Gen Z predicted to be the most loyal buyers of private brand products
In recent years, a significant shift has been observed in the consumer behaviour of Generation Z (Gen Z). This demographic is increasingly leaning towards private label brands, which are perceived as budget-friendly alternatives that reflect their values.
According to a report by Numerator, private label brands are becoming more than just cost-effective options. They are seen as reflections of Gen Z's values, with a growing association with innovation, trendiness, and premiumization.
This trend is not going unnoticed by major retailers. Macy's has introduced its own private label brand for a range of merchandise, while Lowe's recently launched Lowe's Essentials brand, featuring items that sell for under $10. Walmart has debuted a private label apparel brand for tweens, Weekend Academy, with most products priced below $15. Even Kohl's has entered the fray, debuting its own home goods private label brand this year.
The forefront of this shift is Generation Z. By mid-2026, Gen Z is projected to spend 18.4% of their consumer packaged goods and general merchandise budget on private label brands, surpassing the spending of baby boomers, millennials, and Gen X.
The driving factors behind this trend are multifaceted. Economic conditions, including inflation, are prompting Gen Z consumers to seek more affordable options, which private labels often provide. The emphasis on sustainability and transparent labeling resonates with Gen Z, aligning with their consumer values. Private labels also allow Gen Z to enjoy what they perceive as "affordable luxuries," fitting their lifestyle without breaking the budget.
Retailers are capitalising on this trend in various ways. They are introducing new private label brands, expanding product lines, and employing targeted marketing strategies to attract Gen Z consumers. Companies like Dollar General are adding around 100 new private brand products to their lineup, with a focus on their Clover Valley label. Retailers are also emphasising the exclusivity and urgency of their private label offerings, such as limited-edition releases that foster a sense of loyalty and belonging.
Last year, private label brand sales reached a record high of $271 billion, while national brand sales rose only 1% compared to 2023. This indicates a clear shift in consumer preferences towards private labels.
However, Gen Z consumers have concerns about the quality, retailer trust, packaging, and design of private label brands. Retailers are addressing these concerns by investing in attractive packaging and marketing campaigns that highlight the premium nature of their private labels. Popular private label brands among Gen Z shoppers include Ulta Beauty, Wild Fable, Trader Joe's, Costco's Kirkland Signature, and the newly launched private label brands from major retailers.
In conclusion, the increased consumption of private label products by Gen Z is a response to their budgets and changing perceptions of store brands. Major retailers are capitalising on this trend by introducing new private label brands, expanding product lines, and employing targeted marketing strategies to appeal to Gen Z consumers. The future of private label brands looks promising, with Gen Z leading the way in this shift.
- The growing association of private label brands with innovation, trendiness, and premiumization is creating new opportunities for AI and industry in developing smarter and more appealing products for the Gen Z demographic.
- In finance, the increased preference for private label brands among Gen Z consumers is influencing investment strategies, as companies begin to prioritize private label brands with strong market growth potential.
- The shift in consumer behavior towards private label brands has prompted changes in the retail sector, with an emphasis on shopping experiences that reflect and cater to the lifestyle and values of Gen Z consumers.
- As Gen Z's spending on private label brands surpasses that of older generations, the trend is extending beyond the retail industry, affecting trade agreements and economics, particularly in relation to inflation.
- The rising popularity of private label brands among Gen Z shoppers is reshaping businesses and industries beyond retail, with potential long-term impacts on branding, marketing, and consumer values.
