PLBuyer: Should Stores Showcase PL More?
Through a special arrangement, what follows is a summary from a current article from Private Label Buyer, presented here for discussion.
Consumers have a lot of choices when it comes to brands, so what can you do as a retailer to make them see that your private label brand is the best? Increasingly, presentation and merchandising play a big role because that is the aspect that retailers uniquely control.
"Retailers have an opportunity to look at the entire store as a showcase for their private brands and to develop cohesive, store-wide presentation schemes that tell a story, rather than working category-by-category," Carol Spieckerman, president of newmarketbuilders.
As with all brands, it starts with having a product that meets a consumer need, Terry Lee, founder of Private Brand Advisors.
"Retailers have the opportunity to create products that are targeted towards their specific customer base versus the national audience," he says. "Creating awareness and trial is critical to the success of a good product. This is where retailers must invest and leverage better the marketing elements they control — for example, in-store, websites, print ads, etc."
Retailers can generate interest and trial of their private brands by doing several things, Jon Hauptman, partner at Willard Bishop says.
"Highlight private label items at the shelf so they’re easy to find, for example, merchandising them at eye level and ‘over-facing’ to create a banner effect at the shelf," he says. "Quantify the savings associated with trading to private label versus purchasing corresponding national brands at the shelf via shelf talkers or through basket comparisons at the front of the store. Reduce the risk associated with trying new private label items by sampling private label products in-store, offering a money back guarantee on private label items, and highlighting private label items that are top-sellers in their categories."
Retailers also don’t truly understand the value of great design, Todd Maute, partner at CBX. "Many companies have built their entire business on great design and clearly defined brand strategies," he says. "A consumer’s reason to believe and behavior in a given category vary differently. Consumers’ purchase intent in cereal varies greatly from that in frozen commodities. Understanding that behavior will allow retailers to effectively create relevant brands and appealing designs that will attract consumers.
"Additionally, retailers need to understand that packaging is not the only key driver in stimulating purchase intent at the shelf. Merchandising your brands in a proud and relevant way will present the brands role and purpose and stimulate trial. Smart pricing, promotion, and even store design will also enhance the perceived value and essence of that brand."
Discussion Questions
Should retailers do more to call out their private label brands in-store? What changes to merchandising, presentation and other steps would further highlight PL offerings? Should stores rethink how national brands complement their PL assortments?
For some retailers, it’s the only bullet left in their gun.
Today’s questions remind me of a German-owned break-thru that has creatively addressed those questions. But it isn’t the only example.
Trader Joe’s is a contempory and unique PL concept and it’s working successfully. They do not have the need to use national brands to complement their assortment.
So if your PL assortment is well conceived and unique, well merchandised, high in quality and appropriately packaged, then use your PL to build your own store brand. Otherwise try to be a resourceful blender.
Definitely should be doing more — and a number of comments above are right on target — better packaging (so it doesn’t look so “generic”), better merchandising (don’t be afraid to overface) and more trial generators.
Two small words of caution — the product has to perform as well as a national brand — you are trying to overcome a US bias against store brands. And don’t shortchange national brands too much — they are national for a reason and shoppers are often looking for them.
The US is far behind the PL penetration of many other countries. There are some great examples here, though, like Trader Joe’s. Stores here do need to integrate PL into the national brand categories, like most of them always have, so side-by-side comparisons can easily be made by shoppers.
The profitability and brand value potential of PL warrants every retailer to drive what they can in PL penetration.
I believe national brands and their inherent brand value can truly complement and augment PL growth with proper analytics and brand sentiment insights.
First of all there are no “private” labels. If it isn’t a branded item then it’s “your label” in the minds of the consumer, i.e. a brand, even if it isn’t a product you produced or directly contracted for.
I think I’m just tired of hearing the same old argument made by the private label folks which, by the way, comes down to one of the oldest of all retail cliches — if you promote it, they will buy it.
No kidding! Really?
Private label proponents ought to be ashamed of themselves. With notable exceptions like Dave Nichol, formerly of Loblaw, they have resigned themselves to the role of apologists for products that “don’t get no respect.”
Keep thinking like that and we’ll be reading these kinds of posts until the end of time.
Retailers need to become merchants again. If a product — whether your label, a private label or a brand — is in your store it should be there because you actively endorse it and stand behind it. If you don’t then it shouldn’t be for sale in the first place.
The genius of the initial President’s Choice strategy was that it was not apologetic. It didn’t beg for a slightly larger share of voice — it screamed for primary attention, just like any leading brand would.
Were there/are there flaws in the strategy? Of course.
Was it better than sitting back, whimpering on a shelf begging for, “just one more facing,” like the CPG equivalent of Oliver Twist? No doubt!
If you begin with the premise that your products are second-class citizens, you shouldn’t be so shocked when they are treated that way. And if you believe the only thing retailer controlled brands have to offer consumers is a few cents off a unit, you shouldn’t be shocked when they don’t get excited about them.
I’m done with all the apologists!
What private label needs is a revolution of true believers. Either you’re prepared to make sure every product choice is a good choice for shoppers or you need to rethink your manufacturing and/or retailing strategy.
And, if you’re not prepared to man the merchandising barricades in support of all the products you sell, maybe it’s time to rethink careers.
The number one thing that has slowed the growth of Private Label has been the lack of marketing and merchandising. Too many retailers stop at getting the product on the shelf and hoping the price difference will sell it. Retailers must create awareness and trial by social media, in-store sampling, and display. Private Label needs to be supported with advertising and promotion. Retailers must be as creative with Private Label as they are with branded product promotions. Some of the extra gross margin needs to be spent to increase the sales and store profits.
Delhaize America has been doing an excellent job promoting “My Essentials” at all of their banners. The quality and depth of the product line is as good as or better than other competitor’s private label offerings, and the value is exceptional.
Retailers continue to have tremendous upside opportunity when it comes to their PL brands. As I have stated in several past comments on RetailWire and onstage at industry events. “If a consumers loves your PL cereal (for example) there is only one place in the world they can buy it — your store.” What better loyalty builder is there? Just ask Trader Joe’s, Stew Leonard’s and Wegmans as key examples.
Ahold and Meijer are doing some really unique work that ties together Private Label brands with a non competitive national brand to help build trust and trial. For example, buy two Prego Pasta Sauces get one PL Pasta noodle free. This type of unique merchandising is a great way to build a user base. Publix uses a more head on approach that offers free PL items when you buy the national brand equivalent. Although effective over the last few years, I still believe the collaboration with national brands is stronger long term for retailers, national brands and the consumer.
There will always be a place for national brands, so why not work collaboratively with them?
As a retailer, your private label program is really a defining statement about who you are as a retailer, and retailer brand. It’s also a statement of your point of differentiation. That said, not all retailers should, or need, to be in the private label branding business. If who you are as a retailer is really all about major national brands, specialties, niche brands, variety, etc., than private label might actually reflect negatively about who you are.
A retailer’s PL offerings are an extension of their brand so they should at the core of their merchandising strategy. These products are controlled by the retailer, have the retailer name or an associated name on them and should be given premium placement and promotion. Retailers treating their PL offerings as “off-brands” are missing a large opportunity to differentiate their products.
Retailers have so much power over the merchandising of their private label brands and should pull out all the stops to promote them. Publix Supermarkets does a great job of promoting their PL brands with the updated packaging and in-store promotion. Shelf talkers that compare prices between PL and national brands are another great way to promote PL brands in aisle. And having a live person offering samples and talking about the products is another method to highlight PL brands. If there is a smart way to promote how national brands can complement PL brands, retailers should take advantage of it.
In my neck of the grocery woods, Publix does an outstanding job of cross merchandising store brands on end caps with national brands as well as promoting and using store brands as ingredients for their in-store recipes and demonstrations. Sweetbay and the Delhaize group have done a very credible job of elevating their My Essentials (store brand) in both their weekly circular and in-store promote sections.
Other best practices include running continuities and campaigns to reward shoppers for buying store brands But these campaigns must be done with some regularity before the needle will begin to move. Picking the right store brand categories to promote is also important. Specifically, store brand canned vegetables is a particularly strong category to establish a “price image” and engender shopper loyalty. Anchoring an everyday low price in this category against national brands and price shielding against national brand promotions TPRs has proved to be successful in building store brand sales.
On the other side of the coin, if the retailer’s clientele is more upscale, over emphasis of store brands can lead to a diminished variety and quality image, unless the retailer has a well developed line of “premium” store brands, which many of the aforementioned retailers either have or are developing. But even in the best Harris Teeter, Whole Foods, or Wegmans, there is a market for store brand growth provided it is done in context with the consumer’s profile and shopping behavior.
Retailers understand that there is a real financial balance between promoting private label products against recognized consumer brands. The retailers’ brand vendors are ‘asked'(?!?) to provide market development, coop and placement funds that are often absorbed into the retailers overall marketing budget. Navigating the use of these funds to promote private labels can be difficult and certainly adds to the undercurrent of the adversarial business relationship between retailers and their brand vendors. Historically they’ve needed each other, but as brands can now develop and establish direct communication through all the digital channels the necessity of a retail outlet is undermined.
As brands require more accountability from the retailers as to how and where their marketing and promotion funding is used, retailers will need to use their own money to advertise and promote their competitive private labels. The commercial success of these products will hinge upon their market acceptance as they function with their own P&L within the retailer ecosystem.
It is extremely important for a retailer to be as effective as possible to showcase its private label. While one of private label’s prime roles is to generate dollars for the bottom line and another is to provide a value alternative to shoppers, possibly the most vital role should to differentiate the store and its product selection in the eyes of the consumer. A large, well-designed, and multi-tiered store brands program imaginatively and forcefully merchandised is required to fulfill this important mission. One aspect of this is to take the PL program beyond the NB level, so that it features products that are unique to the retailer and appealing to the consumer. A powerful private label program should be an integral part of the overall merchandising plan and less balanced against national brands, but aimed at providing the consumer she can’t get at any other store.
No. No. No. PL should be about delivering great value (quality) at a great price. Everything else in the marketing equation is minor (at most) and definitively subsurvient to these key attributes. The concept is more how things actually play out in the store environment, rather than competing with all of the other brands.