Photo: Private Label Manufacturers Association
Where is the innovation we should be seeing in store brands?
Almost exactly three years after its last in-person conference, the Private Label Manufacturers Association met in Chicago this week to share the latest and greatest on store brands. The expo floor featured more than 1,400 exhibitors and 2,300 booths, and the hustle and bustle in the aisles was reminiscent of the before times.
PLMA President Peggy Davies shared with the audience during the opening educational session that, “Store brands are no longer copycats. Our industry is now cutting edge in category after category.” The show floor didn’t quite tell that story.
With a few exceptions, there wasn’t anything really new. The 2019 show had dozens of hemp and CBD vendors, and there were more this year. Same thing for plant-based marketers, with the addition of a few subcategories like oat milk. Gluten-free, vegan diet offerings, ethnic specialties and prepared foods were all still strong. On the non-foods side of the expo, sustainable products and packaging are still trending positive, with compostable trash bags and bamboo cups featured in several booths.
Some of the exceptions for what was genuinely new at the conference were directly related to COVID-19, like masks and cleaning products. Others were focused on turning existing store brands into premium ones, especially in categories like coffee, herbs/spices and sauces.
It is a valid comment that there hasn’t been a lot of innovation on the national brand side of the grocery business during the last few years while everyone in CPG has been dealing with a myriad of marketing and supply chain challenges. Still, this could be a great opportunity for store brands to really be what Ms. Davies said it is — cutting edge in category after category.
Discussion Questions
DISCUSSION QUESTIONS:: What should retailers be doing with their store brands right now to grow the segment? What new categories of products make sense for private label expansion?
Poll
Loading …BrainTrust
Retailers need to think beyond private label being a cheaper version of what is already out there. Some retailers – Target, Trader Joe’s, Wegmans, and Kroger among them – already do this and they have seen very strong growth from their own brands. All of this thinking needs to be done with the customer and strategy in mind. Target, for example, developed Favorite Day to target younger shoppers in the treat segment. It has been very successful in doing that.
Store brands should be innovating through investment in new material development. We are seeing this type of investment in textiles and hardgoods like at Nike, Levi’s, Ralph Lauren and Away.
We need to see more newness and innovation at these types of trade shows. Store brands that frequent these shows are looking for ideas because they can’t afford to innovate on their own. They need to see that innovation is possible and they can compete with brands like Nike.
These shows and platforms should also show store brands how to innovate from a product creation and merchandising perspective. There are better ways of going to market and they just need to be shown what is possible. New ways of working and creating product is about simplifying and leveraging digital.
Innovation is not the answer. Innovation is costly and time-consuming. The retailers already have what they need to know about the CPG brand categories they carry. The CPG brands are giving them all the test market they need.
Do you want to grow the segment? Don’t see yourself as a price brand. See yourself as a value brand, meaning price and quality.
Aligning with shopper values (sustainability, diversity, value, local and wellness) fuels private label growth. Frozen foods, snacks and alcohol-free beverages are in-demand categories ideal for retailer reinvention.
I think there’s tremendous upside for retailers to innovate with their existing store brands and launch new ones in niche categories that appeal to consumers’ preferences. Yes, this takes some due diligence and good old fashioned research (which means money), but the payoff can be huge when a private label product finds the sweet spot. Target, 7-Eleven, Costco, QT and Racetrac are just a few who have done a fantastic job of launching new private labels that have scored wins with consumers and have raked in huge sums of cash.
Like Gene Detroyer I’m not sure innovation ought to be a goal. If I look at the history of retailer-controlled brands like Loblaw, Trader Joe’s, Aldi, Wegmans, H.E.B., etc. it looks to me like success is anchored in consistent product quality, not novelty.
Store brands are alive and well — and growing! The key to expansion is to be laser focused on what’s important to consumers and how to build a brand franchise (e.g., Kirkland Signature comes to mind).
Delivering high quality, value, and relevance are the underlying variables that can drive successful growth for retailers. The other key is standing out in a crowded field with consistency.
This is actually a really tough question to answer. When it comes to grocery, consumers tend not to deviate a ton in their purchase decisions. Innovation in food that garners shopper interest unfortunately usually comes from the diet industry. It’s hard to generate demand for a new food product if consumers don’t understand it or know what to expect when it comes to how it will taste and how they’ll be better off for eating it. Innovation is always important, but it has to be driven by consumer needs and interest.
Many shoppers have bought store brands during this time of inflation. Once inflation decreases, the temptation will be to go back to national brands, and certainly manufacturers will promote heavily to make that happen. That is why private label manufacturers need to enhance the quality of their brands now. In other words, make it difficult for shoppers to change their buying habits.