Through a special arrangement, what follows is a summary of a current article from Private Label Buyer, presented here for discussion.
For many years, private label resided in "me-too" land. In this realm of sameness, the greatest compliment a product could receive was that it looked and tasted or performed much like the "real thing" -- the national brand item it was designed to emulate.
Although you'll still find a slew of national-brand-equivalent products on retailers' shelves, today's store brands are implementing a major reroute of their road to success. And that new route is leading retailers into an exciting new territory -- private label programs that set them apart from the national brands and retail competitors, in areas ranging from strategy and product development to packaging and marketing.
The ride might be an exhilarating one for retailers, but it represents a potentially scary journey for some national brands."The national brands are not the sole leaders anymore," stresses Scott MacLennan, director of store brands for Specialized Technology Resources (STR). "The new race is really private label retailer vs. private label retailer. As long as retailers can deliver sustained box-to-box store brand quality, there is no stopping the charge."
In fact, retailers might be even better situated for product and program differentiation than the national brands are."
National brands, depending on what their brand stands for, can be more restricted with what they can experiment with," Mr. MacLennan said. "Retailers can more easily try something new and creative instead of making the traditional flavors and/or styles."
Of course, differentiation is more than just a trend. For private label programs across the supermarket, drugstore and mass merchandiser channels, it also is an increasingly important margin-boosting strategy.
"It is imperative for retailers to differentiate in order to create a unique shopping experience as retail store options and repetitious products abound," noted John Burt, senior national account manager - Target for Marketing Management Inc. (MMI). "Having winning costs on basket-building essentials such as milk, eggs [and] bread is still a key competitive element to drive shopper frequency, but it is a singular approach -- as is creating a single national-brand-equivalent strategy for your private label program."
Mr. Burt advised retailers to create a premium "differentiation" tier within their private label programs. Products within such a tier encourage destination-minded shopping behavior on the part of consumers.
Retailers could gain consumer loyalty with premium private label products such as salsa, pizza and ice cream, he adds, as well as with products boasting a social marketing element such as fair trade or advocating sustainability. Other tactics that build excitement into the assortment, Mr. Burt said -- and subsequently encourage more frequent shopping trips -- include unique flavor profiles or flavor profiles that mimic restaurant trends; meal solution demos, displays and recipes that simplify the shopping experience; localized assortments that provide seasonal relevance with private brands; and easy-to-read (and well-researched) nutritional claims and health benefits for better-for-you items.
Discussion Questions: What's the next step private brands need to take to further differentiate themselves from national brands? What key areas (i.e., pricing/promotion, product development, packaging, marketing, etc.) should stores be focusing on to stand out?