3 Tools That Can Promote Private Label Growth Amid Financial Uncertainty
Inflation has thrown the retail industry for a loop in the last year, and unfortunately the effects
are likely to remain noticeable for shoppers and retailers alike in the coming months.
In fact, food prices for 2023 are predicted to increase 7.5%. As a result, consumers are looking for
ways to cut costs at the grocery store. Unfortunately for grocers, a wary shopper with a restricted basket size means even tighter margins amid this financial uncertainty.
One line of defense for grocers? Private label brands. These products can be sold at a lower price for shoppers, while increasing margins for the grocer. In fact, due to rising prices, private label sales reached a record high of $228.6 billion in the United States in 2022.
Here’s how grocers can rely on digital tools to grow private label brands.
Optimizing Profits With Dynamic Pricing
It’s no secret that consumers are on the hunt for the best prices, but over-discounting to intrigue these shoppers can cost a retailer greatly. Finding the balance between offering low prices an protecting margins can be difficult, and testing prices can involve expensive trial and error.
Luckily, grocers can invest in dynamic pricing tools that automatically ensure their private label brands are set at an optimal price for both the shopper and the bottom-line. Dynamic pricing tools consider a wide variety of factors including market trends, product availability and competitor pricing.
There is a common misconception among consumers that dynamic pricing always leads to higher prices. This belief is a myth because these tools strive to strike the right balance to manage supply and demand while keeping customers happy.
Dynamic pricing can be applied to electronic shelf labels or it can be used to inspire optimal changes for physical price tags. Regardless of how a grocer chooses to implement dynamic pricing, this tool can improve long-term profitability without ostracizing price-wary shoppers.
Driving Loyalty With Personalized Recommendations
One of the best ways to promote the private label is with personalized recommendations. Grocers should take the time to review customer data and understand what items their shoppers are most interested in.
Once identified, grocers can share personalized recommendations via the shopper’s preferred touchpoint whether it’s email, SMS or an in-store application. These recommendations can highlight private label equivalents to products the shopper already buys, or other store brand products within the product categories the shopper prefers.
Personalized recommendations showcase a level of understanding about the shopper’s needs and preferences which is especially important as they struggle to fill their cart amid rising prices. This gesture can drive conversions and foster loyalty for the grocer’s own brand.
Predicting Supply and Demand With Inventory Management Tools
Changing customer preferences can be difficult to predict. Despite fluctuations in demand, grocers can further promote the private label brand by ensuring that the customer’s favorite items are always well-stocked.
Inventory management tools can be used to secure ideal inventory quantities at all times. When a product is running low in a particular store, these solutions can automatically re-order the product. Additionally, inventory management tools can be used to inform employees of any changes in stocking practices.
For example, if a private label product was moved to another area of the store, the employees have the information they need to redirect inquiring shoppers. This level of transparency across inventories enhances the customer experience by ensuring customers can always find what they want, when they want it.
Make the Most of Private Label Brands
Private label brands give grocers the control they crave, despite the uncontrollable macrotrends occurring around them. As prices continue to rise in the food industry, private labels provide an
opportunity for grocers to enhance profitability and improve the customer experience.
By investing in technology that can bolster private label brands, grocers can form stronger
customer relationships and improve margins.
Michael Jaszczyk is the CEO of GK Americas, where he works to maintain and enhance the company's global reputation as one of the most innovative and complete retail software platforms and suit of services. GK provides a future-proof foundation to support retailers' customer engagement strategies. Jaszcyzk has been a part of GK for more than 12 years, previously serving as CTO.
He draws on an extensive wealth of experience, both in software development for the retail sector and as a manager at international IT including MCRL AG, Pironet AG and SA2 Retail AG.
