Retail Customer Experience: Five Ways to Win Back Private Label Switchers
Roughly 74 percent of almost 1,500 consumers recently surveyed by Epsilon Targeting said they shifted to private label in both food and household products. A surprising 61 percent switched in personal care.
This move could indicate not only the fading perception that purchasing store brands means sacrificing quality, but also that consumers are becoming satisfied with the value of these alternatives. Yet at the same time, Epsilon research shows national brands still wield influence: in almost all segments, more than 65 percent of consumers said they would return to their national brands, with a coupon.
For manufacturers of the nation's most enduring brands, this is a sobering shift, but they can rise to the challenge. To recapture this shifting segment and, importantly, to prevent additional brand switches, we offer the following suggestions:
1. Target the Former Faithful: While more than 65 percent of those surveyed said they would return to their national brand if given the right offer, that means roughly 35 percent are not likely to switch. Marketers should first identify those consumers who would return to their national brand and then target them with coupons, samples and similar incentives.
2. Reward the Savvy Shopper: These days there is less of a stigma associated with store brands, coupons and other efforts to save money. This includes "image" categories such as hair and facial care. In addition to using coupons and samples, manufacturers can increase their consumer connections with "Savvy Shopper" clubs and similar loyalty programs tailored to the shopper's lifestyle. Such rewards also potentially result in powerful word-of-mouth marketing.
3. Track the High-Risk Categories: Our research shows more consumers are switching to private label in high-quality categories such laundry detergent and diapers. Consumers make these decisions based on two factors: price and quality. Manufacturers must use their data to identify these price-conscious consumers and then target them with tailored promotions that emphasize the quality and value of the product.
4. Use Food for Thought: The Wall Street Journal recently reported that food prices will continue to rise, meaning that the trend toward store brand foods will likely escalate. Using this pricing knowledge, manufacturers can cross-reference those categories with vulnerable pricing against the spending patterns of their best shoppers, and then promote accordingly. This trend also presents an opportunity for non-food marketers to develop cross-category promotions -- "Buy two cans of soup, get $1 off cold remedy."
5. Channel Surf for Success: Access to robust, actionable consumer data and shopper insight enables national brands to identify what their best shoppers buy, where they buy it and when. Then, they can use this intelligence to reach these shoppers where they are, applying the "what, where, when" knowledge across all channels, from direct mail to mobile phone. National brands have the advantage of scale and can create a deeper emotional link with consumers through the web, social media and other channels where private labels might not venture.