The power of packaging
Its no secret that over the past five years, high unemployment and shrinking paychecks in the United States have led to a boom in private label sales. Call it a golden age for retailers, an unprecedented time during which they have been able to do the nearly impossible – entice consumers to switch from national brands to more profitable store brands.
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The switching first might have been about price. However, price drives only the first few sales. Consumers have remained with store brands and are more willing to try new store brand products because the products increasingly meet quality expectations.
But with the economy improving, private label products could be on the verge of losing some of their luster.
\"We [retail marketers] are now seeing consumers switching back to national brands,\" says Carol Best, vice president, brand strategy for Anthem Worldwide, San Francisco.
She explains that national brands are ingrained in our culture, and success for many Americans means being able to buy a national brand, even if it is a product that sits behind a pantry door. But Best, along with many other experts, sees a tremendous opportunity for retailers to continue to grow their private label programs and create true competitive brands. The path involves nourishing a complete package – from the physical wrapping to the identity and brand development – for each product line.
More than meets the eye
\"Packaging is an experience where your product and your brand physically [reach] consumers – visually through graphics and packing aesthetics, sensory through touch, and even scent and taste from an in-store bakery or deli counter,\" says Deborah Ginsburg, CEO of Strategia Design, Oakton, Va. \"Packaging is even more important to convey messaging for private label because traditionally retailers dont market their products with the same intensity as national branded items. Effective packaging needs to be enticing enough to stand out on the shelf while still in the store, and then serve as a quality reminder to the consumer when its on their shelves at home.\"
Marcus Hewitt, chief creative officer for Dragon Rouge in New York, agrees with Ginsburgs assessment, adding that successful products become synonymous with their packaging.
\"Think about the brands you love,\" he suggests. \"Try to imagine them without their packaging – for instance, Pom in a regular straight bottle, Red Bull in a regular 12-ounce can or even Frosted Flakes without Tony the Tiger.\"
Packaging certainly can set the brand image in the mind of the consumer. And for products with more \"standard\" packaging such as Coca Cola or Absolut Vodka, Hewitt says that these brands \"strive for ways to be timeless\" and constantly evolve their graphics and formats.
Think about the box
So, how could retailers compete against the branded giants and other retailers on the packaging side? Via investment, the packaging experts say.
Big brands have well-funded strategy and research teams that track consumer likes, pain points and needs. Armed with multi-cultural and multi-generational marketing metrics, they can create new products and evolve others to speak to consumers. Retailers with steady private label lines might not have the resources for the same type of research, but they do have customers – thousands of them walking through their stores, using loyalty cards, coupons and ready and willing to give their feedback.
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Best points to Leeds, England-based Asda, which launched its Chosen by You line in 2010, as an example of a retailer that understands how to leverage this reality to create products and packaging that resonate with customers. To develop the line – essentially a redesign of an existing mid-tier range – the retailer surveyed thousands of its customers about all aspects of the private label products and programs.
Patrick Rodmell, CEO of Rodmell & Co., Toronto, echoes the idea of using customers for research, adding that online customer surveys can be powerful tools. With an understanding of what customers truly want, retailers then can work to differentiate themselves through packaging and promotions.
Rodmell also believes that private label packaging has become too systematic, noting it represents an evolution to manage consistency and costs. But he says retailers need to build their own assets. Safeway, for example, licensed Warner Bros. characters for its Eating Right line, but the retailer could have developed its own characters instead.
Retailers also need to improve store brand packagings graphic integrity, Rodmell notes.
\"A lot of retailers have improved photography and imagery, but the actual graphics and type treatments are not as strong as with the national brands,\" he says.
Rodmell also would like to see more innovation in how packaging communicates to consumers. For instance, in addition to putting the nutrition panel on the side or back of the box, hed like to see retailers put key nutritional values on the front.
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Also, store brands can compete on more than value, he says. They can compete on quality, unique recipes and convenience. Retailers that improve their product lines often dont convey new and improved recipes, ingredients or benefits (e.g., improved cleaning power) on the package the same way or with the same frequency as the national brands do.
Another problem retailers face is that they often compete with themselves, Hewitt says.
\"Do drugstores need three different price points for [their] store brands?\" he asks.
Additionally, Hewitt says retailers need to evaluate when they have \"stretched their brand too far.\" Should the brand used for diapers be the same one used for juice?
Ginsburg adds that many retailers rely solely on packaging to market their products. As a result, many private label packaging designs are overcrowded with information. She believes \"retailers need to edit their packaging by homing in on the benefits and values of each product to the target customer.\"
Ginsburg also says store brand packaging is not updated often enough to take advantage of consumer trends and needs, or to reflect the fact that retailers are no longer selling to one audience – for instance, women aged 18-45. The U.S. economy is increasingly multigenerational and multicultural, and packaging can be a powerful tool to segment and sell product.
Best agrees that retailers need to better understand cultural cues. She believes retailers often \"rush product to market\" without taking the same time to research and manage a design strategy that truly speaks to the various audiences.
Finally, retailers should take advantage of their nimbleness and become true packaging innovators. Rodmell, for example, is waiting for resealable cereal packages that keep products fresh, as well as for U.S. retailers to take a cue from Europe with ideas such as refillable packaging for items such as laundry detergent. Packaging innovation is a surefire way for retailers to build a unique brand voice that goes beyond value pricing and me-too product marketing.