Private Labels and Branded Goods: Consumers’ ‘Horrors’ and ‘Heroes’

Abstract

Abstract Private label and manufacturer branded goods compete for shelf space and the attentions of consumers. They may have much in common but they can have very different impacts on supplier and retailer competition and ultimately on consumer welfare. This chapter considers the different sides to private labels and branded goods, examining how each type can affect competition in a positive or harmful way. From the consumer’s perspective, the exercise of market power may stifle competition and restrict consumer choice. Different types of brand or private label ‘horrors’ are considered, where the respective market power of brand producers and retailers can be used in a way that is detrimental to competition and consumer welfare. Equally, though, branded goods and private labels can have a countervailing capacity to stem or neutralize market power and enrich choice with new, innovative products, such that each in their own way have the ability to extend and encourage greater competition and thereby offer important consumer benefits. The chapter considers how and when these goods support effective competition, illustrating the different types of brand and private label ‘heroes’ that can promote competition and choice to the benefit of consumers. The chapter closes by considering the shape of future competition in light of relentlessly increasing retail concentration and the growing power of large retailers, with possible implications for consumer sovereignty.