How brands can combat private label products

by | Sep 24, 2018 | Branding with impact

There are many lessons that private label products can teach brands, providing those brands are willing to sit up and take notice. When studied upfront and closely one can easily find a number of ways brands can combat these private label products.

It used to be …

It used to be that private-label strength varied based on economic conditions. Private-label used to increase in shelf space presence in a downward economy and flatlined in growth when the economy was headed upwards.

This is no longer true. Private label products have been in growth mode for well over a decade. Just look at the growth of Aldi here in Australia. Store brand sales due to private label products continue to grow despite economic conditions going up or down.

It used to be …

It used to be that brand names were popular with the consumer mainly because the busy consumer needed the security and assurance of quality when they were short of time and inclination to check out other alternative products at the shelf.

It used to be that consumers preferred the security, and value knowing that the “Brand” meant consistent quality versus a private label product.

This mindset used to be true and is what has contributed to national brands building strong consumer equities.

It used to be…

It used to be that if a store didn’t carry a particular popular brand, consumers would be put off and switch stores. It used to be that retailers would have to stock and promote that they stocked the popular brands the consumer wanted.

No more! Todays consumer has become well educated and sees the private label products as just as reliable in terms of quality as the national brand, only cheaper.Plus the consumer doesn’t feel like they are paying for the brand advertising when they buy a private label product.

It used to be…

It used to be that the consumers could easily detect  a “Home Brand. ” Whereas today there is a large diminishing discrepancy between the quality of national brands and their private label counterparts. Today store brands no longer suffer the stigma of inferior quality.

Supermarket retailers have taken product design cues that the national brands have spent years building up. In addition, retailers are also applying more advanced marketing strategies as well as going as far as hiring brand managers in an effort to augment the work their buyers and category managers are doing.

Packaging design is a significant piece of the private label process

Did you know that a critical piece of the private label strategy puzzle is the packaging design.  According to research,” millennials report they can’t tell the difference between a store brand and a national player “.

Retailers have worked hard over the last few years to up the ante. Since the cost of packaging design has fallen, they are easily able to make sure their private label brands and products are “indistinguishable” from the national brands.

Supermarkets have done this by investing in significantly improved, cost effective packaging design and rapid go to market programs.

So how brands can combat private label products against the rising tide?

Today retailers have been rationalising the number of traditional national brands they carry to create more shelf space for their own store brands.

When one considers the significantly larger share of shelf space that European retailers are taking up with their own private label products, there is still a lot of wriggle room for Aussie supermarket retailers to increase their private label holdings.

So the big question for national FMCG brands is  “how can they compete effectively against store brands?”

In their great 2010 article on the subject, Deloite Insights, an article by the way which is just as relevant to national brands today as it was way back then, suggest 7 recommendations that would help FMCG Brands navigate the changing supermarket landscape.

  1. Be a brand that the retailer cannot be.
  2. Be irreplaceable.
  3. Shed homogeneity.
  4. Create a retailer-specific product portfolio.
  5. Make me-too strategies an onerous path.
  6. Stop reckless promotions.
  7. Leave retailers bricked and mortared.

What can we learn from low private label penetration categories and products?

To compete with private label products, brands need to to treat them like any other brand competitor. Brand marketers need to set their brand apart from the “competing brand” with a clear value proposition as to why its worth more than the retail store brand.

When last did you conduct an independent category review?

BTW did you know that a professional brand and packaging design agency will conduct category reviews as a matter of course if they designing new or improving existing product packaging.

National brands need to look at those product categories and those products where there is a low penetration of private label products. These brands need to study those categories and products where consumers are still brand loyalty and see what learnings they can apply to their own brands.

There is still a significant strategy that the private labels are yet to cotton onto.

Strategic brand and product evolution is how brands can combat private label products today and into the future.

Strategic Brand & Product Evolution

In essence, private labels are not proactive. They dont have to be. They have the data and the resources to see those products that are upswinging, analyse them and develop them as private label products.

Private label brands can easily do this either by manufacturing them under their own label or simply by upgrading their existing private label packs to suit current market trends.

An evolutionary design strategy is a very effective strategy to combat private label products. In fact we’ll go as far as to say that an Evolutionary Brand/Product plan cannot fail. You can read more and why HERE

Why Strategic Brand Evolution can’t fail

An evolutionary approach signals a fresher way of being perceived as the business evolves organically to own new ground.

At Jam&Co we say that “The core reason why the evolutionary strategic brand plan is so effective is because it is founded upon a clear plan. Small evolutionary changes along the way that keep the brand and it’s packaging constantly ahead of its competitors and regularly attracting new consumers.”

A focused brand/product evolutionary focus is like the rudder of a ship as the winds and currents shift, so too will the evolutionary brand and packaging change as required…All the while still staying on course and more importantly staying ahead of the competition.

How can I be sure that the Evolutionary Strategic Brand Plan will work for my brand or product range?

  • Want to know how to sell this approach in to your senior management team?
  • Want to know where you can find the budget for this strategic approach to brand growth?
  • Want to know how to sell this approach in to your retailer/distributor?

Contact us here at Jam&Co and let us demonstrate how this “oldie but a goodie” will help your brand stay ahead of the ‘pack’ whilst putting you and your brand marketer career on the map.