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Golden era of PB : Who reaped the fruits of growth?

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Title Golden era of PB
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Sub Title

Who reaped the fruits of growth?

Material Type Videos
Author(English)

Korea Development Institute

Publisher

[Sejong] : Korea Development Institute

Date 2017-08
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Industry and Technology < Manufacturing
Holding Korea Development Institute
License

Abstract

Private brands are booming in Korea. Unlike national brands, private brand or PB products are branded with the respective retailers’ brand and are only available at their stores. And as for market size, the domestic PB market grew 2.5 fold from 2008 to 2013, marking 9.3 trillion won from 3.6 trillion won during the same period. Then, what is spurring the rapid creation and growth of PB products in Korea’s retail market? Corporate retailers have become increasingly influential in the general retail market as more and more consumers purchase their products. Accordingly, their growing presence has allowed retailers to inject themselves into the production process, thus, creating private brands. In addition, private brands have enabled retailers to secure stable retail margins through product differentiation in response to the intensifying price competition that has cut into their profits. So, have PBs increased profits? The results of an empirical analysis reveal that the shift in strategy has been a success with stores experiencing a yearly average increase of 22.3 million won in sales and 2.7 to 9 million won in profit for every 1%p increase in the share of PB sales.