The future of Private Brands and its Role in Retail

ECRM Private Label Health & Beauty Care EPPS

Keynote – The future of Private Brands and its Role in Retail
April 15-17, 2015 Orlando, FL

Private Label quality continues to improve beyond its sales growth. Retailers and Private Label manufacturers should leverage its strengths to build sales beyond price. Consumers are willing to pay for quality products that meet their needs. Private Label messaging needs to do a better job of connecting with consumers.

Private label plays an important role in retail. Store brands can now be found in every department.  They offer consumers additional choices at shelf.  In the past, consumers typically chose private label brands as an alternative to national brands while at shelf primarily due to their lower price.  Value was not the primary consideration.

Shoppers don’t think of store brand the same way same they think of national brands.  They don't trust it to the same degree that they do branded products.  This is because private-label is not consistent across all retailers.  This is due to different retailers using different private label suppliers.

Private brands are evolving every day. They are no longer the cheap alternative to branded products. In fact, private brand quality is sometimes better than branded products, “67% of consumers say private label offers extremely good value for the money and 62% say purchasing private label makes them feel like smart shoppers”**.   “80% of consumers now believe that private label quality is equal or better than their national brand counterparts”*.

Private label sales last year were $120Billion*.  Private label represents 17.5% of total CPG sales volume**.  Private label is outpacing the industry average 1.6%*.  To build a strong store brand, retailers need to increase penetration, build trust, meet consumer needs, establish value/affordability, and authenticity.  More importantly, they need to focus growth strategies on their private label brand store wide – especially in grocery retailers (private label penetration is highest in grocery 97.6%*).

A common mistake retailers make is to view every department as a free standing store.  The reality is that products from different departments all interact with each other. Shoppers who like a brand will search it out in other departments if they know it is available.  The key is in building trust around the brand in every department – as a single brand that represents the retailer’s commitment to quality and value.  Retailers need to encourage shoppers to buy their store-branded corn flakes and toothpaste during the same trip.  The opportunity is for retailers to merchandise and promote their brand throughout the entire store with creative strategies.  46% of consumers will increase their purchase of affordable brands this coming year*.

This session will focus on strategies to help retailers grow their store brand sustainably with several key strategies:

• Consolidate Private Label at a single retailer – consider a three-tier strategy
  • A single brand strategy for each tier
  • A single brand strategy allows you to attract and build loyal shoppers
  • A strong single brand strategy reduces consumer confusion and reduces out-of-stocks while maximizing merchandising efficiency, and promotional effectiveness, etc.
• Hold Private Label to the same high standards as national brands
  • Set realistic performance goals for Private Label (different strategies for each tier)
  • Include Private Label manufacturers in category assessments (same as branded manufacturers)
• Develop strong Private Label consumer loyalty programs
• Leverage Private Label product attributes to attract new shoppers

Source: Private Label vs. National Brands – IRI Report January 2015*, THE STATE OF PRIVATE LABEL AROUND THE WORLD – Nielsen Report November 2014**

The future of Private Brands and its Role in Retail