5 major shifts impacting private brands in the COVID era

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5 major shifts impacting private brands in the COVID era

By Matt Caldwell, Equator Design - 08/20/2020

As private brands work hard to navigate the twists and turns brought on by COVID-19 — from pandemic pantries to new basket contents to pared-back budgets — there are more twists and turns coming.

Although consumer data is still thin on the ground, early signs indicate that there are a number of major shifts coming to the marketplace which stand to impact private brands significantly. Here are five to look at closely, starting with the most timely of them all: the impact of lockdown on Back to School and holiday offerings. 

B2S and holiday ranges
As and when schools reopen, the sort of materials to be purchased remains a big question for both students and their parents. B2S spending in the U.S. is expected to reach $28.1 billion, or $529 per student, according to Deloitte, and this edges towards what families spent in 2019, but there remains uncertainty around what it is that they actually will be buying this year.

Here are the predictions: While clothing sales are expected to fall under the mark set the past three years, spending on electronics could double that of 2017. Purchases of personal health products are expected to rise, with an average of $46 spent per student on supplies like sanitizer and wipes.

Meanwhile, consumer behavior around our favorite Fall holidays will be anything but regular. Even though Halloween falls on a Saturday this year, we will almost certainly see a drop in party consumables, while trick-or-treat candies and multi-pack sweets, which prominent pediatricians say will prove “a nightmare” for spreading infection, stand to be impacted.

However, some of the big B2S players have come out swinging, including Target, which is promoting its own brand lines across school supplies and B2S apparel in children’s, teens and activewear, while releasing new dorm bedding and decor for kids going off to college; it has also introduced a new premium bathroom linen collection called Casaluna, and for Halloween a special range of easy-dressing, wheelchair-friendly exclusive costumes.

This suggests that while private brands must be agile in meeting consumer demand, throwing the “business as usual” rulebook to one side, there are sales to be made for retailers determined to stake their claim through the introduction of new products and lines. 

Health, wellness and snacking
Reflecting our newfound attentiveness to our own health and wellbeing, supplements and over-the-counter medicine have seen unprecedented popularity as a result of the pandemic. Since the onset of COVID-19, there has been a 28% increase in use of vitamins and supplements in the United States and a 25% increase across the world. Meanwhile, over-the-counter drug purchases (cold, flu and pain relievers) rose by 217% from January to March alone.

In the U.S., consumers have demonstrated a particular love for snack foods over lockdown. Cookie variety pack purchases rose by 20% over last year, while salty snacks such as pretzels and cheese snacks saw a boost by roughly 15% and 12%, respectively. 

Our estimation is that increased snacking is down to a mix of comfort eating and relying on snacking to boost one’s work-from-home stamina. Interestingly, snack attacks are most common among younger consumers. According to a Harris Interactive survey, the 25 to 34-year-old age group snack more regularly than their older counterparts, with 86% admitting they snacked at least daily and 21% saying they snacked three times a day. Meanwhile, among those 55+, 65% reported snacking at least once a day. Only 6% said they snacked three times a day, and 8% said they didn’t snack at all.

Sales of supplements, over-the-counter medicines and snacks aren’t just performing adequately in the face of economic turbulence, they are proving both recession-proof, and pandemic-proof too.

High-tech solutions
E-commerce and shopping via app as well as Click and Collect play an undeniable role in our new normal, and though brick-and-mortar shops will see many consumers return to their doors, tech will grow ever more central to the way consumers interact with brands.

In the U.K., supermarket chain Sainsbury's has begun trialling a new app-based queueing system, which allows customers to queue from the comfort of their car, a nearby café or even at home, meaning they do not have to stand waiting in socially distanced lines outside its stores.

Retail apps are now being downloaded at a rate never before seen, and they are also experiencing increased levels of conversion. Retail app platform Poq reveals a spike in retail app downloads occurred on the weekend of March 27-28, as more shoppers turned to mobile means to make their purchases.

But apps offer much more than purchasing capabilities: consumers can find and engage with a host of other content, such as tutorials, ‘how to…’ videos, user-generated content and more. Poq points to homebound consumers looking for inspiration as chief users, driven by a need to connect with the world at large, often to show off their cooking, projects and activities. Meanwhile, PepsiCo, Nestlé and Heinz all launched direct-to-consumer, or D2C, offerings in lockdown. This format will appeal to fans of these particular brands who feel anxious about venturing out to supermarkets.

So what is the benefit of our technological leap forward? Overwhelmingly, it has to be the increased potential to know more about consumers, and to create new and different shopping experiences around their needs and wants.

Tech solutions can include real-time inventory management, predictive analytics, AI-powered search, personalization, social commerce, reviews and recommendations… this list goes on and on.

Retailers equipped to harness these new capabilities can deliver immersive experiences wherever customers are — with reach that extends well beyond the physical outlet.

Rethinking controversial product names and images
Public mood is shifting, and there is increasing pressure to rethink food and drink product labels to make them more inclusive. While much of this pressure has been placed on prominent national brands, private brands are also being impacted. Some ethnic food ranges have been on the receiving end of public scrutiny, such as Trader Joe’s being the subject of an online petition which criticized the way in which the brand presents its Chinese-, Mexican- and Italian-style offerings, for example, stating that the products perpetuate harmful stereotypes. On a wider scale, the developments are leading some smaller brands to take a proactive approach to spotting and altering any labels which may exoticize non-Western cultures or peoples.

Three-quarters of respondents of a recent study in this very publication, said the recent protests against racial injustice have made it more important to support businesses that improve diversity and inclusion. And as global movements shedding light on issues of racism and cultural appropriation lead to changes across many parts of society, the worlds of packaging, branding and private brand must pay heed to these shifts too. 

Buying local and purpose-driven
Lastly, one of the most interesting impacts brought on by the pandemic is the drive among communities to buy local, and to support domestic farmers and producers.

In the U.K., recent data from the EY Future Consumer Index reveal that 42% of consumers say that the way they shop will fundamentally change as a result of COVID-19, with 26% reporting they will pay more for local products, 25% for trusted brands and 24% for ethical products. 

Meanwhile, here in the U.S., the wine market is seeing a shift in consumer preference towards domestic varietals. Although many respondents to a recent survey stated that they have stuck with their existing country of origin repertoire, domestically produced wine has benefited from increased feelings of trust overall. Conversely, Italy and France have lost market share over lockdown. According to beveragedaily.com, one in five respondents reported actively buying more wine from across the U.S., while 20% of drinkers said they were buying less from Italy, France and Spain.

An experienced marketer, Matt Caldwell is USA vice president of client engagement at Equator Design, joining two years ago with a remit to lead the client service departments across the company’s multiple U.S. locations.

He spent 13 years in-house at Aldi in senior sales, operational and buying roles across a number of categories, which has given him an insightful understanding of what a retailer needs from an agency and the importance of the pack in consumer engagement.

 

 

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