Working with retail and national brand clients every day at Kaleidoscope, it’s our job to think strategically and stay ahead of the latest trends in packaging and branding, so that we can best position our clients for success.
The Private Label Manufacturers Association (PLMA) held its annual conference from November 17th to November 19th in Kaleidoscope’s home city of Chicago, and I was able to attend. The days were filled with insightful sessions, applicable recommendations from industry leaders, and interesting people from across the private label space. There was a lot of information to digest, but a few key trends really stood out.
Retail Urbanization
Consumers are becoming more and more reliant on quick outlets for shopping given the increased hustle and bustle of everyday life. As a result, U.S. grocery retailing is transitioning from retailer-operated single banner stores to smaller, more convenient formats.
Urbanization is one of the last few expansion opportunities remaining for big box retailers. Walmart for example is now implementing smaller express stores within major cities hoping to lure competitors away from big box retailers. Target has also gotten on board by building smaller City Target stores to appeal to urban shoppers in busy downtown locations.
While this new smaller store structure will likely attract a large customer base in urban settings, it is important to recognize the implications on packaging at these locations. Package architectures that fit suit urban commuters are much different than that of a rural or urban shopper, who may purchase in larger family sized packs. Larger sized products are more conducive to consumers who have access to a vehicle to transport the larger items, and who have storage space in their homes to accommodate Costco sized packages. Urban consumers are often lacking these luxuries. With smaller package sizes becoming more popular, SKU counts will likely increase. This urban customization may lead to a logistical headache in order to account for the increased volume.
As a brand owner, both for private label and national brands, it’s important to plan for this trend by working with a package design and implementation partner like Kaleidoscope who can help you develop a brand architecture and style guide that you can span across many SKU’s.
How expansive this trend may be is still unknown. However, customization in retail settings is a trend that will continue to grow in 2013. It’s important to begin conducting research now and testing smaller package formats in key urban markets.
“Click and Connect”
You know how you devote at least an hour perusing the aisles of the grocery store to stock up for the week? Well, that idea may be foreign to our children now that we’ve entered an era of grocery delivery and what the industry is calling “click and connect”. With shoppers looking for value in developed markets, many retailers are looking to develop a new niche. For example, Tesco in the UK developed a service allowing consumers to order their groceries online and pick them up in store. By year-end, Tesco expects to complete collection points in 150 stores as part of a 1 billion-pound ($1.6 billion) initiative to revive domestic sales. In France and Germany, drive-thru chain grocery stores are becoming increasingly popular with nearly 1,700 new stores. This concept has been very well received abroad, and it is expected to be just as successful in the United States’ convenience-driven consumer culture.
So how do brand owners prepare for this trend now? For one, they need to start rethinking their packaging strategy. Currently, shelf impact is weighed heavily when developing a packaging strategy because many consumers make purchasing decisions at shelf. With consumers steering from the shelf to computer screen, how can retailers ensure products stand out? Traditional advertising methods like purchase displays and pop-ups will become extinct should this digital shopping trend become mainstream. Retailers will need to consider how to connect with their consumers digitally. Website user-experience, online promotions, social media and email marketing campaigns will become even more important to win mind and wallet share of consumers shopping online. Retailers will operate more like major e-commerce sites than traditional grocery stores.
Private Brand Management Requires Continued Dedication & Investment
There is no doubt that private label brands have made their mark on the retail environment in the United States. While private brands in the US have typically lagged behind Europe, private label sales grew 4.1% in 2011 while brand names grew at only 1.6% compared to prior years.
In order to compete with national brands, store brands it’s imperative that private brands continue to seek out consumer insight when planning new categories and tiers. And they need to involve the right partners – designers, suppliers, manufacturers and marketers – to elevate product and packaging innovation. The change in perception regarding private brands in recent years has reinforced the right that private brands have to be pioneers.
Target is a great example of a retailer who has invested significantly in private label. Archer Farms generates added value for shoppers and drives differentiation with its high quality ingredients and differentiated package design.
Up & Up, launched by Target in 2009 demonstrates dedication to private label with its integrated visual and verbal messaging. This personal care and beauty range was one of the first to use design to differentiate from national brands. The bold simplicity of its design has endured and evolved to attract a new generation of millennial fans.
If you’d like to discuss any of these trends or talk about strategies for a particular private brand, I’m all ears and would love to hear from you!
About The Author
Sarah Bensfield
Account Management & Planning, Kaleidoscope Chicago
Kaleidoscope is the premier Co-Creative & Brand Realization agency in the world. We believe in working together with our clients to develop breakthrough product, package and brand solutions through Iterative Design Thinking, Rapid Ideation and Iterative Prototyping.