Store brand management: How to protect and build on growth

Store brands are a huge boon for grocery retailers today. In fact, according to Nielsen, the dollar volume of private label products in mass market retail jumped by 41% from 2014 to 2019 versus just 7.4% for national brands during the same time.

This data was pre-pandemic, but the trend remains. Nielsen reported double-digit sales gains for store brands in the last month.

This immense growth is generating a tremendous amount of revenue, and more and more grocery brands are taking note and trying to get more involved. However, with Amazon’s growing influence within grocery retail — not to mention more traditional budget-centric players like Walmart — other grocery retailers need to be vigilant about protecting their store brand growth and keeping their private label products as appealing as possible.

With that in mind, here are three ways grocery retailers can fortify their private label success and even achieve additional growth.

Private label strategy management

As the private label market continues to grow, an increasing number of store brand products are hitting shelves. Gone are the days when grocers would offer a handful of private label products. Now, private labels can be found in virtually every product category from ice cream to hand soap.

Grocery retailers need to be vigilant about protecting their store brand growth and keeping their private label products as appealing as possible.

To successfully manage this ever-growing catalog of products, grocers need to have a dedicated comprehensive strategy. The first step in managing a private label pricing strategy is to bring the items together as a sub-group and apply dedicated rules, derived from marketing insights. From there, to ensure consistency, it is essential to have the infrastructure and tools in place so that a retailer can track the position of its private label products in comparison to competitors and national benchmark brands. In addition, this infrastructure needs to include guidelines for price matching, thresholds and coefficients that apply to all categories. This helps to ensure retailers have the ability to make any proactive or reactive adjustments as quickly as possible.

Linking products

Once a clear private label strategy and infrastructure is in place, grocers need to begin thinking about how each product relates to another and how a shift in price for one product could impact others. Enter “linking.”

Linking products is a relatively straightforward process whereby a change in one product’s price automatically results in changes to other “linked” product prices as well based on predetermined criteria and ratios. Products can be linked based on factors such as quantities, similar products (such as several different brands of peanut butter) or products that are typically purchased together. Linking enables grocers to keep prices consistent across store assortments and can also save them a lot of time.

Private labels and price image management

One of the key benefits of private label products versus name brands is that retailers have more control over pricing. Therefore, it gives retailers an additional tool to help differentiate themselves from other competitors when it comes to pricing and helps to underline the exact value and “price image” shoppers can expect for their brand.

In addition, private label products allow retailers to offer more budget-friendly options when unforeseen circumstances such as ingredient shortages, weather disruptions and regulation changes arise and raise name brand product prices as a result. This type of adaptability is hugely important and provides retailers with the opportunity to get private label products into the hands of new shoppers who either don’t have access to their name brand first-choice, or simply don’t want to pay the elevated price for it.

The private label industry has become one of the most interesting spaces in retail, and also one of the most competitive. However, by focusing on the key areas outlined above, traditional grocery brands can not only protect their private label businesses but also help it flourish.

Julien Gautier is the marketing director at ActiveViam, an analytics platform company headquartered in London with offices in New York, Paris and Singapore

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