What is a private label brand? A private label brand is generally developed, created, and used by a wholesaler or retailer based on consumer needs. The retailer independently chooses the production and branding routes, controlling the entire process from design to distribution. Currently, retailers face two major problems: First, severe product homogenization among retailers, leading to small profit margins and an inability to meet all consumer needs; second, a sharp decline in customer traffic, not only in hypermarkets but also in small supermarkets and convenience stores. Therefore, to pursue product differentiation and profit maximization, retailers must organize and analyze current consumer demands, participate in the design, management, and distribution of brands throughout the process, and launch private label products to meet the changing demands of consumption stratification, niche markets, and personalization. Data shows that in the past two years, private label brands in the Chinese market have grown at a rate of 26%, far exceeding the 11% growth of the FMCG market. Additionally, according to relevant research data, 39% of Chinese consumers have purchased private label products, and of the remaining 61%, 94% are willing to try them. Currently, although private label brands are developing rapidly in China, their overall market share is still very low. At this stage, private label brands account for only 1% of the Chinese market, while in some European countries they reach nearly 50%. Among international retail giants, Walmart's private label sales account for 40%, and Costco's reach 30%. These brands entering the Chinese market, under the catfish effect, have also stimulated the process of domestic retailers building their own brands. Consumption is in an era of upgrading and transformation, and cultivating private label brands has become a consensus in the industry, driven by pain points such as the lengthy supply chain in FMCG. Below is an inventory of private label brands from retail enterprises. -01- Suning In June this year, Suning.com launched two private label FMCG tissue products on its official website: Bailin and its sub-series Zhi Hao. Notably, the product page indicates that these tissues are Suning.com's private label products. Previously, Suning.com had already launched its own grain and oil brand, Su Xiansheng, and related products for the FMCG category. In addition to tissue products, Suning's FMCG private label also simultaneously launched four rice products under Su Xiansheng: Crab Field Rice, Panjin No. 1, Northeast Long Grain Fragrant Rice, and Northeast Pearl Rice, with promotional offers comparable to Suning.com's "Billion Subsidy" and "J-10%" savings plans. Suning stated that Su Xiansheng focuses on grain and oil, while Bailin is a daily necessities brand. In the future, Suning.com will also develop private label snack food products, and its FMCG private label categories are rapidly expanding. -02- Alibaba At the end of 2019, Alibaba's Tmall Supermarket launched its private label snack food brand Bonbater (Bang Beite), which has not yet been extensively promoted. From the listed product lineup, currently available items include Bang Beite pistachios, Bang Beite pure egg cakes, Bang Beite Xinjiang red dates, Bang Beite purple-skinned cashews, Bang Beite organic soybeans, Bang Beite organic yellow millet, Bang Beite organic black rice, Bang Beite dried meat and seaweed, and Bang Beite sesame seaweed. From the packaging, the product designs are novel and have the characteristics of internet-famous brands. Although the product categories are currently relatively few, sales seem quite good. However, a Baidu search for Bang Beite currently yields no relevant brand information, indicating that the brand has not yet been extensively promoted. -03- JD.com On August 22, 2018, JD.com collectively unveiled its eight private label brands: Ba Xiang Shi, Chu Ran Zhi Ai, Hommy, Jia Bai, INTERIGHT, LATIT, Jing Xuan, and Jing Mi, covering food, maternal and infant products, home furnishings, daily necessities, apparel, luggage, home appliances, and fresh produce. It is reported that the interfaces of Ba Xiang Shi, Chu Ran Zhi Ai, and Jing Xuan prominently display labels such as "JD Private Label" and "JD Original." Among them, "Ba Xiang Shi" is a new food brand developed specifically for office workers. Ba Xiang Shi advocates a new light-meal concept, selecting premium raw material origins, and creating lightly processed, minimally additive, and portable packaged foods for office white-collar workers, bringing them a new office food experience. A representative from Ba Xiang Shi stated, "Through nutritional supplementation, a variety of flavors, and calorie control, we will bring the positive energy and joy of delicious food to busy office workers, helping them relieve stress and improve work performance." Chu Ran Zhi Ai, as a private label maternal and infant brand, provides safe and worry-free infant and toddler care solutions for families. Many of its products have become "internet-famous bestsellers" chosen by parents, including baby wipes, diaper rash cream, lotion, and shampoo and body wash. -04- Walmart Private label brands have always been the core of Walmart China's strategy to enhance product and service differentiation. Currently, Walmart China's private label brands have nearly 4,000 SKUs in total. Walmart China focuses on three private label brands: Great Value, George, and Marketside. Among them, Great Value primarily offers packaged foods and FMCG products, characterized by value and affordable necessities, covering categories such as candy, biscuits, snacks, chocolate, alcoholic beverages, refrigerated foods, frozen foods, dry goods, paper products, and cleaning supplies. According to Walmart's public announcements, since the beginning of 2020, sales of Walmart's private label products have increased by approximately 40% year-on-year, with particularly strong growth in rice, flour, vegetables, fruits, and eggs, where sales increased by 60%. -05- Carrefour Carrefour has developed nearly 2,000 food and non-food Carrefour products. They appear in Carrefour stores under different brand forms with the best prices and strictest quality control: Carrefour grocery private label, Carrefour fresh private label (Carrefour Quality System), Carrefour home appliance private label (Fosley), Carrefour textile brand Ouwen, and department store Bang products. Carrefour plans to increase investment in private label development, with the goal of private label sales accounting for one-third of the group's total turnover by 2022. Carrefour lemon soda -06- Yonghui Superstores At the end of 2018, Yonghui Superstores launched its new private label brand "Yonghui Preferred," which includes sub-brands such as Yonghui Farm, Tianqu, Yusong, Chan Da Shi, and Ofresh, covering fresh produce, dry goods and daily necessities, household items, and leisure food and beverages, with a total of over 1,000 SKUs, committed to creating a new quality lifestyle for consumers. "Through the creation of private label brands, we can trace the source to solve and improve food safety." It is reported that "Yonghui Preferred" has made three brand commitments: selecting source suppliers, conducting thousands of blind tests to select premium products, and offering high-quality products with high cost-performance. Among these, insisting on direct procurement from source origins is placed first. Yonghui Superstores' 2019 first-half report shows that in the first half of the year, 44 private label brands were on sale, with SKUs reaching 1,022. Six months earlier, when Yonghui's private label "Yonghui Preferred" was just launched, SKUs were fewer than 300. Additionally, the financial report shows that Yonghui Superstores achieved notable results in private labels, with B-end sales of 714 million yuan in the first half, including 450 million yuan from food and general merchandise and 264 million yuan from fresh produce; C-end sales were 786 million yuan, accounting for 2.1%. -07- China Resources Vanguard China Resources Vanguard's private label brands include Simple Combination, Run Zhi Jia, Jia Zhi Xuan, VICTOR (apparel), and Jia • Footprints. Among them, the independent brand Run Zhi Jia covers fresh produce, household food, and leisure food. "Run Zhi Jia" is China Resources Vanguard's food private label brand, with a complete range of products, mainly including leisure, dried goods, and cold fresh foods. The supermarket business has ranked first among Chinese chain supermarkets for many years. The deep-sea series of dried goods features vivid and lively packaging with strong visual impact, adapting to market demand trends and having good market effects. -08- Lianhua Supermarket Lianhua Supermarket's main private label brands are "Better Living," "Lianhua Jiahui," and "Youpin Shenghuo." "Better Living" has the richest product categories, mainly including small daily necessities, kitchenware and tableware, cosmetics and care products, and food, and is widely distributed in stores. Among small daily necessities, compared to similar non-private label products, "Better Living" products are clearly about 10% cheaper, and the quality is no worse than non-private label products, making them a good choice for ordinary households. "Lianhua Jiahui" mainly offers stainless steel tableware, with a small amount of daily necessities such as raincoats, umbrellas, and hangers. "Youpin Shenghuo" mainly offers underwear, socks, and towels. -09- Wumart Wumart Comprehensive Supermarket Company established a private label R&D department in 2001, becoming one of the first retailers in China to develop and sell private labels. In October 2005, Wumart Commercial Group integrated the strengths of various companies to establish the Private Label Department of the Wumart Commodity Center, uniformly managing the group's private label planning, design, development, quality control, and sales. In December 2005, Wumart's private label "Gei Ni Sheng" (Save for You) products were launched, shocking the market with ultra-low prices and receiving customer praise. In May 2006, the original Wumart private label "Wumart" products were all withdrawn from the market, marking a new stage of development for Wumart's private labels. In August 2006, Wumart launched its private label "Dongfang Xizhi." In October 2006, Wumart's private label "Liangshiji" was grandly launched. -10- Hema When Hema opened its first store in 2016, it intended to lay out private labels and put its first private label product on the shelves: Wuchang Daohuaxiang rice. In 2019, Hema announced that its private label SKUs had approached 1,000, accounting for more than 10%. Hema's private label began with the Hema brand Wuchang rice launched in 2016. In 2017, Hema launched the "Hema Daily Fresh" brand, gradually covering vegetables, meat, eggs, milk, and other categories. Currently, Hema Daily Fresh products come in seven colors of packaging for each day of the week, selling only on the day, with unsold items removed from shelves in the evening, and no overnight dishes are sold. Hema hopes to achieve more than 50% private label products within three years. This does not mean that all private labels are developed solely by Hema; rather, it hopes that suppliers will develop some products for Hema, which Hema will buy out, with all operational risks borne by Hema. Hema believes that having 50% of products as private labels within three years is the inevitable path for successful retail enterprises worldwide, as the proportion of private labels in successful global retail enterprises is generally around 50%. In conclusion: As the overall growth of the retail industry slows down, the supermarket industry, which is in a state of meager profits, has shifted from aggressively opening stores to improving the efficiency of individual stores, leading to a new wave of private label enthusiasm. Data shows that under normal circumstances, the gross margin of supplier products in supermarkets is around 5%, while the average gross margin of private label products can reach 15%. If domestic supermarket enterprises can further increase the proportion of private labels, it will help supermarkets break out of the current low-profit development bottleneck to a certain extent. However, private labels are not a smooth road for retail enterprises. Domestic consumers' awareness of private labels is still not high enough. Moreover, the private label products of domestic retail enterprises are still in the initial stage of "OEM production," and there is still a long way to go.