The share of business generated by private labels in department store sales increased from 9 per cent to 16 per cent between 2019 and 2022, as per a new report by the International Association of Department Stores (IADS). The report has found that department stores around the world have been relying on their own brands since the Covid-19 crisis.

The rise in demand for private labels has been due to customers abandoning national brands in favour of cheaper options. For some department stores, developing their own brands is a way to improve profitability, especially as the pandemic has challenged them.

Department stores have repositioned their private labels in the high-end segment to maintain viable margins. Some see it as a way to compete with international brands, while others are pre-empting the high-quality essentials segment.

Private label retail prices have increased in line with overall price inflation. However, the higher prices have opened up a debate about going upmarket to justify a new price point. The report also found that private labels with the highest gross margins sell best.

Department stores are increasing the share of sustainable products in their collections and are keen to become more transparent. It is expected that private labels will continue to generate greater competitive and financial advantage compared to other commercial models found in department stores.