Value(d) Brand Strategies

My parents taught me the value of a dollar; my career has taught me to better understand the value of a brand. Since 1984, I’ve been working to promote amazing product portfolios — from companies that include Fry’s, Kraft Foods Group Inc. and Federated Group LLC — and now am representing the entire food retail industry’s private brand platform at the Food Marketing Institute (FMI).

It’s true that consumers of every socioeconomic class have tightened their belts and looked for ways to stretch their grocery dollar throughout the recession. The food retail industry reacted to this new segment of buyers by offering value through private brands, and in turn, private brands have become mainstream — and, even better, desired.

FMI found in this year’s “U.S. Grocery Shopper Trends” research that consumers are willing to travel farther than their nearest store to seek out particular private brands. In fact, a better selection and variety of private brand offerings ranked among the top five reasons for traveling to a store that might be out of a consumer’s customary shopping radius.

We’ve witnessed an evolution in private brands over the last several years; product development is no longer relegated to a focus on cheaper ingredients and packaging options. Today’s consumer expects private brands to address trends such as sustainability, organic, gluten-free and more healthful ingredient options.

On the business demand side, companies I speak to regularly are addressing the challenges of simultaneously maintaining cost-efficiencies and developing strategies that encourage trial, build loyalty and improve operations and supply chain efficiencies to drive growth and share of private brands.

To meet our companies’ diverse and competitive needs, FMI recently commissioned a study, “Store Brand Strategies,” that confirmed our expectations that while there are commonalities among private brand strategies, the differences are akin to personalities and as unique as the businesses represented.

The study’s authors at Acosta Mosaic Group Strategic Advisors conducted a qualitative survey to better understand what makes store brand programs successful. Among the findings was the need for retailers to focus on innovation, quality and customer solutions. Companies should strive to be first to market with better-quality/better-tasting items; they need to achieve 100 percent buy-in and organizational effort from all teams involved; and they must recognize that margin-building and penetration are only secondary to a broader strategy.

As I was writing this column, I reached out to the leadership among my FMI Private Brands Leadership Council members to represent their feedback and business goals for our ongoing pursuits as a council:

• ■ Pam Boynton, chief strategy officer, Federated Group, offered that there is greater awareness among consumers and greater propensity for the larger consumer base to be motivated by compelling programs and marketing messaging.
• ■ Council member Bob Cutler, senior vice president, Western Family, said he strongly believes brand owners must make the strategic move from selling to customers to inspiring them. He emphasized, for brand owners, that the opportunity exists for them to mirror the desires and lifestyles of their customers through private brand offerings.
• ■ Council member Jon Tisch, manager, own brands, Affiliated Foods, offered: “Certainly, the economy is a factor, but I think the research is showing something more. For the last 20 years, private label brand owners have been narrowing their focus on the consumer, in part, in response to what national brands were doing with costing, deal funding and quality, and also as a way to differentiate themselves competitively. In essence, they’re acting like true brands agents.”

The charge from our research and council is clear: Consumers want private brands that push the envelope and connect with them. Price is only a short-term win, and consumer loyalty should be a brand owner’s end goal.

To obtain a copy of the report, visit FMI.org or contact me at [email protected].