Jump-starting private label

Discussion
Nov 13, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

Private label shares have been fairly flat since 2012. Frozen & Refrigerated Buyer asked industry experts what’s going on, and how retailers might jump-start growth.

Here are some suggestions:

Trim back low-margin national brands.
Craig Espelien, CPG industry consultant: "Too often, retailers react when their competitors put a fringe brand on sale, frequently reaching out to the brand in question to try to replicate the deal. Instead, they should focus (like Kroger has) on how to maximize shelf performance by carrying fewer duplicative brands.

Communicate PL messages better.
Jon Hauptman, partner at Willard Bishop: "Retailers need to effectively communicate: 1) the quality and value of their private label offerings inside the store (via signage and stories) and outside the store (via digital vehicles like their website, social media, etc.), and 2) the value and savings associated with choosing a private label option via shelf edge tags.

Stop the "me-toos".
Christine Bellamo, director of dairy and frozen global business development at Daymon Worldwide: "Retailers that integrate private brands into their long-term strategic growth plans rather than viewing their private brands as a range of ‘similar’ or ‘me-too’ products are the ones whose private brand sales growth haven’t stalled."

Seek out untapped PL categories.
Todd Hale, principal at Todd Hale, LLC: "Retailers should focus on making the most out of growing private label categories where private label development has been low while managing losses in large private label categories whose relevance is waning (think milk)."

Emphasize local/natural.
Bob Shaw, president/CEO of Concentric Marketing: "All of the hot button trends right now around basic, local, authentic, non-processed, etc. are not often associated with private label. And that’s unfortunate because it wouldn’t be that much of a stretch to flip private label to a more local story. But outside of the produce section, where many retailers are talking about where the food comes from, most aren’t doing it with private label, which is a missed opportunity."

Which suggestions in the article would do the most to perk up private label growth? Can you add any more?

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5 Comments on "Jump-starting private label"


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Dr. Stephen Needel
Guest
7 years 6 months ago

Jon’s idea is good—more communication (and don’t forget TV and radio as well as digital). I also like Todd’s point about less developed PL categories. I’d add price increase considerations. We’ve done enough research to suggest that sometimes PL prices could be raised a bit with no loss of unit sales.

J. Peter Deeb
Guest
7 years 6 months ago

All of the suggestions made by the industry experts would help to perk up sales and they would differ in importance based on how each retailer is currently marketing their own brands.

The most successful store-brand retailers do an extensive marketing job around their brands. Those who have branded their stores the most successfully have mined their shopper data extensively to find opportunities for converting shoppers to their brands, incentivizing them to try store brands in new categories, and resisted the urge to pocket every penny of profit by spending back against their brands with increased ad space, creative tie-in promotions and increased floor display space. A couple of percentage points less in margin on the frontend can build increased sales and profits to fuel future growth.

Raymond D. Jones
Guest
Raymond D. Jones
7 years 6 months ago

For the most part, retailer strategy for store brands has been to copy national brands and offer lower-priced alternatives. This has worked well over time but may have reached a saturation point in many categories.

Some retailers have gone to the next step and established higher-quality store brands but most have still focused on the duplication of products with known appeal in the category.

In order to reach the next level and generate growth, retailers will need to become more innovative and take a more active leadership role in category development. This will require them to better understand their shopper needs and react more quickly to trends in the marketplace.

Gene Detroyer
Guest
7 years 6 months ago

All of these suggestions are good. But to me the ideal private label strategy is to target quality above the national brands and price it slightly lower. Convert the margins that national brands spend on advertising and promotion into quality. Quality will win in the end!

Robert DiPietro
Guest
7 years 6 months ago

Stopping the “me toos” is probably the best way to perk up private label. Don’t just copy what is already in the market, create a product that’s better or fits a niche for your customer. The big guys are focused on mass appeal.

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