The Rise Of The Private Label And How Brands Can Fight Back

Discount fatigue is real. Shoppers are value-hungry, retailers are margin-obsessed, and big FMCGs are stuck in an endless loop of price cutting that’s eroding their brand value, visibility, and viability. And while discounts do have their place within the marketing calendar, clinging to them as the default strategy is a bad bet, especially when private label is winning.

The global private label market was valued at $915.1 billion in 2024 and is projected to reach $1.62 trillion by 2034, reflecting strong consumer trust and growing retailer investment in private label brands, with a CAGR of 5.9%. In the US, private label sales hit $271 billion in 2024, increasing 3.9% year-on-year, with private labels capturing around 20% of grocery market share. Europe remains the strongest region for private labels with 39% grocery market share in 2024, led by countries like Switzerland (51%), Spain (44%), and the UK (42%).

South Africa shows rapid private label growth of 7.5%, representing roughly 18% of FMCG sales value in 2024. The Middle East and Africa region display strong momentum with 34.3% growth, supported by urbanization and shifting consumer preferences. This growth trajectory accentuates the global evolution of private labels as key drivers for retail innovation and consumer value.

And the growth of the private labels is only projected to continue on an upward trend.

Major South African retailers such as Shoprite (Ritebrand), Checkers (Housebrand), Pick n Pay (No Name), Spar, and Woolworths have expanded their private label offerings with improved quality and premium positioning. Private labels now command approximately 24.3% of total basket value sales in South Africa, equating to around R71 billion annually, with expectations to surpass R100 billion in the near future NielsenIQ analysis SPAR market update.

Consumer perception of private label products in South Africa is highly positive:

• 72% of consumers view private labels as good alternatives to national brands.
• 75% believe these products offer good value for money.
• 66% trust private label brands because they are endorsed by the retailers, and
• 45% say their quality is equal to or better than branded products.
• Nearly 65% of consumers would buy more private label products if a wider variety were available NIQ consumer insights.

This growing acceptance is also driven by economic factors, as around 39% of South African consumers report increased purchase of private labels due to price sensitivity, while nearly half of shoppers say they are likely to upgrade to premium private label products, particularly among Millennials and Gen Z groups.

Private label products in South Africa are no longer merely cost-saving substitutes but are trusted, valued, and preferred choices offering both quality and affordability across income and generational segments.

For brand marketers, the battleground has shifted. This isn’t just about who can shout the loudest on shelf or slash the deepest at checkout. This is about who can create real value in a way that shoppers remember and retailer’s support. And it starts by expanding the toolkit beyond just pricing and recognising that value-add can be just as powerful, if not more, than money off.

It’s easy to see why discounts are so widely used in South Africa. They’re straightforward to plan, simple to execute, and drive short-term sales results. But beneath the surface, there are significant issues:

• In recent years, the volume of goods sold on promotion (through discounts or special offers), largely driven by price promotions is around 31%.
• Nearly half of these promotions tend to be loss-making or provide very thin margins, negatively impacting profitability.
• Brands that rely heavily on generic promotions have a lower chance of outperforming competitors in the competitive South African retail sector, as continuous discounting erodes brand equity and consumer trust.

Over time, persistent discounting creates unsustainable pricing expectations among South African consumers and diminishes the perceived value of brands. This is especially critical as consumers increasingly seek value for money without compromising on quality, turning instead to well-positioned private label brands offered by major retailers.

It’s no surprise that Marketing leaders are under pressure. On one side, retailers demand price support. On the other, procurement teams are watching ROI like hawks. And in between, shoppers are switching at speed, loyalty is waning, and your margin is disappearing.

What makes private label such a growing threat isn’t just affordability. It’s the growing perception of relevance and quality. Retailers back their own brands with priority placement and aggressive pricing. In the store, that means your brand is fighting for space against a better-supported rival. Online, it means your product might not even surface in the top search results.

In South Africa, nearly 3 in 10 consumers make their final purchase decision in physical stores, highlighting that a significant percentage of purchases are decided in-store. Additionally, 56% of consumers favour in-store exploration for purchasing decisions.

Additionally, the quickness of on-shelf decision-making aligns with known retail behaviour where shoppers decide in just a few seconds. This emphasises the competitive pressure private labels create by being strategically placed and aggressively promoted in the store environment.

FMCG brand managers and shopper marketers need standout strategies to influence that moment of choice. Not deeper discounts, but with added-value that supports the brand’s values and connects with consumer passions and needs.

Great value matters more than price. It’s a subtle difference, but promotions can be more effective when value is added to a product, rather than cents removed from the price. More and more, value is being defined by consumers as ‘what’s in it for me’, not just how much a product costs at the till.

Imagine if there was a viable alternative to discounts that was both affordable and proven to deliver results - one that could tell your brand story, differentiate your promotions in a sea of lookalikes, and deliver greater perceived value to shoppers and better ROI to your business.

That alternative already exists.

It’s called experience-led value.

At its core, experience-led value acknowledges a simple truth: people don’t just buy with their heads and their wallets - they buy with their hearts. In fact, As Daniel Kahneman’s research shows, 90% of consumer decisions are emotional - yet most promotions are still rational (save R10, get 2 for 1). What we feel, influences what we choose, how much we spend, and whether we come back.

Think about your last memorable purchase. Chances are, what made it memorable wasn’t the price, it was how it made you feel. That’s the opportunity brands are missing when they default to discounts.

And the numbers back it up:

Consumers don’t remember prices – they remember moments. Brands that invest in experience-led promotions aren’t just delivering a short-term perk, they’re building emotional equity.

These activations:

• Differentiate from private label by building emotional connection
• Justify premium pricing by communicating the brand story and benefits
• Increase basket size and opt-in engagement
• Capture first-party data from shoppers at point of sale

At a time when approximately 33-36% branded FMCG sales are promotion-driven and an almost the equivalent is loss-making, experience-led incentives offer a smarter alternative: a value exchange that delivers a higher perceived reward for the shopper often at a fraction of the cost of traditional money off promotions.

And because every shopper receives something of genuine personal value, engagement and participation soars - and with it, data capture, brand recall, customer satisfaction, and repeat purchase.

Experiences don’t just drive volume; they shape perception. They make your brand feel more authentic, closer, and more meaningful. That’s the kind of value that private label products can’t replicate. And it’s the kind that builds real loyalty.

One of the most difficult dynamics in promotional planning? The retailer relationship.

Securing secondary space or off-shelf visibility isn’t just about who pays more. It’s about who brings something new to the table; a promotion that engages shoppers and drives conversion of course, but also one that increases the impact of the entire display - making it more likely to catch attention, drive impulse purchase, grow the category and justify prime retail positioning.

Experience-led promotions offer something traditional discounts rarely do: a campaign that adds more personalised value to the purchase without cutting into the total spend. In other words, consumers buy the same volume (or more), but the perceived reward is higher - keeping basket sizes (and value) intact and even encouraging repeat purchase behaviour to get more of the added value. When a promotion offers a strong consumer mechanic, one that’s easy to activate and impossible to ignore, it drives attention, action, and sell-out. That makes the retailer’s job easier as it moves volume and justifies visibility.

We get it. Moving away from discounts might feel unfamiliar or even risky; especially when they’re quick to deploy and proven to lift sales. But experience-led campaigns are no longer the complex, high-cost alternatives they once appeared to be. And marketers can no longer ignore the erosion of their margins and brand equity caused by repeat discounting.

In fact, with the right partner, brands can deliver high-perceived value rewards for a fraction of the cost of traditional discounts. These campaigns are built on a value exchange: the shopper receives a meaningful, memorable and free experience, and the brand maintains pricing integrity and equity, while boosting emotional engagement and basket value.

The key is who you partner with. A partner who can unlock this powerful solution for you and will take care of the heavy lifting - from campaign ideation and comms integration, to reward sourcing, tech, customer service, and reporting. That means no operational headaches, no delays, and no surprise costs.

Just a better way to drive results, without damaging your brand.

Private label isn’t slowing down. Retailers will continue to prioritise their own brands. Shoppers will continue to hunt for value. The difference? You have a choice in how you respond.

 

You can keep discounting, and watch your margin disappear. Or you can do the original job of marketing, by leveraging your brand, being unique, solving consumer needs and being more memorable – even when you are on promotion.