Oh no! Private labels are killing brands!
Branded retail goods should be (and most are) paying attention to what’s happening. Customers’ love affair with private label products is growing, and that shows no sign of slowing. But it’s not a case of private labels killing brands; private labels ARE brands.
From Target’s premium brand Archer Farms, to Walmart’s evolving Great Value line, these store brands are anything but generic. Private labels are much more than a cheaper version of the national brands, with unique products and killer benefits, the retailers are beating many national brands at their own game.
Customer sentiment by the numbers
The research group Mintel has found that 44% of grocery store customers believe store brand products are better today than they were five years ago. Only 19% of surveyed customers say it’s worth paying more for name-brand products. Most categories show customer preference to be in favor of the store-brand products, with the only exception being soft-drinks and personal care products. Local store brands have an appearance of freshness when it comes to bread, dairy, and similar fresh products, while 61% surveyed do not believe there’s a difference in canned and shelf-stable foods. This really puts the odds against the national brands.
How are private labels gaining this traction?
So what’s the difference? First, many retail chains have been investing in private label products that are superior in quality to the national leading brands. They have been spending the time on research and development to make a product that performs better, and worried less about being the cheapest product. Second, the retailers are promoting their own brands with multiple marketing efforts to spread the message that their own products are high quality. Since retailers have the ultimate say on in-store marketing, this really tips the favor in their own court.
What I believe to be one of the most significant differences, retailers are carefully developing a strong packaging look for their products to make them aesthetically superior. Packaging is one of the most powerful in-store marketing tools, and the retailers are really nailing this aspect. The days of copying the national brand seem to be over, and private labels are building their own identities. This illustrates to the consumer that the products are different than the leading consumer brands, frequently using very fresh and clean design with a heavy emphasis on product over gimmicks.
Is it game-over for mega-brands?
The message to package goods manufacturers: start taking risks, making changes, and promote! You have brand equity and recognition, but you need to remind people what your brand stands for. Centuries of history have shown that marketing and innovation work. That’s not going to change any time soon.
