Final answer:
Retailers creating their own store brands can offer consumers high-quality or more cost-effective options, leading to increased profits and a solid reputation that fosters customer loyalty. This strategy can ultimately boost a retailer's market presence and provide a competitive edge in the marketplace.
Step-by-step explanation:
The benefits of a retailer creating their own store brands or private label are manifold. By doing so, they can offer consumers better or less expensive products compared to national brands. This strategy often results in increased profits for the business and more income for its employees. Furthermore, having a private label can contribute to a retailer's reputation for quality, leading to repeat customers and positive recommendations from consumers.
A strong reputation means customers are less concerned about product quality and are willing to pay a premium at reputable establishments. For instance, a well-regarded grocery store can command higher prices than a temporary farmer's market stand because consumers trust the consistency and quality associated with the store's brand. Overall, the gains from having a private label are significant for both the retailer and the consumers, as they result in a wider selection of goods at more competitive prices.