BCG & Inverto analysis: Private Labels Emerge as Key Growth Driver in Retail

• BCG and Inverto analysis shows: Private labels are becoming a strategic growth engine for retailers, particularly in non-food categories
• Consumers increasingly associate private labels with quality – 61% of English consumers choose them for their strong value-for-money proposition
• Procurement plays a pivotal role – a robust supply chain unlocks significant margin potential for retailers

London, Febuary 02, 2026 – Once considered low-cost alternatives, private labels have evolved into strategic assets for retailers and attractive choices for consumers. A new study by Boston Consulting Group (BCG) and Inverto reveals that private labels – especially in non-food categories – are becoming a decisive competitive advantage. Retailers that manage their private labels with the same rigor as manufacturer brands can boost margins, attract new customer segments, and build lasting brand loyalty.

Today, private labels are no longer seen merely as budget options but are often associated with quality. In fact, it’s increasingly common for them to outperform leading national brands in independent tests. Nearly two-thirds of English consumers (61%) prefer private labels for their superior price-performance ratio, according to the analysis.

Private Label Investments Pay Off – for Retailers and Consumers Alike

Younger shoppers, in particular, have shed traditional reservations: on platforms like TikTok, #dupe videos now garner billions of views – a strong indicator that Generation Z often values affordability over brand prestige. This “dupe culture” is accelerating the mass-market breakthrough of non-food private labels. Success is especially evident among retailers that manage their private labels as true brands – leveraging data-driven assortment planning, emotional branding, sophisticated packaging, and high visibility across all sales channels.

Some retailers are taking it even further: developing dedicated microsites, social media profiles, and even listings on external marketplaces to boost reach and brand perception. However, executing a high-performing private label strategy comes with challenges. Especially in non-food segments – from cosmetics and clothing to tools and power equipment – quality expectations are high. Consumers expect products that match or exceed leading brand standards. At the same time, demands around design, sustainability, and the overall shopping experience are also rising.

Procurement and Supply Chain Excellence as Cornerstones of Success

A critical success factor lies in procurement and supply chain optimization. Retailers benefit from long-term supplier partnerships, transparent cost models, and agile, regional sourcing strategies. “Leading retailers today blend global efficiency with local agility in a ‘glocal sourcing’ approach. This includes joint value analyses with suppliers, clearly structured product development processes, and increasingly AI-powered forecasting,” says Simone Hilbring, Managing Director and Consumer Goods Expert at Inverto.

Retailers using AI-based forecasting models can improve planning accuracy by 10 to 20 percent. This reduces reliance on markdowns triggered by poor predictions and significantly enhances supply reliability – ensuring consumer demand is met and reducing the risk of product switching due to stockouts.

Those who master these levers can bring assortments to market faster, more cost-effectively, and with higher quality. “A well-structured procurement function and a strong supply chain are the foundation for success in non-food private labels,” Hilbring emphasizes. “This includes selecting suppliers based on clear targets, implementing strict quality controls, and intelligently bundling demand across countries where feasible.”

AI-driven analytics also support the harmonization of assortments across markets while still addressing local consumer needs. Retailers who combine global structures with local execution stand to unlock significant margin potential. Executed correctly, private labels can not only compete with national brands – they can outperform them in speed and customer proximity. As a result, a retailer’s private label portfolio becomes a key tool for market differentiation. “The retailers investing strategically in their private labels today will be the ones shaping tomorrow’s competitive landscape,” Hilbring concludes.