PL Buyer: Accenture Lays Out Playbook to Beat Private Label

Discussion
Aug 15, 2012

Through a special arrangement, what follows is a summary from a current article from PL Buyer, presented here for discussion.

In a report based on its 2012 Store Brand Survey, Accenture detailed the ways that consumer packaged goods companies can win their battles against private label products, a battle that Accenture’s survey showed was tipping in favor of retailers’ brands.

The survey showed that 64 percent of respondents said their grocery carts were at least half full of store brands and 77 percent said they would continue to buy the same amount of private label products even if their disposable income rose to the level it was before the recession began.

Accenture said consumers traditionally have been skeptical of the "quality and efficacy of private label products," but that those barriers have eroded. Now, "Private label is much more of a threat to CPG companies than ever before."

To strengthen their ability to compete against private label, Accenture said CPG companies need to increase their shopper relevance. It suggested CPG companies:

  • Understand with better accuracy specific product attributes that are important to shoppers and predicting their buying behavior better.
  • Create products and campaigns that appeal to emotions and shared values.
  • Engage in product development that leverages innovation to make more relevant and timely products.
  • Understand the unique needs of emerging market consumers.
  • Create multi-channel relationships to build loyalty and understand long-term consumer preferences.
  • Drive execution excellence at point of purchase.

 

Discussion Questions: What do you think CPG brands need to do to regain share from store brands? Would stronger CPG brands be a positive or negative for retailers?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

12 Comments on "PL Buyer: Accenture Lays Out Playbook to Beat Private Label"


Sort by:   newest | oldest | most voted
Bill Emerson
Guest
Bill Emerson
9 years 9 months ago

Very interesting. The list of actions to be taken is essentially the same as a competitive analysis of other CPG brands. PL has apparently arrived.

Dr. Stephen Needel
Guest
9 years 9 months ago

Give shoppers a reason to buy their brand instead of a store brand. Of course, that’s what makes one CPG brand stronger than another.

Gene Hoffman
Guest
Gene Hoffman
9 years 9 months ago

What should CPG brands do now to regain share? Pray or innovate. The greater hope may now rest with the former.

Stronger CPG brands would be a positive for retailers, but the winds of the competitive are now blowing against that happening.

Paula Rosenblum
Guest
9 years 9 months ago

You know, I’m not sure (especially with CPG) the Private Label genie can be put back in the bottle. The easy answer is “Out-innovate” but it’s FOOD.

Even Organics are quickly copied.

I see private label only increasing.

Max Goldberg
Guest
9 years 9 months ago

To regain share from store brands, CPG brands need to offer value. Value, in this instance, means a better product that is within the price parameters that a consumer is willing to pay. If a CPG brand is not perceived as better, either practically or emotionally, consumers will consider the less expensive store brand.

This requires CPG brands to be innovative and to better communicate points of differentiation to precise target audiences. Brands that do this will succeed. Brands who don’t will see a steady decline in market share.

Ben Ball
Guest
9 years 9 months ago

Two part question — two part answer.

To regain share from store brands CPG brands simply need to be more price competitive. The quality differences are now functionally negligible and consumers know it. Of course, retailers are going to have something to say about that.

Stronger CPG brands are a positive for retailers IF they can command higher prices than store brands AND they provide that benefit back to the store in the form of higher penny profit per unit. This is where the old adage “no one takes percent margin to the bank” comes into play.

All of Accenture’s suggestions are of course part and parcel to the things CPG brands need to do to try and command that price premium from consumers. But they are highly unlikely to result in a net shift in unit share away from store brands at this point. That horse is out of the barn.

W. Frank Dell II, CMC
Guest
9 years 9 months ago

CPG companies have been facing a two-prong challenge for years. Consumer communication options have exploded from 3 TV channels to 300 TV channels plus social media. Without the ability to image build and reinforce, brand equity is likely to decline.

Second is Private Label growth from improved product formulation, quality and improved packaging. The Great Recession and weak recovery has supported Private Label growth. This leaves only innovation for CPG companies and they must step up the pace as Private Label is now innovating.

Raymond D. Jones
Guest
Raymond D. Jones
9 years 9 months ago
Much has been written recently about the shopper focus on value. The issue for brands is to define value to justify their typically higher prices based on brand equity, product differentiation, or innovation. It is increasingly difficult to compete with Private Label based on brand equity alone. First of all, what we call Private Label has evolved to real store brands with their own equity. Who does the shopper really have a relationship with? The brand they buy a couple of times a year or the store they choose to shop at every week. Brands need to build equity by establishing stronger relationships with shoppers on an individual basis. The best form of product differentiation is higher quality. These days, Private Label is often at or near branded quality. Brands need to identify key attributes that add value to shoppers. Brands should be experts in shopper insights, understanding the needs of shoppers and building added value into their product offerings. Innovation is a critical area in which brands can be more effective than Private Label.… Read more »
Ed Dennis
Guest
Ed Dennis
9 years 9 months ago

I fear Accenture is doing nothing more than trying to sell its consulting services. Each of the tenets laid forth above can be found in any first level marketing textbook under brand development.

Any plan that sets out to beat Private Label is starting with the wrong goal. The goal should be to deliver a superior product and nothing less. Deliver a superior product that solves problems for the consumer. How about frozen skillet meals that consider the dietary needs of the diabetic consumer, but still taste great? Very few seem to be addressing this issue, but all medical reports indicate that diabetes is almost at plague levels. Now I don’t need Accenture to tell me this and never did.

Ralph Jacobson
Guest
9 years 9 months ago
The survey actually shows no new news. PL penetration has grown due to consumer confidence in its value for literally more than the past decade. And this trend has less and less to do with consumer income. 4 in 10 people earning over US$100,000 are now buying the less expensive store brands. What are the reasons for this? Well, let’s start with the fact that of the 250,000+ new items introduced globally each year, more than 70% fail within that first year. Manufacturers are not leveraging the “big data” that lurks in the marketplace (at POS, Websites, social channels, etc.). Do retailers need stronger CPG brands? Are you kidding?! The strongest brands in the world are CPG Brands. Coca-Cola is the world’s most valuable brand with over $70billion in brand value. Bottom line, forget the vanilla fluff findings of this survey and bet the farm on these vital few steps: 1. Commit to global best practice new product development and introduction 2. Engage global best practice social listening tools and respond in real time to… Read more »
Craig Sundstrom
Guest
9 years 9 months ago

So next week (or month or year) we’re going to have some survey claiming CPG is gaining on PL, and we’ll be asked how PL can gain it back?

Anyway, everyone here seems to be making the same point (more or less): if your only differentiating point is price, then to sell more you’ll have to price lower, But is market share the be-all-and-end-all? Plenty of dot.com sites showed you can run up sales quite quickly if you simply give merchandise away, but then comes the hard part…making money doing it.

Christopher P. Ramey
Guest
9 years 9 months ago

There are no surprises in Accenture’s initiatives to compete against private label. The analysis is universal. Very likely, these are the same six points that private label uses to compete effectively against store brands or that Ford uses to compete against Chevrolet.

wpDiscuz

Take Our Instant Poll

Which one of the following should CPG brands focus on most to regain share from store brands?

View Results

Loading ... Loading ...