What we can be certain of is that with all the disruption, many companies have been forced to innovate or face going out of business. Even if businesses are doing well, now is the time to pilot new ideas that anticipate where future consumer needs might be (for example, meal solutions).
With the unprecedented level of unemployment, a recession is likely. That will increase the proportion of shoppers looking for better value. A strong private brand that can deliver a quality product at a better price is going to be essential, not just for our economy, but to help millions of Americans living through incredibly challenging times.
SB: As the economy struggles, how do retailer private brands innovate?
DM: Value will be more important than ever, but we’d also benefit from recognizing the differences in why people shop. In the past, this was primarily driven by demographics and basket behavior. The rise of marketing technology now allows us to operationalize an attitudinal lens. That allows us to identify and serve different interests. These can include seeking out new flavors to discover, wanting healthier choices on a budget, or enjoying comfort eating above all else. If we can understand the “why” behind the “what” of consumer behavior, then we can tailor our innovation and our marketing to meet those different needs.
SB: Is there an advantage to being a private brand in this current climate and how?
DM: Absolutely. As younger brands, they typically aren’t as tied to decades-old recipes that, while tasty, no longer meet the need for cleaner ingredients and healthier living. They benefit from greater marketing efficiency from use of owned media, e.g. store and website. Also, as private brands typically span more categories than a national brand, the opportunity to basket-build once you’ve secured the initial relationship is greater.
SB: How should private brand suppliers adjust product innovation, packaging based on trends such as an increase in digital delivery and e-commerce?
E-commerce remains stronger as a replenishment versus discovery channel. Research from Civic Science suggests that shoppers have been underwhelmed by their digital experience, so we expect for many to return to the physical store once circumstances allow. I would focus on replenishment items and consider options such as larger pack sizes and refill packs. Larger pack sizes also open up the possibility for some crafty marketing, using the pack itself as a billboard to hero other products in the range.