Retailer-Owned Brands: The New Battleground for Customer Loyalty and Data
The Rise of Retailer-Owned Brands: A Strategic Shift
The retail landscape is experiencing a profound transformation. As the lines between brands and retailers blur, a new competitive frontier has emerged: retailer-owned brands. Unlike traditional private label products, which were often positioned as lower-cost alternatives to national brands, today’s retailer-owned brands are built to stand out. They are unique, purpose-driven, and strategically designed to leverage the retailer’s direct relationship with the customer and the power of first-party data. This evolution is redefining how retailers compete, how they build loyalty, and how they capture and activate customer data.
From Private Label to Powerhouse Brands
Historically, private label products were about cost savings and shelf placement, with little investment in innovation or marketing. Modern retailer-owned brands, however, are built to be destinations in their own right. Leading retailers like Target, Kroger, and Bed Bath & Beyond have launched exclusive brands that generate billions in annual sales. These brands are not mere imitations—they are differentiated, often with their own value propositions, marketing campaigns, and even international reach. For example, Kroger’s Simple Truth line has become a flagship brand, available not just in the U.S. but also to international consumers through platforms like TMall.
Data: The Engine Behind Retailer-Owned Brand Success
What truly sets today’s retailer-owned brands apart is the strategic use of first-party data. Retailers have access to a wealth of information from millions of daily transactions, loyalty programs, and digital interactions. This data provides deep insights into customer preferences, unmet needs, and emerging trends—insights that traditional CPGs, often reliant on focus groups and syndicated research, struggle to match.
Retailers are using this data to:
- Identify market gaps by analyzing search queries, purchase patterns, and product reviews.
- Develop products that meet specific customer needs, informed by real-time feedback and behavioral signals.
- Personalize marketing and promotions to drive trial and repeat purchases, leveraging loyalty platforms and digital channels.
- Optimize inventory and fulfillment by predicting demand and managing supply chains more efficiently.
The result is a virtuous cycle: better products drive higher engagement, which generates more data, enabling even greater personalization and innovation.
Redefining Customer Loyalty
In a world of endless choice, loyalty is no longer just about points or discounts. Retailer-owned brands offer a new path to loyalty by creating exclusive experiences and emotional connections. When customers can only find a beloved product at a specific retailer, their relationship with that retailer deepens. This is especially powerful when combined with data-driven loyalty programs that reward not just purchases, but engagement and advocacy.
Retailers are moving beyond one-size-fits-all rewards to offer personalized incentives, gamified experiences, and VIP access—fostering a sense of belonging and differentiation that traditional brands and digital natives struggle to replicate. The ability to unify data across channels—online, in-store, mobile—enables retailers to recognize and reward customers wherever they shop, further strengthening loyalty.
Implications for Traditional CPGs: A Call to Reinvent
The rise of retailer-owned brands is not just a threat to shelf space—it’s a challenge to the very foundation of the traditional CPG model. As retailers become both the gatekeepers and the competitors, CPGs must rethink their approach to brand building, distribution, and customer engagement. Leading CPGs are responding by:
- Investing in direct-to-consumer (D2C) channels to build their own customer relationships and capture first-party data.
- Reimagining the role of their brand.com platforms as hubs for education, engagement, and loyalty.
- Optimizing their presence on retailer platforms to stand out on the virtual shelf, leveraging enhanced content, targeted promotions, and data-driven merchandising.
- Embracing a Total Commerce mindset, integrating online and offline touchpoints to deliver seamless, omnichannel experiences.
Nike’s transformation is a case in point. By shifting from a wholesale model to a D2C focus, Nike has grown direct sales from 16% to over 40% of total revenue, while enrolling more than 100 million consumers in its Nike Plus membership program. This shift not only drives sales, but also creates a rich data asset that fuels ongoing innovation and loyalty.
Guidance for Retailers and Brands
For Retailers:
- Centralize and unify your data to gain a holistic view of customer behavior across all touchpoints.
- Invest in product development and brand building for your owned brands, treating them as strategic assets rather than cost-saving measures.
- Leverage loyalty platforms and digital channels to create personalized, exclusive experiences that drive engagement and advocacy.
- Continuously test and iterate based on real-time feedback and analytics, using agile methodologies to stay ahead of changing customer needs.
For Brands:
- Develop a first-party data strategy to better understand and engage your customers directly.
- Explore direct-to-consumer models to build relationships and gather insights outside of traditional retail channels.
- Partner with retailers in new ways, offering differentiated products, exclusive collaborations, or data-sharing initiatives that create mutual value.
- Focus on your unique value proposition—what can you offer that retailer-owned brands cannot?
The Path Forward
Retailer-owned brands are not a passing trend—they are the new battleground for customer loyalty and data ownership. The winners will be those who can harness the power of data, create differentiated experiences, and build lasting relationships with their customers. As the lines between brands and retailers continue to blur, the ability to innovate, personalize, and adapt will define the next era of retail success.
Ready to shape your strategy for the new retail battleground? Connect with Publicis Sapient’s experts to unlock the full potential of data-driven retail and build brands that win in a digital-first world.