A private brand is a product manufactured by one company but sold under a retailer’s own brand name. When you buy Great Value paper towels at Walmart or Up & Up ibuprofen at Target, you’re buying private brand products. The retailer didn’t manufacture them. Instead, a third-party factory produced the items, and the retailer slapped its own logo, packaging, and branding on them before putting them on shelves. Private brands (also called private labels or store brands) have grown from bare-bones generic alternatives into a massive segment of retail, with some store brands now reaching more households than many national names.
How Private Brands Work
The process is simpler than most people assume. A retailer partners with a third-party manufacturer that already produces a finished product, often the same or a very similar product it supplies to multiple retailers. The retailer then applies its own brand name, logo, and packaging to the product and sells it as its own. The core product stays largely unaltered, though there may be minor adjustments to formulation, flavor, or appearance to match the retailer’s specifications.
This model is sometimes called white labeling. The retailer doesn’t need to build factories, hire engineers, or develop products from scratch. It essentially acts as a distributor, relying on the manufacturer’s production expertise while focusing its own energy on marketing, pricing, and shelf placement. That’s why private brands can launch quickly and expand into new product categories without the retailer investing in manufacturing infrastructure.
There’s a distinction worth knowing between private label manufacturing and contract manufacturing. With private labeling, the manufacturer owns the production process and offers a ready-made product. With contract manufacturing, the retailer designs the product to its own specifications and the outside manufacturer builds it to order. Many large retailers use both approaches depending on the product category. A store-brand can of soup might be a straightforward private label, while a premium store-brand skincare line might be contract manufactured to a unique formula.
Why Retailers Invest in Private Brands
The economics are straightforward: retailers earn significantly higher profit margins on private brands than on national brands. Industry data consistently shows retailer gross margins on private labels running 20% to 30% higher than on comparable national brand products. Research from the National Bureau of Economic Research found that in nearly every product category studied, retail markups were higher for private label goods than for national brands. In soft drinks, for example, the retailer’s markup ratio on private label products reached 1.76, compared to lower ratios on national brands in the same category.
Beyond margins, private brands give retailers something they can’t get from carrying Tide or Coca-Cola: exclusivity. Every grocery store sells Cheerios, but only Target sells Good & Gather. That exclusivity drives store loyalty. If you love Kirkland Signature olive oil, you have to shop at Costco. Private brands also give retailers more control over pricing, allowing them to offer lower-priced alternatives that keep budget-conscious shoppers from leaving for a competitor.
Startup costs are low relative to the payoff. Because the product is already being manufactured, there’s no design phase, no engineering, no tooling, and no production ramp-up. The retailer gets a market-ready product and can focus its spending on in-store placement and promotion rather than product development.
The Range From Budget to Premium
Private brands used to mean one thing: the cheap option in plain packaging sitting next to the “real” brand. That perception has changed dramatically. Today, major retailers operate multiple private label tiers under different brand names, each targeting a different shopper.
A large supermarket chain might carry a low-cost value line priced well below national brands, a mid-tier store brand positioned as comparable quality at a modest discount, and a premium private label with upscale packaging and higher-quality ingredients priced at or even above some national brands. Some retailers have also launched organic-only private brands to capture health-conscious shoppers who might otherwise gravitate toward specialty national brands. This tiered approach lets a single retailer cover the full spectrum from price-sensitive to quality-driven customers, all while earning those higher private label margins.
Biggest Private Brands in the U.S.
Walmart dominates the private brand landscape. As of mid-2024, the five private label brands with the highest U.S. household penetration all belonged to Walmart: Great Value (reaching 86% of households), Equate (75%), Mainstays (70%), Marketside (69%), and Freshness Guaranteed (67%). To put that in perspective, Great Value alone is found in nearly nine out of ten American households.
Outside of Walmart, several other private brands have built enormous reach. Dollar Tree’s store brand hits 65% of U.S. households. Target’s Up & Up and Good & Gather reach 43% and 41%, respectively. Costco’s Kirkland Signature, arguably the most recognized premium private brand in the country, reaches 43% of households. CVS Health (40%), Kroger (40%), Sam’s Club’s Member’s Mark (38%), and Dollar General’s Clover Valley (37%) round out the top tier.
Growth in the space continues to accelerate. Kroger’s budget-oriented Smart Way brand saw sales volume jump 135% in the year ending mid-2024. Dollar Tree’s B Pure brand grew 92%, and Walgreens’ Complete Home line increased 59%. These numbers reflect a broader shift: retailers are investing more heavily in private brands, and shoppers are increasingly willing to buy them.
Where Private Brands Show Up
Grocery stores were the original home of private labels, and food remains the largest category. But private brands now span virtually every product type a retailer sells. Pharmacies like CVS and Walgreens sell store-brand medications, vitamins, and personal care products. Target and Walmart offer private label clothing, home goods, electronics accessories, and office supplies. Costco’s Kirkland Signature covers everything from batteries to vodka to golf balls.
The model also extends beyond brick-and-mortar retail. Amazon has launched dozens of private brands across categories including batteries (Amazon Basics), groceries (Happy Belly), and clothing. Online-only retailers in fashion, beauty, and home goods frequently use private labeling to build product lines without owning any manufacturing.
What Private Brands Mean for Shoppers
For consumers, private brands typically offer lower prices than national brand equivalents. That price gap exists partly because retailers spend far less marketing a store brand than a national brand manufacturer spends on television ads, sponsorships, and promotional deals. The savings get passed along, at least in part, to the shelf price.
Quality is a more nuanced question. In many categories, private label products come from the same factories and use similar formulations as the national brands sitting next to them. A store-brand ibuprofen tablet contains the same active ingredient at the same dosage as the name-brand version. In other categories, particularly processed foods, snacks, and personal care, there can be real differences in taste, texture, or performance. The only reliable way to judge is to try the product.
One thing worth noting: the fact that retailers earn higher margins on private labels doesn’t necessarily mean shoppers are overpaying. Those margins are higher as a percentage, but the dollar price is still usually lower than the national brand alternative. The retailer makes more profit per unit while the customer pays less. Both sides benefit because the marketing and distribution costs baked into national brand pricing have been stripped out.