Private Label vs. National Brands: Two pricing strategies that shouldn't be managed the same way
Fabrice Decroo
Consulting Director
August 21, 2026
Private labels and national brands have different cost structures and roles on the shelf. Private labels will account for 45.5% of volume in France in 2025 (35.6% by value, NielsenIQ)—but national brands will regain momentum in 2026 (+1.9% in units vs. +1.8% for private labels). Managing both with the same margin thresholds distorts the profitability picture; the cross-elasticity between the two should be measured, not assumed.
On the same shelf, just a few centimeters apart, a private-label brand and a national brand do not follow the same economic logic. Managing both with the same margin thresholds, the same KPI framework, or the same price-adjustment schedule is like trying to measure two different realities with a single tool.
This guide explains why this confusion is costly and how to develop truly differentiated pricing strategies.
Two products, one shelf, two business models
- National brand — brand awareness built through advertising, often with a narrower per-unit margin. Massive marketing investment, presence across multiple retail chains, and a role in driving traffic and building consumer confidence.
- Private label — streamlined cost structure, direct role in price-image. No comparable in-house marketing investment; exclusive to the retailer.
- Role on the shelf —two complementary, non-competing functions: the national brand builds trust and attracts customers, while the store brand shapes the overall price perception of the shelf.
What the French Market Figures Reveal
45.5% —that is the market share of private-label products by volume in France in 2025 (35.6% by value), their highest level in recent years—a level that nevertheless remains below the Western European average, which is close to 48% (NielsenIQ, as reported by LSA, 2025).
+1.8% —that’s the growth in private-label sales by unit volume during the first few months of 2026, driven in particular by the premium private-label segment (+2.1%)—while national brands are also regaining momentum, with a 1.9% increase in unit volume over the same period (NielsenIQ, 2026).
Why a One-Size-Fits-All Pricing Rule Skews Profitability Analysis
Applying the same target margin threshold—or the same KVI selection criteria—to a category that mixes private label and national brands produces a misleading picture. A category where private label products account for a large share will automatically show a more favorable average margin rate, without this reflecting a true difference in management performance. A customer compares the price of a national brand across different retailers; they rarely compare the price of a private label, since it is only available at a single retailer—see also the section dedicated to food retail.
At Booper — the module Pricing Optimization Software allows you to analyze price and margin performance by breaking down each category by product type—private label, national brand, premium brand—rather than relying on a department-wide average. Discover the solution at Pricing Optimization Software.
Developing differentiated pricing rules
- Set separate margin targets by brand type, rather than a single category-wide target.
- Identify the KVIs separately for each family —the monitored core varies depending on the nature of the brand.
- Never publish a margin metric without breaking it down by brand type.
Cross-training: The Connection We Often Overlook
Private-label and national brands within the same product category are not mutually exclusive: a price increase for one often shifts some of the demand to the other. This substitution effect should be measured rather than assumed. Ignoring this cross-elasticity leads to inconsistent decisions.
The Most Common Mistakes
- Set a single margin target per category, without breaking it down between private labels and national brands.
- Apply the same KVI logic to both families.
- Ignore cross-elasticity when there is a price change for one of the two product families.
- Treating private-label positioning as a rigid rule (“always cheaper”), without taking into account the specific segmentation of each retailer.
- Compare the performance of two categories without taking into account their respective mix of private-label and national-brand products.
Private label and national brands are not two versions of the same product—they are two distinct business models that coexist on the same shelf. To objectively analyze the margin breakdown of your key categories, explore our pricing strategy development service.
FAQ
National brands invest heavily in marketing and recoup those costs through pricing that reflects that investment, often resulting in a lower per-unit margin. Private-label brands have a leaner cost structure and generally generate a higher profit margin.
Their roles on the shelf differ: the national brand attracts customers through its name recognition, while the private label directly shapes the price-image. Managing them the same way distorts the profitability analysis.
According to NielsenIQ, approximately 45.5% of volume and 35.6% of revenue in 2025—a level below the Western European average (~48%).
By setting separate margin targets, identifying the KPIs for each product family separately, and modeling the cross-elasticity between the two.
Not automatically, but it is a common substitution effect that deserves to be modeled rather than assumed.
This is the most common positioning strategy, but it is not a hard-and-fast rule: some premium private-label brands deliberately position themselves close to national brands.
Also in this series
- Pricing in the Retail Sector: What's Changing (and What Isn't)
- Pricing in the Food Retail Industry: Balancing Margin and Price Image on a Product-by-Product Basis
Sources: NielsenIQ, as reported by LSA · NielsenIQ, 2025 Consumer Goods Market Outlook · Booper × Coopérative U Business Case.
Lowering a price almost always leads to higher sales—that’s never the issue. The real question is whether the additional volume generates enough profit to offset the profit lost on each unit already sold. The answer depends on two figures that are rarely considered together: the product’s markup rate and its actual price elasticity.
In the retail sector, a product’s profitability is never fully reflected in its selling price. Part of it is determined on the shelf (the front-end margin), while another part is negotiated separately with the supplier, off the sales receipt (the back-end margin). Managing one without the other means managing an incomplete picture of profitability—and often, without realizing it, an underestimated one.
The margin, markup, and margin rate do not measure the same thing, and confusing them distorts all the resulting pricing decisions. Once these definitions and their formulas are established, the real question becomes an operational one: how can you maintain an accurate view of your margin when it changes every week, product by product, rather than recalculating it once a quarter in a spreadsheet?