Convert The naysayers

Even in tough times, some consumers usually will choose the national brand over the store brand. Learn who these people are and how to win the ones who count over to your own brands.

It's well-known that the global economic crisis has driven greater acceptance of store brands. However, a number of people remain loyal to the national brands and refuse to purchase store brand products outside a small number of categories. "There is a cross-section of consumers who are simply [national] brand loyalists — they trust, understand and purchase national brands," says Neil Stern, senior partner with Chicago-based retail consultancy McMillanDoolittle LLP. "This is mainly out of habit and routine."

In terms of demographics, the consumers who are least likely to purchase store brands tend to be young, single and childless, says Jim Wisner, president of Wisner Marketing Group, a Libertyville, Ill.-based retail consultancy.

"One thing that correlates with private label purchases more than any other ... factor is presence of children in the household," he explains, adding that as household size increases, so does private label consumption.

National brand loyalists also tend to be urban dwellers, Wisner explains, which means they're more likely to shop at a drugstore or convenience store than a traditional grocery store.

Is this group of consumers worth winning over? Not really, he suggests.

"About 50 percent of [these people's trips] are small-basket trips," Wisner says. "If you win the customer over, you haven't won much."

Attitude adjustment

But Jim Hertel, managing partner with Barrington, Ill.-based retail consultancy Willard Bishop, divides private label "reluctants" up in terms of attitudes, not just demographics. He believes these naysayers all of whom are worth converting — fall into three groups: people who simply believe national brands are better and refuse to give a second look to store brands; people who believe they will look cheap or poor if they purchase store brand products; and people who always seek the latest and greatest products and see the national brands as the big innovators.

The key to winning these consumers over is to start thinking like a consumer-packaged-goods company during development, Hertel says. Retailers need to create innovative products and merchandising strategies that grab the attention of consumers in all three groups, making them proud to select the store brand over the national brand — and winning their loyalty.

That means the brand must have an identity that stands on its own.

"Many successful retailers offer premium store brands [that] don't call attention to their brand ownership," Hertel notes. "They're just brands that are 'exclusively ours.'"

Archer Farms from Target is an excellent example of one such brand. In fact, the brand stands on its own so well, one could easily find a private label naysayer with an Archer Farms product in her shopping cart, Wisner explains.

Retailers also should consider developing "lifestyle brands" with their own identity. Wisner points to Safeway — which boasts such natural and organic lifestyle brands as O Organic and Open Nature — as an excellent example.

And if retailers truly want to differentiate themselves, they should consider developing items that have no national brand counterpart, Hertel adds. However, this type of endeavor can get a bit tricky, as even the best new-product marketers fail more often than they succeed.

Because retailers "own" their stores, Carol Spieckerman, president of Bentonville, Ark.-based retail consultancy newmarketbuilders, contends they have "built-in focus groups" with which to consult during the development stage. Retailers also could use their stores to test — and quietly fold — concepts at will.

But it's not enough to ask customers what they want — retailers also need to observe how their shoppers behave. As Douglas Merrill, former chief information officer for Google, noted in his presentation at the Private Label Manufacturers Association's 2011 Private Label Trade Show in Rosemont, Ill., consumers "can't envision what they haven't seen."

Get 'em to try

Even after the product is developed and on the shelf, it still runs the risk of going unnoticed by the private brand skeptic. Therefore, it's critical to create ways to generate trial. Hertel notes that in-store sampling and demonstrations are "tried and true" methods that create trial.

Product giveaways also are critical in converting national brand loyalists, says Paula Rosenblum, managing partner with Retail Systems Research, Miami.

"I always go back to the Publix promotion: 'Buy a national brand, get a store brand free.' Anyone who would avoid that would seem silly."

Smart merchandising counts, too.

"The one thing in-store merchandising does is it forces you to reevaluate your habits and accept or reject what the offering is," Wisner explains. "So you force people to make a decision."

Wisner adds that retailers are starting to push consumers to make purchase decisions online.

In his opinion, Mariano's Fresh Market — a Chicago-area banner of Milwaukee-based Roundy's — does an excellent job drawing its consumers into its overall retail brand online, which creates opportunities to get consumers to switch to a private brand.

And if they want to get the blogosphere talking about their products, retailers should consider sending samples to online reviewers, Wisner says.

A good review in the blogosphere can go a long way. Hertel says smart retailers could gather favorable third-party endorsements and use them in promotions to convert skeptics.

"Stalwarts must be won over by performance claims," he explains.

‘The one thing in-store merchandising does is it forces you to reevaluate your habits and accept or reject what the offering is.’

— Jim Wisner, president, Wisner Marketing Group