Private labels used to be seen as the second rate offering in the retail world with a majority of consumers shying away from these alternatives to major brand products. They were viewed as knockoffs, cheap substitutes or poor quality ploys only purchased if you were trying to make your weekly shopping budget stretch a bit further. However the market view on private label brands has shifted considerably, especially with the recent economic downturn, and more consumers are willing to forgo the big brands in favour of lower-priced private labels—as long as the quality is maintained.
Time Magazine reported that since the latest recession, 93 percent of grocery store shoppers have changed their buying habits and now stock up on own label, also often referred to as private label store brands. Major chains stores have seen significant increases in consumer purchases of private label brands according to Bloomberg. In the USA, Safeway’s store brand has shown a 3-to-1 growth margin over major brands, and Kroger’s store brand sales accounts for 27 percent of total grocery sales.
Image via www.kroger.com
Of course, in order to sell private label brands successfully, retailers must promote their own label brands to their customers and make them just as appealing compared to major brand names. It’s not enough to simply stock them high and sell them cheap, as in the early days of own label branding.
Brand positioning, the brand promise, brand values, the brand story and category segmentation together with consumer mindset and so forth, must all be very carefully developed and fully integrated into the brand strategy for private label items to be most successful, with the same level of intricacy as major brands, and perhaps more so, because they’re competing with the automatic perceived quality of big, familiar brands.
In fact it would be fair to say that private label branding has become extremely sophisticated in some of the retail groups with their ‘private label’ brands carrying significant weight and authority amongst their target audience consumers.
The Importance of Superb Private Label Packaging
As every marketer knows, presentation is key to selling products. In fact people’s willingness to buy, recommend, refer, work for and invest in an organization is driven 60% by their perceptions of the brand and only 40% by their perceptions of the product or services (source: Kasper Ulf Nielsen).
Perhaps one of the primary reasons for the underperforming sales of private label brands in the early days was the bland, generic packaging and questionable quality. Many retailers felt that a lower price would sell these own label brands so few bothered to give any significant thought to packaging. In fact private label products were noticeable, for the wrong reasons, with their generic and non-descriptive packaging that looked completely underwhelming next to the carefully designed major brands. Also plagiarism of major brands was a notorious problem in the early days until legal channels flexed their muscles accordingly.
Today’s successful private label brands incorporate appealing packaging design into their branding with a very clear focus on who their target audience is and how they’re going to grab attention and engage with them effectively, through their packaging design. Gone are the stark, single or two-color boxes that simply state the name of the product inside.
Image via www.waitrose.com
Many retailers are creating entire lines of own branded products carefully segmented and tied to their “brand name” such as UK grocery retailer Waitrose’s impressive portfolio of store brands including Seriously, Heston, Menu, Duchy Originals, Love Life, Good to Go and Essentials, each with its own specific brand strategy and distinct look or brand style.
Image via www.waitrose.com
These proprietary Waitrose brands are not always directly comparable to any other ‘brands’, be they national or private label, thereby making them unique all of which helps support growing consumer Waitrose brand loyalty and increased wallet share. Some don’t even mention the proprietary store owner, such as department store chain Target’s Simply Balanced health foods and beverages.
Image via www.waitrose.com
These private label brands and their relevant product lines feature distinctive packaging styles and well defined brand propositions with clear target audiences that are competing with major brands on the shelves. In fact, many are indistinguishable from standalone major brands as they’ve become ‘brands’ in their own rights, with the exception of the lower price segments.
The best private label brands are blurring the lines of ‘major brand’ or ‘own label’ brand distinction through ensuring superb product quality, creative brand packaging and compelling brand offerings all of which attracts consumers to choose the own brand product without compromises on quality or price. Many are now brands in their own rights without any of the old stigmas of the early days.
Embracing Environmental Causes and Sustainability
Sustainability and environmental consciousness in both food sourcing and packaging is another major brand selling point that some private label brands are adopting. For example Waitrose has made several changes to its private label products that reduce packaging waste significantly.
Recent changes to the packaging of a number of Waitrose’s private label brand lines is estimate to have saved the company almost 100 tonnes of packaging annually. Among other changes, the company’s line of prepared meals, Menu from Waitrose, now features a reduced-width package sleeve and a recyclable, lacquered aluminum tray that allows consumers to cook and serve the meal right from the packaging.
Image via www.waitrose.com
It’s effectively a ‘win win’ for all concerned, rubbish is kept out of the landfills, the packaging changes make life easier for the consumer – who now has less waste to deal with and less space used in their refridgerator. Waitrose has also raised consumer awareness of their rebranded, environmentally conscious private label packaging through a marketing campaign in which they pledge to reduce packaging by half, by 2016, all of which helps generate a very positive engagement with the Waitrose brand.
Encouraging Consumer Interaction
Just as with any form of branding, interaction and a personal touch can help to promote private label brands. Several companies have launched innovative campaigns that aim to introduce consumers to their brands, and give them the opportunity to experience high quality at a lower price—therefore earning repeat business and private label brand loyalty.
Image via www.co-operativefood.co.uk
As an example, business group The Co-operative in the UK recently launched a Twitter campaign called “Tweet for a table,” which offered a grand prize of a free, gastro-style meal for up to 4 people, served in one of the company’s pop-up restaurants. The winning meal was created entirely with private label products from The Co-op, introducing potential shoppers to a number of brand lines during a fun and memorable experience.
Image via www.produktdesigner.fotoparadies.de
German drugstore DM uses an innovative way to personalize the shopping experience with private label brands. The company teamed with a product designer to create a website called “Foto Paradies” where customers can create their own custom labels for a range of private label items—choosing their own text, and even including photos.
Broadening Private Label Brand Distribution
Recognition and visibility is an essential component of branding, and some retailers are branching out by offering their private labels for distribution in other markets. Once again, Waitrose UK is demonstrating private label innovation in this area, offering several of its lines through international grocery corporation Dairy Farm’s retail locations in Singapore.
French mass retailer Groupe Casino is expanding its private label brands to the Asian market. The company works with Rustan in the Philippines, and A.S. Watson in Hong Kong, to distribute and sell several store brand lines through the retail chains Shopwise and Taste.
Expanding Your Private Label Brand Revenue
Consumers are no longer ignoring private label brands, they’re actually seeking them out, and often preferring them over major brands. In fact, shoppers are willing to pay more for store brands than they had previously. The Wall Street Journal (via Time Magazine) reported that average prices for private label brands have increased by 12 percent, compared to an 8 percent increase for major brands in the same time period—yet store brands still cost an average of 29 percent less than major national brands. If you’re a independant brand owner maybe supplying ‘private label’ along side your ‘branded’ product could also be a significant part of your growth strategy.
Its the combination of erasing the perceived quality gaps between private and major brands together with solid brand strategies underpinning ‘eye popping’ great packaging design, excellent customer experiences and consistently engaging customer campaigns, alongside maybe broadening distribution through strategic partnerships, that can collectively help increase sales of own brand for more profitable long term growth and increased customer loyalty.
What do you think?
• Is your private label brand packaging comparable in quality to major brands? Is it time for a redesign?
• What kind of consumer experience are you offering for your private label brand?
• Are your private label brands developed with the capability of range extensions, or are they simply single-shot offerings?
• Are there any markets you could investigate to broaden your private brand distribution?
Feel free to share your thoughts in the comments below, we’d love to hear from you!