Summary of Key Points
In the past two years, the private brands of supermarkets and retail platforms such as Sam's Club, Hema, and Walmart (such as Member’s Mark and Hema Gongfang) have evolved from being merely low-cost, incidental products to becoming key offerings in high-frequency consumption scenarios like baking, fresh food, and dairy products. These brands have gained market share at the expense of traditional supplier brands by leveraging channel trust and offering excellent value for money. However, this does not mean that supplier branding has become completely obsolete: categories with higher decision-making complexity (such as cosmetics and baby products) still require professional brands, while mid-tier brands without distinctiveness are facing competition. High-quality suppliers, on the other hand, can use these channels to build their own recognition.
Detailed Analysis
1. Channel Private Brands: From Supplementary Products to Key Attractions
In the past, supermarket private brands, like RT-Mart's "Da Thumb Super Save," were simply basic daily necessities with simple packaging and low prices, for which consumers did not make a special trip to the store. Today, things have changed significantly:
- Explosion in Scale: Hema now has over 1,200 private brand products, accounting for 35% of its sales; Pupu's private brand sales exceeded 5 billion yuan in 2024, representing 15%-20% of its revenue.
- Upgraded Usage Scenarios: These brands are no longer limited to daily necessities but have expanded into high-frequency, highly engaging categories such as baked goods and fresh food (for example, Hema Gongfang's prepared meals attract many customers specifically).
- Differentiated Value: Channels are using private brands to create uniqueness—Wojixian launches nearly a thousand new products each year, and JD Qixian uses AI for product innovation, making these items major attractions for customers.
In short, channel private brands have become a core tool for retaining customers, rather than just supplementary offerings.
2. Why Do Consumers Buy Them? Trust + Price
Consumers choose channel private brands because they offer a combination of trust and cost savings:
- Trust: These products are manufactured by established companies—Oleqi's premium soy sauce (9.9 yuan) is made by Haitian, and Sam's Club's fresh milk is produced by Mengniu, ensuring quality. The reputation of the channels themselves further adds to the credibility.
- Affordable Prices: For example, a 2L bottle of private brand fresh milk at a certain supermarket costs 17.9 yuan, which is only 8.5 yuan per 950ml, 1.5 yuan cheaper than similar products from dairy companies. At member stores, the same volume costs 18.9 yuan, 50% less.
Why are prices so low? First, channels purchase in bulk, resulting in lower costs for suppliers; second, they save on branding expenses (suppliers don't need to spend on advertising or promotions, passing these savings directly to consumers).
3. Why Are Suppliers Willing to Use Private Brands? Rational Choices Under Pressure
Previously, only smaller suppliers were willing to produce for channels, but now even large companies like Mengniu and Haitian are participating. The reasons are practical:
- Capacity Utilization: For example, in 2024, dairy consumption slowed down, leading to inventory buildup. Producing for channels provides stable orders, even if the profit per bottle is lower than selling directly.
- Closer to Consumers: Channels are closer to the point of sale and can quickly respond to consumer needs—Walmart, for instance, changed the size of milk bottles to meet customer preferences and then worked with suppliers to reduce prices by 10%. This customized cooperation also helps improve efficiency.
For suppliers, producing for channels has become a means to stabilize their operations in a volatile market.
4. Is Supplier Branding Still Relevant? It Depends on the Category and Strength
Not all suppliers need to build their own brands. The decision depends on the category and their capabilities:
- High-Demand Categories: Professional brands are still essential for products like cosmetics, sports shoes, and baby products, where consumers require expert judgment (e.g., ingredient composition in lipstick or safety of baby formula).
- Mid-Tier Brands: Those without distinctiveness and relying on advertising and distribution through channels (e.g., certain paper towels and snacks) are at risk of being marginalized by more affordable private brands.
- High-Quality Suppliers: Some can still succeed—For example, Unuo produces Greek yogurt for Sam's Club and Hema and also supplies fresh milk to Starbucks, gaining recognition through these strong channels.牧高笛 initially produced for Decathlon but later developed its own outdoor brand.
In summary, branding has not become ineffective; what has changed is the dominance of superficial brands built on advertising alone. Truly valuable brands either solve complex consumer needs or possess unique technologies. Suppliers producing standardized products should focus on improving their products and using channels to build customer recognition.
Final Conclusion
The rise of channel private brands does not mark the end of branding but rather a process where genuine brands become more valuable while fake ones are phased out. Consumers are becoming more discerning and only willing to pay for real value.