The focus was on the future during the first day of the 2023 Velocity Conference & Expo as retailers and industry experts discussed opportunities to build off the growth the private brands sector has seen over the past two years.
An example of increasing private label sales is seen at Sprouts Farmers Market. Just two years ago, private label products accounted for 16.1% of total sales. That figure jumped to 19.2% in 2022 and this year has surpassed the 20% threshold, said Jac Ross, vice president of Sprouts Brands at Sprouts Farmers Market.
While inflation has played a role in the increase, Ross noted the company’s commitment to driving sales has been a major factor in more of its shoppers turning to its store branded assortment.
When developing its store brand products, she said the grocer’s efforts included a multi-pronged approach that includes staying away from offering items that are NBEs (national brand equivalents) and bringing back in-store product sampling that is done five days a week.
“We know customers trust our brand and we really focus on where the Sprouts brand makes sense for our shoppers,” Ross told attendees at the Omni Hotel in Charlotte, N.C. “We also did a two week store-wide promotion where everything was focused on the Sprouts brand. Every department had some promotional offer on our branded products.”
As retailers across all channels work to expand their private brand product lines, collaboration with suppliers is critical, said Bob Himler, vice president of Own Brand Development at Rite Aid.
“We can’t do it ourselves and we rely heavily on our supplier partners,” he said. “When we worked to remove certain chemicals from products, we worked closely with our suppliers to identify alternative ingredients that are better for our customers and better for the environment.”
Himler noted that strong relationships with suppliers will also prove to be an asset as the retailer takes steps in the future to develop product packaging that is more sustainable.
Private brands are also growing in military retail outlets as the Naval Exchange Service Command (NEXCOM) is moving forward on several expansion initiatives this year, according to Rich Honiball, executive vice president, global chief merchant & marketing officer with NEXCOM.
The retail outlet serving America’s sailors plans on launching Navy Pride in the third quarter and 3 Paces Athletic in the fourth quarter. It is also expanding its Harbor Home brand in outdoors, mattresses, kids and within other key product categories, and repositioning its apparel private brands to elevate quality and consistency.
Top of mind for many at the conference was how to maintain the current sales momentum private brands are enjoying.
Katie Kelly-Landberg, vice president at Periscope, feels retailers need to focus on the basics when working to build a brand.
“What is the tone of voice, what is the personality, how does it attract consumers and what does it stand for,” she said. "I love coming back to the purpose of the brand."
Jamie Richards, CEO of Branded, feels a greater focus on e-commerce when designing product packaging could help further boost sales.
"We have to make sure we are thinking about omni-channel when developing product packaging," he said. “It has to look as good on a smartphone as it looks on a store shelf. We have to make sure it is easy for consumers to buy the product when they’re shopping on their phones."