---
title: "2026: The Great Reckoning for Private Labels"
description: "In 2025, the private label sector saw two outcomes: some, like Sam's Club's Member's Mark, always have queues and carts being pushed out; others, the majority of followers, have private label sections gathering dust. This year, private labels were elevated to a pedestal, seen as retailers' 'lifeline.' But reality is harsh: according to the '2024-2025 China Private Label Development Report,' despite positive signals that large retail enterprises' private label sales share has exceeded 10%, over 60% of small and medium retail enterprises still have private label SKU share below 5%."
author: "薛文发"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-01-16"
categories: "Brand Marketing, Retail Formats"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/Cwd7DzxDPuuqDZ-IK0wdnA"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/2026-the-great-reckoning-for-private-labels-f6475948/"
citation: "薛文发. “2026: The Great Reckoning for Private Labels.” New Distribution, 2026-01-16. https://xinjignxiao.com/en/articles/2026-the-great-reckoning-for-private-labels-f6475948/"
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---

# 2026: The Great Reckoning for Private Labels

> In 2025, the private label sector saw two outcomes: some, like Sam's Club's Member's Mark, always have queues and carts being pushed out; others, the majority of followers, have private label sections gathering dust. This year, private labels were elevated to a pedestal, seen as retailers' 'lifeline.' But reality is harsh: according to the '2024-2025 China Private Label Development Report,' despite positive signals that large retail enterprises' private label sales share has exceeded 10%, over 60% of small and medium retail enterprises still have private label SKU share below 5%.

In 2025, the private label track had two outcomes:
Some, like Sam's Club's Member's Mark, always have people queuing, with carts being pushed out one after another; others, the majority of followers, have private label sections on shelves that are gathering dust and not selling.
This year, private labels were put on a pedestal, regarded as retailers' 'lifeline.'
But reality is cruel: according to the '2024-2025 China Private Label Development Report,' despite the positive signal that large retail enterprises' private label sales share has exceeded 10%, over 60% of small and medium retail enterprises still have related SKU share below 5%.
Why is it that everyone is doing it, but only a few succeed?
The truth is, most supermarkets are not doing private labels; they are doing 'self-righteousness.'
The tide of blind following is receding, and those swimming naked are beginning to show. By 2026, private labels are no longer a question of whether to follow, but a more direct one: Do you really want to do it? How to do it?
**Private labels have become a trend in retail competition**
In 2025, competition in the retail industry reached a fever pitch.
The market has shifted from competing for growth to competing for survival, with thinner profits and harder-to-increase sales; everyone is fighting for the same piece of the pie.
Brand marginal benefits are declining, and many traditional distributors are also exiting.
Retail is even harder, with online-offline integration, hard discount, membership stores, instant retail, and newly remodeled stores all squeezing simultaneously, raising the intensity of competition by a notch.
Some supermarkets lacking core competitiveness are accelerating their exit from the market. Industry public data shows that in the first half of 2025, the closure rate of supermarkets in second- and third-tier cities nationwide reached 15%, up 5 percentage points from the same period last year.
In this context, private labels are no longer a bonus but a necessity for retailers to differentiate, protect gross margins, and retain customers.
Moreover, compared with mature markets in Europe and the US, where private label share is over 30%, China's supermarket private labels still have huge structural growth space.
According to Kantar Worldpanel research, consumer satisfaction and recommendation intention (NPS) for leading retailers' private labels have approached or even surpassed some national brands.
'Quality at a fair price' has become the core purchasing driver, meaning that pricing power and product definition power are irreversibly shifting to retail channels that can provide 'quality certainty.'
It's not hard to understand why national supermarket chains like Yonghui and RT-Mart have publicly planned to increase private label sales share to 15%-30% within the next 3-5 years.
**The 'Strategic Myopia' Under the Noise**
**Causing Chaos**
In 2025, the private label track was hot, to say the least.
How hot?
Relevant industry reports show that the annual number of new private label products developed by retailers continues to rise, with categories rapidly expanding from basic grains, oils, food, and beverages to personal care, household cleaning, and home goods.
For example, Yonghui announced a five-year plan to create '500 core private label products,' while RT-Mart launched both the 'Chao Sheng' (Ultra Saving) series positioned for extreme cost-effectiveness and the 'Runfa Zhenxuan' (Runfa Select) series focused on quality upgrades.
Even in some county-town supermarkets, you can see private label sections.
At the same time, the industry has seen media hype, planning fever, learning fever, and follow-the-leader fever. Retailers of all sizes talk about private labels, with product planning and development being all over the place; 'learning from Sam's, imitating Donglai, copying Aldi' has become a common move.
When the boss gives an order, the people below start疯狂贴牌 (frenzied OEM branding).
An administrative order can spawn a batch of white-label products with vague positioning and no connection to brand dimensions. A more common phenomenon is copycat imitation, like learning from Sam's 'Mochi Bread' or imitating Pangdonglai's juice, but only copying the product's appearance without touching the unique supply chain control, formula R&D, and extreme quality control standards behind them, ultimately resulting in 'drawing a tiger but ending up with a dog.'
This leads to an awkward situation: although consumers do not reject private labels, the immature private label systems of retailers cause problems and contradictions to erupt.
The chaos is mainly concentrated in six aspects:
**First, chaos at the strategic level: wrong direction, confused positioning.**
Treating private labels as 'cheap goods' rather than strategic assets; many retailers still position them as 'low-price substitutes.'
Moreover, there is a lack of brand architecture, with main brands, sub-brands, and series brands in disarray, making it impossible for consumers to identify them. Observations show that most domestic private label names are something like 'XX Selection,' 'XX Premium,' 'XX Choice,' etc.
At the same time, blind expansion of categories and unclear category planning lead to many SKUs but poor sales. For example, a domestic commercial alliance, without sufficient preliminary research, developed over 1,000 SKUs of private label products in 2024, resulting in massive overstock and a one-time write-off of nearly 20 million yuan at year-end.
These are all cases of treating private labels as short-term profit tools rather than long-term brand assets. The result is unstable quality, frequent supplier changes, and turning private labels into negative assets.
**Second, chaos in organization and processes: cross-departmental conflicts, lack of professional teams.**
Private label department vs. merchandise department vs. quality control department bickering: lack of high-level coordination, no professional leader with decision-making authority.
Lack of a professional private label team: traditional procurement staff double as private label managers, leading to 'only knowing how to squeeze prices, not how to develop products.'
Chaotic processes: unstable development cycles, lack of inter-departmental coordination, and chaotic launch timing.
Unreasonable KPI system: same evaluation standards as traditional procurement, without an adaptive and reasonable system for evaluation.
**Third, chaos in supply chain and production: cost squeezing, quality fluctuations.**
Excessive price pressure leads suppliers to cut corners: private label growth mainly comes from 'quality at a fair price,' but unreasonable excessive price pressure leaves suppliers with insufficient profits, prompting them to take risks, causing unstable quality.
Frequent supplier changes lead to unstable quality: the same SKU may have differences in taste, texture, and appearance across batches.
Lack of a supplier tiered management system: strategic suppliers, core suppliers, and long-tail suppliers are all lumped together.
Lack of a stable quality monitoring system: unsystematic sampling inspections, increasing food safety risks.
**Fourth, chaos in product development: copying, piling up SKUs, no differentiation.**
A lot of 'copying domestic brands, copying internet-famous products, copying big brands': lack of original capability, making it impossible to build brand value.
SKU piling-up development: lack of consumer insight, just pursuing 'if others have it, we must have it too.'
Lack of sensory testing and user co-creation: rough packaging design, lack of brand feel.
**Fifth, chaos in branding and marketing: can't tell stories, can't build brands.**
Private labels are 'under-branded': only products, no brand story, no value proposition, no visual identity system.
Insufficient marketing investment: thinking private labels 'will sell naturally,' no promotion, lack of consumer communication.
Brand equity is hard to accumulate: frequent packaging changes, name changes, consumers can't remember.
**Sixth, chaos in channels and stores: poor display, weak sell-through.**
Stores are unwilling to promote private labels: because of unreasonable gross margin structures and incentive mechanisms.
Inconsistent display: the same brand looks completely different in different stores.
Lack of tasting, trial, and experience mechanisms: consumers cannot build trust.
Confused positioning of private label sections: setting up large sections without sufficient retail reputation, leading to poor sales.
**Three Mountains:**
**Supply Chain, Product Power, Operational Losses**
From 'making it' to 'making it work,' there is a long road for private labels.
Many retailers experience an initial new product dividend: launching a batch of new products, opening sections, running promotions, which looks lively. But soon they hit a reality: the further they go, the harder it gets; sales don't rise, repurchase doesn't pick up, and gross margins are eaten by losses.
Except for a few top players like Sam's Club, Costco, Aldi, and Hema, most companies' private labels perform mediocrely, stuck in a vicious cycle: **have products, no brand; have sales, no stickiness.**
Why are they stuck here?
Supply chain, product power, and operational losses—these three mountains are too hard to overturn.
**The first mountain: supply chain—if scale is insufficient, you don't even get a ticket.**
Many retailers hit the first hurdle in private labels: 'factory minimum order quantities' and 'delivery stability.'
Industry research shows that 62.22% of retailers cite 'manufacturer minimum order quantities too high' as the primary bottleneck.
For example, developing a custom beverage might require a minimum order of tens of thousands of cases. For top players, this is trivial; for most regional supermarkets, it means betting inventory and cash flow.
More troublesome is the lack of long-term bound quality factory resources; cooperation remains at a shallow OEM, transactional level.
**The second mountain: lacking core capabilities, not knowing how to make products.**
Traditional retail is best at product selection: looking at sales, price, and gross margin, bringing in products that sell well.
But private labels require a different set of capabilities: you need to define a product like a brand owner.
  * Who is the target consumer? Who is this product for? What pain point does it solve? What scenarios is it suitable for?
  * Who are we competing with? What is the competitive scope? Compared with brands, what are our advantages? Compared with non-branded products, why should we be a bit more expensive?
  * What is the product positioning? How do formula, taste, specification, packaging, and pricing match together?
  * Is the support system sufficient? What standards are used to control quality? What methods are used for iteration?
Private labels are not an extension of procurement capability but the establishment of product capability. For example, Three Squirrels, when transforming into offline community retail, mentioned the need to 'reconstruct retail capabilities from the perspective of a brand manufacturer.'
The third mountain is operational losses: not understanding standardized management.
Private label operations are a 360-degree all-front battle, especially for food and beverages, where loss control directly determines gross margin survival.
Branding non-standard products (like fruits, vegetables, and cooked food) is even harder. As supermarkets shift toward restaurant-style and ready-to-eat formats, non-standard items like cooked and fresh food become key battlegrounds.
However, transforming these 'category-without-brand' items into 'private labels' with stable quality and unique experiences is the ultimate test of supply chain control and standardized operations capability.
**Retailers**
**Don't Blindly Do Private Labels; First Do a Review**
The 'private label fever' of 2025 has made many retailers work hard.
New products launched quickly, sections were set up, SKUs piled up, but in the end, did they actually become stronger? Did they make money? Did they build repurchase? Many people haven't calculated clearly.
So at the end of the year and beginning of the new year, the most important thing to do is not to write another plan, but to conduct a calm, data-driven review, do the math, and see how private labels are actually performing.
**Calculate the strategic account: are you really making money, or are you in 'chronic suicide'?**
Don't just look at sales share. If the share goes up but overall gross margin goes down, you're just doing the hard work of a porter.
Does your private label lower gross margin or contribute to it? Does it actually bring in new customers? If you're just converting customers who buy big brands into customers who buy cheap goods, that kind of 'left hand to right hand' growth is meaningless.
**Calculate the product account: did you create a 'hit product,' or is it dead stock in the warehouse?**
Private labels fear two situations: new products rely solely on shelf placement, and old products rely solely on clearance.
Focus on five indicators:
Comprehensive gross margin: How much higher is the private label gross margin minus losses and reverse logistics compared with regular procurement's comprehensive gross margin?
New product success rate: Of the new SKUs launched this year, how many can sell steadily?
Number of star products: Are there a few single products that contribute the majority of sales/gross margin?
Old product elimination rate: Are slow-moving SKUs removed promptly? Or do they accumulate?
Repurchase performance: Can repurchase for the same single product be sustained? Has the category been optimized?
**Calculate the efficiency account: is it an asset or a liability?**
Does the inventory turnover days of private labels outperform regular products? Is the comprehensive loss rate controlled? Many companies' private labels look good on gross margin, but when you calculate turnover and losses, they're all losses. If private labels become an inventory black hole dragging down cash flow, it's better to cut them early.
**Calculate the reputation account: do consumers recognize you?**
Has brand image and product quality established a perceptible and spreadable reputation? Are return rates and customer complaint rates within a healthy range?
**2026 Private Labels**
**Fifteen Questions That Must Be Faced**
Private labels: it's not that you're slow, but that you rush into action without thinking through the direction.
Private labels must be a 'top leader's project' because they involve not just one department but the entire chain of strategy, organization, supply chain, stores, and brand.
Before starting, think through the following 15 questions. If you don't think them through, the faster you act, the faster you'll fall into pitfalls.
**First dimension: Strategy and positioning—solving 'why to fight'**
1. What is the enterprise's overall strategy? What exact strategic role does private label play in it (profit engine, traffic entry, stickiness enhancement, or brand image)?
2. What are the assets of the retail enterprise's mother brand (such as trust, cost-effectiveness, quality feel)? How should private labels inherit and amplify these assets?
3. Based on your own business model (hypermarket, community store, membership store, hard discount, convenience store, e-commerce, etc.) and market size, do you truly have the 'basic capabilities' to do private labels well? If not, are there alternatives (such as deepening single-product procurement, or business alliance)?
**Second dimension: Brand and product—solving 'what to fight with'**
4. How to choose the brand strategy for private labels? Adopt a mother brand strategy, a mixed brand strategy, or a multi-brand matrix with independent brands? Are the brand positioning and value proposition clear and unique enough to occupy a place in consumers' minds?
5. What development stage is the current private label business in (commodity stage, product stage, category stage, brand stage)? Do the strategies and tactics match this stage?
6. Is the 2026 category battle map clear? Which categories should be attacked, which defended, and which decisively abandoned? Is new product development based on data insights or subjective assumptions?
**Third dimension: Organization and process—solving 'who fights'**
7. Is private label truly a 'top leader's project'? Is the CEO personally driving and coordinating?
8. Is the organizational structure an efficient independent business unit, or an appendage under the procurement system? Can it escape internal consumption and goal conflicts?
9. Has an end-to-end standardized closed-loop process been established from market insight, product R&D, supply chain sourcing to launch evaluation? Is quality control management independent and authoritative?
**Fourth dimension: Supply chain and collaboration—solving 'how to guarantee'**
10. Is the cooperation with manufacturers a shallow 'order transaction' relationship, or a deep 'risk-sharing, benefit-sharing' co-creation partnership?
11. Is the supply chain system healthy and resilient? How to scientifically evaluate, select, and continuously manage manufacturers?
12. Is the pricing and cost management system for private labels scientific and transparent? Are there institutional designs to prevent 'price rent-seeking'?
**Fifth dimension: Incentives and evolution—solving 'sustained momentum'**
13. Are the performance appraisal and incentive mechanisms for the private label team 'one-size-fits-all' with the traditional procurement department? Do they truly encourage innovation and long-term value?
14. Has the development of private labels hit a growth bottleneck? Is the core of the bottleneck product power, brand power, organizational capability, supply chain capability, or path planning?
15. What is the path to break through the bottleneck? Is it to learn from Sam's Club and Aldi, moving toward deep supply chain customization (productivity competition); or to learn from Pangdonglai, deepening emotional connection and ultimate service (market power competition)?
**In conclusion:**
Private label development is not simple OEM production but a profound growth for retail enterprises. It requires retail enterprises to transform from asset-light channel operators to heavy-investment 'manufacturing retailers' or 'brand retailers.'
In 2026, the private label industry will bid farewell to the era of rough growth and enter a strategic offensive period where strategic patience, professional depth, and organizational capability determine winners.
The future belongs only to 'rational innovators' who remain clear-headed in the frenzy and adhere to long-termism amid challenges. Their answers will determine the next landscape of China's retail industry.
Xue Wenfa, columnist for New Distribution's private label column, a long-termist with 20 years of practical experience injecting 'value differentiation genes' into brands. He has participated in the brand value reshaping of Nongfu Spring, led the young brand strategy transformation of Zhujiang Beer, and built and shaped the private label ecosystem of Meiyijia. He is currently responsible for OEM/ODM, product R&D, brand and marketing at Guangdong Yinxue Group (the 'King of OEM'). He is currently focused on research and practice in 'value differentiation construction' and 'private label system construction and advantageous growth.'


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## Citation metadata

- Publisher: New Distribution
- Author: 薛文发
- Published: 2026-01-16
- Canonical: https://xinjignxiao.com/en/articles/2026-the-great-reckoning-for-private-labels-f6475948/
- Original source: https://mp.weixin.qq.com/s/Cwd7DzxDPuuqDZ-IK0wdnA

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