2014: The Year Private-Labels Become a Brand to Reckon With

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National brands compete against traditional branded competitors, and increasingly are having to share shelf space with retailers’ private-label items in the same product category. Store brands are no longer “generics”; they are now a powerful brand in their own right.

Proof Is In the (Store Bought) Pudding

Last year, store brands generated more than $60 billion in supermarket sales in the U.S. accounting for 23.3 percent of unit shares in supermarkets. If you take into account other retail outlets, store brands sold more than $115 billion.

Many retailers are trying to get a slice of that pie – everyone from Whole Foods to Dollar General is investing heavily in store brands. A low price point frequently remains the primary USP, but today store brands are created to emulate or exceed the quality of the national brands, and it is the high perceived quality that creates repeat purchase behavior.

A consumer seeking a national brand can buy it at various stores across the country but a private label can only be purchased at a certain retailer. This presents an opportunity for retailers. Having a brand specific to the store from which it originates can drive loyalty among customers who repeat shop at that store in order to secure that product. The satisfaction from one store brand product can inspire a consumer to try other products within the brand’s umbrella, increasing the overall affinity for the store’s brand leading to those massive category numbers.

Customers Win

The private-labels are increasing sales and gaining customer loyalty, no longer playing second fiddle to the national brands when consumers are shopping on a tight-budget. With high quality and a continued low price point there are tangible benefits to the consumer as well. Shoppers who select store brands save an average of 33.3 percent on a grocery basket of routine items. The price is right and now the quality and taste are too. In August 2013 Consumer Reports stated that 33 of the 57 store-brand foods tested as good or better than the national brand.

The growing popularity of retailer-owed brands doesn’t leave national brands out in the cold – far from it in fact. This shift in the grocery marketplace presents an opportunity for established national brands as well as emerging brands who know how to tell a powerful story to drive brand loyalty.

National Brand Opportunity

Sure national brands can look to compete on price but a short-lived promotion is not a long-term strategy – now is the time to create and bolster brand loyalty. To compete with private-labels the passion, the mission, the brand’s story needs to be at the cornerstone of each message, outreach, and execution.

Store Brand Opportunity

In order to keep the momentum going, store brands can capitalize on the ability to be small and nimble. The unique opportunity for them is in offering a greater range of products tailored to a specific region, even as hyper-local as individual stores based on consumer demand.

Tina McCormack Beaty’s passion is food, local retail, and small businesses. Professionally focusing on strategic communications, branding, and entrepreneurial marketing using integrated tools of social media and PR. Currently, Tina is president of Washington Women in Public Relations and is an accounts lead on Porter Novelli’s foodie team. She also serves on Miami University’s (OH) Alumni Board. You can reach Tina at @TMStrategy.

(CC) Image courtesy flickr user dno1967b

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  • Steve@ReSoMe

    I think the best approach from a branding standpoint is for companies to have two brands under the company umbrella, one focusing on lowest price and another on better quality.

    Loblaws does this perfectly with NoName and President’s Choice. Both are priced lower than other brand name competitors. NoName has the USP of lowest price, where as President’s Choice has the USP of lower price without sacrificing quality. President’s Choice also has the advantage of an ESP of buying Canadian, so it’s closer tied to patriotism.