SEOUL, KOREA - Private label products are fast emerging as a strong contender to existing name brands. From low-priced items such as milk and ramen to big-ticket items like LCD TVs, private labels are increasing in numbers. According to retail industry sources, the volume of the private label market last year was as much as 10 trillion won.

 

 

 

E-Mart, one of the three major discount store operators, said its private label sales last year was 3.1 trillion won, accounting for 22 percent in total. Similarly, HomePlus reported that its private label sales volume was almost 3 trillion won while Lotte Mart said its private label sales surpassed the 25-percent level in the total sales revenue, without disclosing the sales figure. Convenience store chains such as CU are also ringing up more than 30 percent of their sales from private label goods.

 

The biggest draw of private label products for customers is low price, as they require little marketing cost that often accounts for as much as 30 percent in total cost. For example, the "E-Mart Red Ginseng Tablets" launched in October last year were sold at 99,000 won for a 240-gram pack, only 50 percent of the identical item sold under the "Cheong Kwan Jang" brand.

 

Customer perception that private label goods are low in quality has almost disappeared too. Lyu Sung-min, marketing professor at Sung-kyun-kwan University, said, "At the initiative of retailers, the quality of private label products available these days is improving markedly." In addition, the proliferation of private labels has an added benefit of keeping the capacity use of consumer goods manufacturers.