Hardware Retailing The Industry's Source for Insights and Information
For years, private label has been viewed primarily as a margin play. Across the independent home improvement channel, retailers consistently point to higher margins and price competitiveness as the primary reasons for carrying private label products. In many stores, private label serves as a lower-cost alternative to national brands, often focused on commodity categories or price-sensitive customers. The financial benefits are real. Retailers routinely report stronger margins on private label products, while direct import programs can create even greater opportunities.
Depending on the category and sourcing model, those programs can generate margin improvements ranging from 15% to 35%. More Americans are embracing private label as well. According to Ipsos Consumer Tracker data, 69% of consumers report purchasing more private label products today than they did previously, up significantly from just a few months earlier. Yet focusing solely on margin may be causing retailers to overlook the greatest opportunity private label offers.
Through conversations with independent retailers and insights gathered from the North American Hardware and Paint Association’s Marketing & Merchandising Roundtable, a common theme emerges.
Most retailers make private label decisions based on price, supplier reliability and margin expectations. Success is often measured by sell-through rates and cost savings rates rather than customer perception or brand impact.
In many cases, private label products receive little dedicated marketing support. Instead, they rely on shelf placement, staff recommendations and side-by-side comparisons with national brands to drive adoption.
While those tactics can be effective, they also reinforce the idea that private label exists primarily as a value alternative. The retailers creating the greatest long-term value, however, are those who are approaching private label differently. They are treating it as a branding strategy, not simply a sourcing strategy.
A Different Approach
One of the clearest examples of this shift comes from lessons learned within the farm and ranch channel. Earlier in my career, while serving as director of retail operations at Bleyhl Co-op, a multistore farm and ranch retailer in the Pacific Northwest that has since become part of Valley Wide Cooperative, I saw firsthand what happens when private label is treated as a branding strategy rather than simply a margin opportunity. There, private label was not viewed as a program that needed to exist across every category.
Instead, it was deployed strategically in areas where it could strengthen both the business and the brand. In the orchard and vineyard segment, private label focused on products customers used every day in the field.
Tree paint, electrical tape, vine guards and wire were all opportunities to place the retailer’s brand directly into the customer’s own operation. The objective was not simply to sell a product. It was to create a recurring brand touchpoint. When customers reached for those products throughout their workday, the retailer’s brand remained visible.
When supplies ran low, contact information was often printed directly on the packaging, creating a natural path back to the store. Private label extended beyond products as well. Apparel, buckets and utility items reinforced the same brand presence long after customers left the salesfloor. Just as importantly, categories with strong brand loyalty were left alone. Power tools, equipment and other highly branded products continued to leverage the trust and equity built by national manufacturers.
Instead of competing against those brands, private label opportunities were identified in adjacent categories where loyalty was lower and differentiation was easier to establish. The lesson was simple: Not every category should be private labeled. The most effective private label strategies are selective, intentional and aligned with the role each category plays in the customer’s buying decision. One of the most common challenges retailers face with private label is positioning. Too often, private label is presented as the “good” option while national brands occupy the “better” and “best” tiers. While this approach may simplify assortment decisions, it can also reinforce the perception that private label is inherently inferior.
The most successful private label programs challenge that assumption. In many cases, private label products can be positioned as the recommended choice, offering the right balance of quality, value and trust. When customers view private label as a retailer’s endorsement rather than a compromise, the conversation changes entirely.
Looking Beyond Home Improvement
The strongest evidence that private label can be more than a margin play comes from outside the independent channel. Some of retail’s most successful brands have proven that private label can become one of the most powerful drivers of customer loyalty, differentiation and long-term growth.
Grocery chains, warehouse clubs and mass merchants have spent decades building private label portfolios that drive customer loyalty, reinforce brand identity and create meaningful competitive advantages. In many cases, customers actively seek out these products not because they are less expensive, but because they trust them. Packaging, merchandising and marketing play a central role in that success. Private label products are positioned as brands with their own identity rather than alternatives to national brands.
One of the most compelling examples is Costco’s Kirkland Signature brand. What began as a private label program has become one of the most recognized and trusted brands in retail. Customers routinely purchase Kirkland products not because they are the least expensive option, but because they believe they deliver exceptional value and quality. In many categories, Kirkland enjoys a level of loyalty that rivals or exceeds national brands. The significance isn’t simply that Costco created a successful private label line.
It’s that Kirkland reinforces the Costco brand every time a customer uses one of its products. The private label strategy and the retailer’s identity work together to strengthen trust, loyalty and customer retention.
Retailers such as Target, Aldi and Costco have demonstrated that private label can become a competitive advantage when it is treated as a brand rather than a product. Consumers increasingly view these offerings as destinations in their own right, not simply substitutes for national brands. Independent retailers may not have the scale of these organizations, but they possess something equally valuable: deep relationships within their communities. The opportunity is not to replicate big-box retail. The opportunity is to apply the same principles by creating products that reflect the store’s expertise, reputation and promise to customers.
The Branding Multiplier
The connection between private label and brand building became particularly evident during a major brand refresh at Bleyhl Co-op. While the company retained its name, it introduced a new visual identity, logo and overall brand system. As with many rebranding efforts, customer adoption did not happen overnight. Private label products accelerated that transition. Customers didn’t just see the new logo on advertisements or storefront signage.
They encountered it in the products they used, the apparel they wore and the supplies they relied on every day. The brand became part of their experience rather than simply part of the retailer’s marketing. That is the true power of private label. The retailers that will gain the most from private label in the years ahead will move beyond viewing it as a margin tool. They will treat it as a strategic extension of their brand.
They will position it with purpose rather than price, merchandise it with confidence and market it as part of the customer experience. Margins will always matter. But private label represents one of the few areas where independent retailers have complete control over their assortment, pricing and brand presence.
In an increasingly competitive marketplace, that level of control is rare. The retailers that recognize it will discover that the greatest return on private label may not come from the margin it generates, but from the brand equity it builds.
Private label is not just a way to improve profitability. It is one of the most powerful tools independent retailers have to strengthen customer loyalty, differentiate themselves from competitors and build a brand that extends far beyond the four walls of the store.
