Private Labels Redefining the Retail Landscape

Economic pressures and evolving consumer expectations are transforming the way Australians shop. Private labels once considered budget-friendly alternatives, are now regarded as quality-driven choices, giving well-known brands a severe run for their money. This shift is particularly evident in the Australian market, where private label growth is fueled by rising financial pressures, retailer strategies, and a lack of innovation from traditional brands.

Here’s a preview of insights from my upcoming report on private labels and Australian consumer behaviour that I am writing.

Changing Spending Habits

Economic challenges are reshaping the way consumers think about value and quality. Here’s what our research found:

• Deliberate Spending: Almost half of shoppers report purchasing less per shopping trip, becoming more thoughtful about their purchases.

• Price Sensitivity: With heightened financial uncertainty, Australians are increasingly comparing prices, hunting for specials, and favouring private labels as affordable yet reliable options.

• Shift to Store Brands: Private labels are now seen as practical solutions for everyday essentials and specific needs, offering value without the premium price tag of branded goods.

Private Labels Competing, Not Just Coexisting

Our data highlights a notable shift in how private labels are perceived:

• Comparable Quality: 54% of shoppers believe private labels are on par with branded products, appealing to a broad audience beyond budget-conscious buyers.

• Better Quality Perception: Surprisingly, 11% of respondents rate private labels as superior to non-retailer brands.

• Minimal Inferiority: Only a small percentage still consider private labels inferior, a testament to their remarkable improvement.

What’s Driving the Shift?

Several factors are behind this growing preference for private labels:

1. Economic Pressures: Rising costs are prompting Australians to prioritise value, and private labels are perfectly positioned to meet this need.

2. Retailer Investment: Enhanced quality control, innovative branding, and improved product development have blurred the lines between private labels and non-retailer brands.

3. Consumer Experimentation: As private labels deliver on quality and innovation, more shoppers are willing to try—and they’re not disappointed. 

The Challenge for Brand Owners

Private labels no longer coexist with traditional brands but compete head-on. For brands to remain relevant and differentiate, they must adapt to this new reality:

• Highlight Unique Value: Make your brand’s distinctive qualities crystal clear (at all touch points).

• Invest in Innovation: Regular product updates, innovative marketing campaigns, and exceptional customer experiences.

• Drive Loyalty: Build deep, lasting customer relationships through consistent communication, exclusive offers, and brand storytelling.

 What’s Next?

Private labels will continue redefining the retail landscape, but non-retailer brands can thrive by understanding and adapting to these consumer shifts. The key is innovation, clear value propositions, and building a strong presence and connections with shoppers and consumers.

The full report will be available in two weeks and will explore value perceptions, purchase motivations, retailer influence, and strategies for effectively competing with private labels. If you would like to receive a copy, please send me a message.