The New Rulers of the Distribution Market: Private Brand (PB) Products

What Is Your Shopping Cart Voting For?

Every time we go to the supermarket, we cast a small vote. On one side of the shelf are familiar nationwide brand (NB) products with big corporate logos shining, and next to them are the store’s own private brand (PB) products dressed more modestly with cheaper price tags. Until recently, PB products were often overlooked with the thought that “cheap means low quality.”

But the world has changed. Now, we willingly put PB products in our carts and even go out of our way to visit stores just to buy certain PB items. This is not just about saving a few bucks. Unbeknownst to us, the map of the distribution industry is shifting, and the meaning of “brand” is being rewritten.

How did PB products, once mere supporting actors overshadowed by famous brands, become the main characters? At the heart of this remarkable revolution is Costco’s “Kirkland Signature.” Kirkland is the textbook example showing how far PB can grow.

We will now uncover how Kirkland achieved its massive success and explore the secret strategies behind it. Then, we’ll follow how this story unfolded uniquely and fascinatingly in Korea, overcoming the harsh waves of the IMF financial crisis. From E-Mart’s dual faces, “No Brand” and “Peacock,” to convenience store cultural phenomena like “Hyeja Lunchboxes” and “Yonsei Milk Bread,” and even incidents that raised sharp questions about fairness in our society.

At the end of this long journey, we will realize that PB products have become a new force based on “trust” between companies and consumers, transcending mere “cost-effectiveness”—a symbol of “buying power.”

Part 1: The Giant’s Textbook – Building Trust and Breaking Costs

Have you heard of the name “Kirkland Signature”? This brand is not just a supermarket product. In 2023 alone, it generated over 98 trillion won in sales, surpassing many global giants. The amazing part is that all this success was achieved without a single TV commercial—only through consumers’ “trust.”

1. Radical Bet on One Name

In 1995, Costco took a risky gamble. At that time, their private brands were divided into dozens of categories—diapers, coffee, batteries, etc.—but they consolidated them all under a single name: “Kirkland Signature.” This was more than just paperwork. If a bottle of Kirkland wine tasted bad, people would doubt Kirkland batteries too. It was a high-stakes bet on the entire brand’s fate.

This move reflected a deep understanding of consumers’ minds: “Too many choices tire you out, right? If it says ‘Kirkland,’ quality and price are top-notch, so just trust and buy.” This message perfectly addressed consumers overwhelmed by countless products, becoming a mark of trust that solved “decision paralysis.”

2. The Heart of Innovation: Creating Value Behind the Scenes

“Quality as good as famous brands, prices at least 20% cheaper.” That’s Kirkland’s promise. How is this magic possible? The secret lies in the invisible “supply chain.”

Costco’s strategy is pure “simplicity.” While local supermarkets sell over 30,000 items, Costco focuses on fewer than 4,000 best-selling products. The power of focus is tremendous.

• Overwhelming buying power: Ordering huge volumes at once lets them get the lowest prices from manufacturers. This is the core of “buying power.”
• Warehouse-free logistics centers: Most products don’t sit in warehouses but move directly to stores upon arrival. This “cross-docking” method drastically reduces storage costs and time.
• Fast turnover: With fewer, fast-selling items, inventory never piles up. Money keeps flowing instead of being tied up in stock.

By trimming inefficiencies this way, Costco maintains incredibly low margins unimaginable to other supermarkets while still making substantial profits.

3. Completing Trust: The Magic Wheel of Membership

The final piece completing this strategy is the “membership” system. In fact, Costco’s real profit doesn’t come from product sales but from the annual fees we pay.

This is not just a membership card; it’s a “psychological contract” between us and Costco. Paying the fee makes us want to “get our money’s worth,” leading us to visit more often. Each time we experience Kirkland’s amazing value, we feel “my membership fee was a smart investment.” This satisfaction leads to high membership renewals, and the stable fee income supports Costco’s ability to keep prices low. This creates a virtuous cycle: [Excellent quality → Amazing value experience → Satisfying membership renewal → Stable revenue → Reinvestment in quality] that keeps turning endlessly.

Part 2: Korean PB Finds Its Way Amid Crisis

Korea’s PB market followed global trends but carries a unique history shaped by our experiences. The painful IMF financial crisis and the world’s fiercest retail competition created a dynamic story.

1. IMF Taught Us ‘Wise Consumption’

In 1997, the IMF crisis shook the entire country and changed our consumption habits. Buying PB products, once somewhat shameful, became praised wisdom during the crisis for “saving” and “rational consumption.” People began valuing actual worth over brand names, laying fertile ground for explosive PB growth. The history of Korean PB started with E-Mart’s 1996 launch of “E-Plus Milk,” which grew into a mighty river over time.

2. Brilliant Evolution Driven by Competition

Since the 2000s, Korean hypermarkets and convenience stores began treating PB not as filler products but as their strongest weapon to attract customers. Fierce competition gave birth to stars representing the Korean PB market.

3. E-Mart’s Two Faces: ‘No Brand’ vs. ‘Peacock’

E-Mart’s “No Brand” and “Peacock” perfectly illustrate how cleverly Korean consumers’ hearts were captured.

• No Brand: Launched with the slogan “The brand doesn’t matter, you the consumer do,” it cut all packaging and advertising costs to focus solely on product essence and the lowest price. It perfectly won over those seeking extreme cost-effectiveness.
• Peacock: Opening the premium ready-meal market with “We sell value, not price,” its products featuring famous chefs’ recipes broke the stereotype that PB means cheap and low quality, winning consumers willing to pay for delicious experiences.

Their success shows that the Korean PB market has entered a sophisticated “brand strategy” era satisfying diverse consumer tastes beyond just being a “cheap market.”

4. Convenience Store Rebellion: Products Become ‘Culture’

Convenience stores, needing to grab attention in small spaces, led innovation by turning PB products into a “cultural phenomenon.”

• GS25’s ‘Hyeja’ (Generous): The lunchbox combining actress Kim Hyeja’s warm image with generous portions created the new word “hyejaropda,” meaning “rich in value for the price.” It became a symbol of abundance, not just a lunchbox.
• CU’s ‘Half-Split Shot’ Craze: The “half-split shot” culture of breaking bread in half to show the filling on social media made “Yonsei Milk Cream Bread” famous for its bursting cream. Beyond taste, it offered “play” and “experience,” causing sold-out frenzy.

These have become “destination brands” that make consumers not just “choose” but “deliberately seek out” their stores. PB has reached its highest pinnacle.

Part 3: The Shadow of Strong Power, Questioning Fairness

The dazzling success of PB products has given retailers immense power. But this power sometimes raises heavy questions about “fairness” in society.

1. The Lesson Left by ‘Tongkeun Chicken’ in 2010

In 2010, when Lotte Mart launched the 5,000 won “Tongkeun Chicken,” the market was turned upside down. Consumers were thrilled, but local chicken shop owners cried, saying “Big corporations are killing neighborhood businesses.” The chicken disappeared after just one week.

This incident was a direct clash between “consumers’ right to buy cheap products” and “society’s responsibility to protect small businesses.” It left a deep mark on society, reminding us that market logic alone cannot explain everything and that the value of “living together” is crucial.

2. Coupang’s 140 Billion Won Fine: Is the Algorithm a Fair Judge?

In 2024, the Fair Trade Commission fined Coupang a staggering 140 billion won for secretly manipulating search rankings to better sell its own PB products.

Coupang argued, “What’s the difference from placing our products in visible spots in a store?” but the FTC disagreed. People trust online search rankings as “fair results based on objective data,” so manipulating them is seen as deceiving consumers.

This case signals that the battle over “fairness” has moved from supermarket shelves to online algorithms. When platforms become both players and referees, how should their immense power be controlled? This is a difficult challenge posed to our entire era beyond the PB market.

PB Grows on Your Trust

From Costco’s success textbook to Korea’s heated competition, we have walked a long path together. Now we know PB products are no longer cheap shadows of famous brands. Today’s PB is a living entity born from fierce innovation by retailers, deep insight into consumers’ hearts, and the voice of the times.

• Innovation: Reduced costs and increased efficiency behind the scenes to keep the promise of “good quality and fair price.”
• Buying Power: This innovation became “buying power” delivering amazing value to consumers, who repay that trust with loyalty.
• Fairness: But this strong power sometimes clashes with society, demanding new responsibility for “fairness.”

Ultimately, the best PB is not just a label on a product. It is a “trust icon” where consumers entrust their money and time. Every PB product you put in your cart today is your precious “vote” for the company’s philosophy and effort. The era of PB has just begun, and the invisible war for our trust will only become more exciting.