private brand adoption increased, and with it came new product loyalty. Customers trust their favorite retailer and, by association, trust products that bear their favorite retailer’s name. Most consumers today can’t tell the difference between private brands and national brands. The private brand market share in Europe currently averages 35 percent, and in the U.S., it is at 17 percent.

Currently, mainland China has only a one percent market share for private brands, illustrating the enormous opportunity for growth. But to establish a private brand in a market where they’re not already widely accepted brings about those same challenges of quality assurance and value perception that have to be addressed.

Many retailers understand their corporate brand but fail when it comes to defining their product brands. By positioning private brands as value alternatives with equivalent, or even premium quality to national brands, we help our clients grow their business.

Ivie works with international private brands including Member’s Mark, Great Value and a host of private brands for Watsons. We specialize in bringing brands to life, whether we’re working to refresh existing brands or creating a completely new brand from the ground up.