The beauty of choice to drive private label growth
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Weve seen many iterations of private label during the past several decades, and the evolution is only picking up steam with increased innovation.
Who could forget the cheap phase in the 1970s with the white packaging with black lettering? (I think Luncheon Loaf was my favorite.) The focus was clear and unapologetic: Deliver the lowest-priced product available.
Fast-forward to the 1990s, and we moved into the same-for-less period when the goal was to offer quality equal to that of a national brand product at a lower price. Why would anyone want to pay more money for the same product? And in more recent years, weve seen the introduction of tiered brands (value, national brand equivalent and premium) and those focused on specialty areas, such as natural and organic.
All of this you know. But what if private label wasnt actually private label anymore? What if it was another brand? A brand you owned with all the benefits of private label, but now you could maintain a much-needed diversity of brands on the shelves for your customers.
This is the new era; this is the natural evolution of private brands. This is the realm where national or regional brands cannot be distinguished from private brands. The private brand has its own identity and personality that is independent of a national brand. Its self-sufficient and no longer about tasting, smelling and looking like a national brand at a discount. In the eyes of the consumers, these products are brands.
Topco Associates is offering a number of these innovative category brands to its member-owners. Chuck Wagon dog food, Nostimo Greek Yogurt, bâ??leve beauty care products, and Wide Awake Coffee Co. are just a few of our standalone brands that have their own unique personality.
The payoff for selling brands such as these comes in several forms.
First, and perhaps most important, they allow our member retailers to offer their customers a broader product selection while driving more private label sales. People want some diversity of brands, and retailers should have some fun delivering that assortment, too. Serving up too much traditional private label can make your customers feel as though youre selling them what you want – as opposed to what they want. Everyone wins with a nice combination of same-for-less private label items and unique category brands.
Next, these innovative items are a key differentiator. They deliver more than just function; consumers connect with them on an emotional level, sparking a long-term relationship. Moreover, the brands are available only at our member-owners supermarkets, delivering exclusivity and the perception of a premium brand. These factors can (and do) increase the likelihood of purchase, as well as repeat purchases. Finally, our members cast a wider net with category brands, attracting consumers who might not traditionally buy private label.
Of course, for supermarkets to extract the value from these well-designed brands, they have to invest in them. CPG companies embed marketing support (the brand tax, as we like to call it) and brand stories into their products; its what they do. To make their own brands come to life, grocery retailers have to put similar effort behind their own brands. Only then can these brands thrive and deliver on their promises.
No doubt, same-for-less products will continue to make up the lions share of private label grocery sales. Yet, category brands now can be part of the complete private label solution. Remember – the most profitable food and beverage retailers are those with higher-than-average private brand penetration. It would be foolish not to integrate category brands into a well-designed private label retail strategy.
Glenn Backus is senior vice president of center store program management and innovation at Topco Associates LLC, Skokie, Ill.