What is a Store Brand?
A store brand is a brand that is manufactured exclusively for one retailer, to be sold at its own store. It is also referred to as house brand, private brand or private label.
How It Works
A retailer identifies certain product categories that are good candidates for being sold under its own brand. It then contracts a private manufacturer to create those products and label them with the private brand.
The manufacturing process could be through white labeling, where a standardized product is being produced by the manufacturer and sold at different retailers, each under their own brand; or it could be through private labeling, where the retailer will have certain specifications, formulas or designs that it wants to apply exclusively to its own products.
The retailer then uses its own stores to sell those products directly to consumers.
Usually, because there is no middle brand owner, distributor or wholesaler between the manufacturer and the retailer, the product can be sold at lower prices to the customers, and this is what drives them to pick it up at the store.
Store Brand Examples
An example of a store brand is Great Value by Walmart.
This brand belongs to the retailer and includes different product categories under its name.
Through its naming & branding, it highlights the saving aspect of such strategy, which is often the main driver for customer adoption of many store brands.
Other examples of store brands include:
- Kirkland Signature by Costco
- 365 Everyday Value by Whole Foods
- Gold Emblem by CVS
Store Brand Vs. National Brand
While a store brand is manufactured for, and sold exclusively at, a certain retailer that owns the brand, national brands are intended to be distributed and sold at different stores across the nation.
An example of companies that create national brands are consumer packaged goods (CPG) companies.
Popular CPG companies include:
- Proctor & Gamble
- Coca Cola
- General Mills
CPG companies don’t operate their own stores, nor do they sell directly to consumers. Instead, these companies create different national brands for different products and lines, and then market them to the consumer through different mass medial channels to create demand for their products in the market, and then sell these products through distributors, wholesalers and finally retailers.
Store Brand Vs. National Brand Example
Proctor & Gamble, for example, is the owner of the Pampers brand.
This brand develops wipes, and it sells them through different retail outlets across the world, and promotes it through huge marketing campaigns across different channels.
Costco decided to have its own store brand of wipes. So it contracted a manufacturer to create a wipes product and label it with Costco’s Kirkland Signature brand.
Now because Costco has its own distribution channel (i.e. its stores) and its own loyal customer base, it can sell this product directly to consumers, without the need for middlemen or marketing campaigns to drive sales.
That’s why Costco can offer this product at a lower price, and pass the savings to its customers, without necessarily affecting its own margins. And this is how store brands can become a win-win for the retailer and the consumer.
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