Walking into the private brand section of most retail stores today, one often feels a strange sense: shelves are fully stocked, SKUs are numerous, but it's unclear why these products are there. Next to a bag of private label potato chips, there's another bag of almost identical specification, flavor, and price; next to a bottle of private label water, there's another bottle that's 20 cents cheaper than the branded one—they compete for position, consume each other, and ultimately are ignored by consumers together. This is the most common yet overlooked problem for Chinese private brands—having products without roles, quantity without division of labor. First, let's clarify the concept: the "role positioning" discussed here specifically refers to "the role a private label product plays within a category," not the retailer's overall brand positioning, nor the positioning of the private brand as a brand. In other words, it's about what each private label SKU does when entering a specific category, what it doesn't do, who it competes with, and how it's measured. Without a clear role, private brands are just fill-in-the-blank exercises on the shelf; with a clear role, they can become protagonists, supporting actors, fillers, or even game-changers in the category. Current Private Label Products Three Major Chaos in Category Role Positioning The first chaos is opportunistic development—going wherever resources are, without category analysis or role positioning. Some retailers' private brand teams work in a state of "resource grabbing" every day:

A factory offers low-priced tissue, project approved;

A contract manufacturer recommends a sparkling water, project approved;

At a trade show, a viral snack is spotted, project approved again. The developed products have no purpose, no clear competitive scope, or definitive evaluation metrics. If they sell, it's a bonus; if not, they're delisted. At year-end inventory, there's a pile of dead stock and write-offs, leaving little profit. I've worked with a regional retailer that, without sufficient preliminary research, developed several hundred private label SKUs in 2024, and at year-end wrote off nearly 10 million yuan due to poor sales—a typical consequence of opportunism. The second chaos is unregulated accumulation—similar products crowding within the same category, with private brands competing against each other. Many companies' private brand teams lack internal division and layering. In the biscuit category, one developer makes a soda-flavored savory cracker, another makes an almost identical savory soda cracker, with similar specs, prices, and selling points, differing only in packaging color. The result is that shelf space is filled with their own products, and sales per square meter actually decline; consumers face a pile of "look-alike" private label products and lose clarity in choice. Internal homogenization within private brands is more dangerous than homogenization with branded competitors because it consumes the company's own resources. The third chaos is the blurred competitive scope between private label products and procured goods, causing constant internal friction between departments. The most common scenario: the private brand department and the traditional procurement department target the same category, same specification, and same price band. For example, in the bottled water category, the private brand makes a 550ml purified water priced at 0.6 yuan; procurement introduces a national brand also 550ml at 1.0 yuan; procurement feels the private brand is "undermining my turf," while the private brand thinks procurement "won't give up shelf space." Another example: in soda crackers, the private brand launches a 400g family pack, while procurement simultaneously introduces a 400g branded product, and they end up side by side on the shelf, both selling poorly. The two departments fight each other in the system—you grab my display space, I pressure your sales targets; you say I affect your assessment, I say you don't support my development. Development cycles are repeatedly interrupted, new product launch rhythms are chaotic, and ultimately consumers remember nothing. This internal friction is essentially not a people problem but a structural conflict caused by the lack of role positioning for private label products. Why Is Role Positioning So Important for Private Label Products? Private brands have evolved to a point where it's no longer a question of "whether to do it," but "how to do it efficiently." Private brand resources are always scarce—development talent, supply chain capacity, shelf space, and consumer attention are all scarce. Investing scarce resources in products without a role is like firing ammunition in a direction without a target. Consider a comparative example. Sam's Club's Member's Mark Swiss roll launched in 2019, with annual sales exceeding 1 billion yuan; in some stores, this single product accounts for 8%-10% of monthly sales, and on average, 300 out of every 1,000 Sam's customers take home a box of Swiss rolls. The key behind this isn't just "making a delicious cake," but that Sam's set a clear role for the Swiss roll—it's the "core hero product" in the bakery category, tasked with driving traffic, repeat purchases, and social buzz. Sam's co-built a production line with suppliers to bring the cost per piece down to around 4 yuan, which supported the repeat purchase rate. Conversely, private label products without role positioning are like actors without a script—no matter how much screen time, they can't establish a character. I've worked with a regional supermarket chain with over 800 private label SKUs across more than 30 categories, but no category is dominated by private labels, nor is any category exclusively supplemented by private labels. Every category has a shadow of private labels, but in no category are private labels important. Over a year, private labels account for 5% of sales, with low sales contribution and even lower brand asset contribution. The significance of role positioning is to concentrate limited resources in the right places to create momentum. Four Role Positions for Private Label Products in a Category Returning to the methodological level, private label products can play four main roles in a category. These roles are not mutually exclusive; they are flexibly chosen based on category maturity, consumer demand, supply chain capability, and competitive landscape. The first role: Category Dominance. Category dominance means that the main sales, gross profit, and traffic contribution of the category are borne by the private brand. The retailer entrusts the "performance responsibility" of the category to the private brand, implying stable supply, strict quality control, and continuous investment in brand assets. The most typical example is Aldi—in the German market, it compressed the average number of ambient milk SKUs from 12 to just 2 (one whole milk, one low-fat), both private label, supplied by a unified dairy farm alliance. The result: shelf dwell time dropped from 54 seconds to 18 seconds, average daily sales per SKU increased by 210%, and inventory turnover reached 3.6 times that of competitors. This is typical "category dominance"—Aldi uses private labels to fully assume all functions of the milk category, so consumers don't need to make choices in front of the milk shelf. In the Chinese market, Aldi also keeps SKUs around 2,000, with private labels accounting for over 90%, meaning most categories are dominated by private labels. Categories suitable for dominance are often those with high purchase frequency, maturity, low or breakable brand concentration, and where the retailer has supply chain integration capabilities. Once a private brand becomes the dominant player in a category, it means the retailer has pricing power, definition power, and rhythm control in that category—this is the advanced state of private brand development. The second role: Category Supplement. The supplement role is the most suitable starting posture for most Chinese private brands today. When a category is dominated by strong national brands, a head-on confrontation has low odds and high costs. In such cases, private brands should choose to effectively supplement in terms of specification, price, profit, function, or scenario.

  • Aldi's "超值" (Extra Value) series soda crackers are a good example. In the biscuit category, small packs, chocolate-filled, and wafer products are already well covered by branded players. Aldi didn't make another "100g pack" or "filled" version; instead, it tapped into a neglected need—"family pack, clean label." It launched a 400g large pack of milk-salt sesame soda crackers, priced at 6.72 yuan during the new product period, using high-quality wheat flour, imported New Zealand whole milk powder, and white sesame, with a clean ingredient list, targeting the "family afternoon tea" scenario, quickly becoming a category hit. This is typical "category supplement"—not directly conflicting with existing supply, but filling the gaps or under-served parts of the category.
  • Another example is Sam's Club's Member's Mark wine series. In the Chinese market, entry-level wine supply is oversupplied, while high-end imported bottles are overpriced. Sam's private brand chose "mid-range premium" as its entry role—sourcing only from 15 classic core appellations like Burgundy, Chablis, and Prosecco. From Italy's 400+ DOP regions, it selects less than 2%; from Spain's 70+ DO regions, only 1; and it reduces costs through direct sourcing with volume commitments. The result: a Burgundy village-level AOC Chablis dry white sells for only 129 yuan/750ml. This isn't a head-on fight with big brands but fills the neglected "mid-range premium" price and quality band. The third role: Category Expansion. Categories are dynamic. Consumer needs, usage scenarios, and processing technologies change. When existing brands are slow to respond, private brands have the opportunity to expand the category—actively extending in terms of specification, function, and scenario. 7-Eleven's fresh food strategy in China is a typical "category expansion." In the convenience store staple food category, traditional boxed meals and rice balls already exist, but 7-Eleven continuously pushes the category boundaries outward:

Kung Pao Chicken and Eggplant Rice, Spicy Hot Pot Noodles, Mushroom Braised Pork Rice—expanding "convenience store staples" from "Japanese rice balls" to "regional Chinese meals";

And it expanded ready-made Oden from "curry and spicy soup" to "kombu and bonito clear broth with various ingredients," giving a once-homogeneous category new consumption scenarios. Member's Mark has also been doing category expansion in recent years—clean-label charcoal-grilled pork jerky, coconut crispy rolls, organic blueberry juice—pushing the "healthy snacks" subcategory toward the extreme of "only a few ingredients on the label." This is category expansion—it doesn't create new categories but pushes the boundaries of mature categories outward. The fourth role: Category Innovation. Generally, private brands are advised to focus on mature categories for discount and value development. But in some cases—such as when category development lags behind consumer demand iteration, or existing suppliers can't meet the retailer's requirements and expectations—private brands need to take on the role of category innovation. Category innovation carries high risk and requires significant investment, demanding trend judgment and pace control. I've always advocated: private brands should avoid 0-to-1 brand-new category innovation (i.e., creating entirely new categories that require lengthy consumer education), and instead focus on 1+N micro-innovation (i.e., adding one or more new dimensions to existing categories, such as health concepts, new scenarios, or new packaging forms).

  • 0-to-1 is from nothing, requiring consumer education and long-term investment, while private brands' core requirements are scale and speed—these are inherently contradictory.
  • 1+N is a steady and feasible conventional path; it has a foundation, validation, low risk, and high success rate. If 0-to-1 is necessary, three prerequisites must be met: the trend is validated, the supply chain is controllable, and resources can be continuously invested. Otherwise, category innovation can easily become a burial ground for the category. Category Management and Analysis Is the Foundation for Role Positioning of Private Label Products Why can some retailers clearly define the role of their private label products, while most fall into chaos? The answer lies in the capability of category management and analysis. Role positioning isn't decided by gut feeling; it must be based on systematic category research. Whether to develop private labels in a category, and whether to dominate, supplement, expand, or innovate, requires answering the following core questions: For the retailer, is this category a destination category, routine category, supplementary category, or seasonal category? Destination categories (where consumers come specifically for them) are suitable for private brands to take a dominant role; routine categories are suitable for supplementation; category expansion depends on whether resources are available. How high is the brand concentration in this category?

Low brand concentration makes it easy for private brands to enter;

High brand concentration with strong consumer loyalty means private brands are better suited for differentiated supplementation or expansion. Where are the unmet consumer values in this category—specification, price, quality, function, or scenario? This is the directional anchor for role selection. Can the private brand's supply chain capability support this role? Dominance requires stable supply and quality control; innovation requires R&D collaboration. If capability doesn't match the role, even the best positioning is empty talk. Category management is the foundation for role positioning of private label products, and it also guides and references it. Private brand development without category research is gambling; with category research, role positioning allows private brands to move from "doing for the sake of doing" to "doing for a purpose." Conclusion Respect the Cycle, Understand Positioning, Collaborate for Win-Win Finally, I want to say two things—one to private brand developers, one to traditional procurement colleagues. To private brand developers: Please value the role positioning of each private label product in its category. Before every product project, answer clearly— What role does it play in this category?

Dominant, supplement, expansion, or innovation?

What is its main competitive scope?

What are its success metrics? Don't launch products without a role; don't develop without boundaries. Otherwise, the more you develop, the greater the losses, and the more passive your department becomes. To traditional procurement colleagues: Please respect the development cycle of private brands and understand their function and positioning. Private brands are not the "enemy" of procurement but its "extension"—they take on the category value that brand manufacturers are unwilling, unable, or fail to deliver. When private brands take a dominant role, please cooperate by yielding display space and resources; when they supplement, acknowledge their contribution to category gross profit; when they innovate, give them the necessary room for trial and error. The synergy between procurement and private brands determines the retailer's ultimate height in category competition. Private brands are not fill-in-the-blank exercises on the shelf but role players in the category. With clear roles, the show is good; with proper division of labor, the category can win. May every private label product play its role well in its category. Xue Wenfa, Deputy General Manager of Guangdong Yinxue Group and senior private brand expert, has spent 20 years focusing on injecting "value differentiation genes" into brands. He has participated in Nongfu Spring's brand reshaping, led Zhujiang Beer's youth-oriented transformation, and built Meiyijia's private ecosystem. He is now responsible for Yinxue's OEM/ODM and product innovation, committed to category innovation and value differentiation system construction for private brands.