Pumping up private label

While dollar sales of private brand products have been slumping at supermarkets and other regional grocery chains, a detailed report from the Food Marketing Institute’s (FMI) Private Brand Leadership Council suggests that those retailers can reverse the decline by differentiating their store brand offerings with more innovative and exclusive products.

FMI’s report, “The Power of Private Brands,” confirmed that private label grocery sales — hampered by deflation and a decline in supermarket trips — haven’t kept up with national brand sales the last two years. But the report, which details information FMI conducted in conjunction with Information Resources Inc. (IRI) and Daymon, stresses that grocers can take advantage of the growth potential of private label by customizing products, recognizing the need to invest to drive store brand innovation and embracing a wider range of promotion vehicles, including emerging social media platforms.

“It will be a lot of hard work and will require retailers to think differently about their store brands, but there is a lot of opportunity for them [with private brands],” Mark McKeown, client insights principal at IRI, told Store Brands.

Kristof Duna, director of private brands at Merchants Distributors Inc. in Hickory, N.C., and co-chair of the FMI Private Brand Council’s research and education committee, says the research justifies what he is seeing in the marketplace. But while supermarkets and regional grocery chains have lost dollar share, Duna believes they can regain it by investing more in private label innovation.

“There are still retailers that want to take the benefits of private brands without really looking at the investment needed to keep them on the cutting edge,” Duna adds.

Dave Harvey, Daymon’s vice president for global thought leadership, says retailers simply need to think differently to distinguish their own-brand offerings to increase sales.

“What will drive future growth in private label are categories actually being created by retailers themselves,” Harvey states.

The report, released to coincide with the FMI Midwinter meeting in Arizona this month, has suggested next steps, and the report’s final chapter called “Putting It All Together” guides the reader on how to benefit through specific actions. FMI will keep the conversation going well after the report is released, including through a series of webinars that educate the industry on key findings.

“Too often, and after significant effort by stakeholders, research is released but quickly finds its way to a book shelf or a file cabinet,” says Doug Baker, FMI’s vice president of private brands. “The FMI Private Brand Leadership Council wanted to develop a tool that would be used throughout the year to generate discussion to help brand owners and their trading partners continue to stay ahead of key trends, consumer demand and competitive pressures.”

To read the complete article with tables and expert insights, visit Store Brands' digital edition: http://magazine.storebrands.com/i/773304-jan-2017/29.