In 2025, private labels are very popular, so much so that almost all national and regional retail chains are trying to develop them, fearing they might fall behind competitors. But a comment by teacher Liu Chunxiong after the article points to a key factor for private label success: whether the retailer's brand power can endorse its private label. Key to success: Retailers as channel brands have already earned consumer trust**** Unlike product brands with omnichannel penetration, private labels mostly appear only on the retailer's own shelves, so the consumer's decision-making path for purchasing private labels likely follows: 1. Trust the retailer, shop there frequently, and encounter the private label; 2. Find the private label appealing (whether in quality or price), at least worth trying, and choose it over product brands; 3. After experiencing it, find the private label not inferior to product brands, trust it, and form stable repeat purchases. This purchase decision involves a dual trust issue: consumers trust the retailer, and trust the private label more than product brands.**** Why choose to trust a private label? Besides the product's competitiveness, the retailer's endorsement also reduces consumers' decision costs.**** So to some extent, consumer trust in the retailer itself has a significant impact on the success of private labels.**** Private labels are not new; they are a sign of retail maturity at a certain stage of development.**** Naturally, there is much to learn from overseas retail history in this regard. Take Sam's Club as an example. Its private label MM (Member's Mark) is well-received in China now, but tracing back, few notice the background of MM's birth in North America and the importance of retailer endorsement. In the 1980s in North America, warehouse club stores were in a fierce battle. Costco was founded in 1983, and the same year, Walmart founder Sam Walton also founded Sam's. North American warehouse club format exploded in the 1980s market When Sam's first launched the MM private label in 1988, the U.S. was in a period of intense competition in the warehouse club format, with highly homogenized product structures and price competition putting Sam's at a disadvantage. Simply selling the same products, Sam's couldn't create a decisive difference in price and experience against competitors like Costco. Seeking value differentiation, Sam's wanted to establish product uniqueness and exclusivity, so it decided to launch a private label.**** It also hoped to strengthen members' mindset, such as "If you want to buy this high-quality paper or olive oil, you can only get it at Sam's," thus escaping the dilemma of pure price comparison. At that time, Sam's, independent of Walmart, was already a retail giant with a solid consumer base: 1. It had 123 stores in North America (covering 90% of the U.S. population-dense areas); 2. Annual revenue was $9.6 billion, close to the $10 billion mark (about 20% of Walmart Group's revenue); 3. It had over 5 million paying members, mainly middle-class families and small business owners. With such a high base of loyal consumers, Sam's also leveraged Walmart's global supply chain resources, providing a very strong endorsement for the MM brand. Ensuring MM's quality was not lower than or even exceeded product brands, strengthening members' trust in "Sam's selection."**** As a result, the MM brand quickly gained market recognition after its launch. It has continuously expanded into different categories, and over the past 40+ years, its contribution to Sam's sales has steadily increased to over 35%. Sam's Club has a clear phased rhythm in MM brand development It's not hard to imagine that if consumers hadn't trusted Sam's so much initially, the MM brand would hardly have had such sustained development and vitality. Successful performance: Private labels outperform product brands and take over shelf space**** For retailers, shelf space is limited, and private labels take shelf space from product brands, essentially a reallocation of limited resources.**** Retail is an efficiency business, and sales per square foot is a core concern for retailers. This reallocation indicates that private labels' sales per square foot contribution has exceeded that of product brands, whether in sales or gross profit. But private label performance is just the result; more importantly, retailers fully leverage their incomparable advantages in making products.**** Private label success is only superficial; the essence is that retailers have developed key capabilities based on their own advantages Compared to product brands, private labels mostly appear only on the retailer's own shelves, so they don't need omnichannel coverage, and naturally there's no extra premium to cover marketing costs. Therefore, the same quality at a lower price is an inherent advantage of private labels, especially evident in deeply processed categories.**** Similarly, the high success rate of retailers in private labels is premised on their broad consumer trust base, meaning retailers must have considerable scale. Compared to branded products, private labels have strong bargaining power over the supply chain from the start, further highlighting their high cost-performance ratio. Of course, beyond high cost-performance, a greater advantage in private label development is that retailers face consumers directly and can use precise consumer data to guide development. Consumers' in-store shopping behavior can almost all be captured and utilized by retailers. Whether it's direct feedback from consumer shopping data or data from testing product sell-through, private labels have a greater chance of appealing to consumers than product brands. Behind these situations, the essence is retailers' control over the upstream supply chain and the precision of their product selection strategies.**** If retailers, with a scale sales base, fully leverage their advantage of direct trust relationships with consumers as channels, it's hard not to develop good private labels; it just takes time for trial and error and iteration. Retail is an efficiency business, how to better increase sales per square foot with limited shelf space is a long-term proposition. This means private labels taking shelf space from product brands will persist and continue to happen.**** Therefore, it's easy to understand that retail giants in mature global markets, whether in Europe, America, or Japan, see private labels as a long-term opportunity for in-depth research. That's why we have textbook cases like Aldi, Costco, Sam's Club, and 7-11, which are worth learning from. Although the development of private labels in China still has a long way to go, as retailers' brand power continues to endorse private labels, things will inevitably advance along the objective laws of retail development.**** The future of local private label development in China is promising!