Private Label Trends

TOP 6 TIPS FOR PRIVATE LABEL: TRENDS AND CONSUMERS

Alex

Alexandra Goff, Account Director

March 1, 2016

From February 25 – 27, Chicago hosted the 2015 StoreBrands Innovation & Marketing Summit. We boiled it all down to the top six tips for private label. Trends ranged from sustainability for private label brands and the battle for innovation to the impact of technology on private label and using social media to engage the consumer. A wealth of insights were offered up: how to leverage brand data, finding opportunities in health, wellness and sustainability and what U.S. retailers can learn from European brands.

1. Sustainability Can Influence Consumer Engagement, Brand Loyalty and Sales, But Only if Consumers Get It.

What tips the scale between failure and success for sustainable brands? The consumer. Yes, there is a hunger for things like sustainable packaging, sourcing and recyclability, but consumers need to opt in, and that’s on all of us who have a hand in designing and communicating via packaging. For instance, the consumer might not understand the value of new pack structure, so communicate it on the pack. Explain why the change supports sustainability and tie figures into it if possible. Know that this new generation is savvy but skeptical. Share the sustainable sourcing strategy and help the consumer understand that recyclability can mean less waste and a healthier planet for all. These steps resonate with consumers who are willing to pay a bit extra to contribute to sustainability efforts.

2. Beware the “Doom Loop”

Private label brands can suffer from the cyclical nature of corporate culture. Often a product goes to market, experiences a short-term loss and gets pulled. One of the biggest decisions private label brand managers can make needs to occur at the onset of a project: It is the decision to introduce the new product into the brand portfolio at all. If this isn’t carefully thought through with an eye to the future, then buyers/category managers might pull back and remove the product altogether. Rather, think about how to modify the product or build upon how you’re communicating value to the consumer. Can the issue be resolved with minor adjustments to merchandising or pricing? Think about how to get store employees to promote their store brands with shoppers. This kind of training and support of store brands starts at the corporate level.

3. Tap Opportunities For Store Brand Foods in Health and Wellness

Consumers, particularly Gen X, are seeking simplicity with ingredients and packaging. A focus on wellness is no longer a “nice to have” but a “must have” for brands to survive. Organic foods and beverages continue to be the largest growth area. GMO awareness has increased 60% since 2011, driving a 262% increase in GMO free product launches. It has started a private label trend: retailers demanding their suppliers reformulate to eliminate synthetic colors and ingredients, offer specialty lines of dietary-focused products and eliminate GMOs. Private label retailers that talk about their products in a simple, honest way will thrive by connecting their brands to health, wellness, sustainability and environmental stewardship. And consumers will reward them with their loyalty.

4. Know Your Consumer; Then Innovate

In a world where the customer is the alpha, it’s more important than ever to understand their triggers, buying habits and preferences. The biggest mistake is to make generalizations about groups of customers instead of responding to their needs by culture and region. For instance, Hispanics are one of the largest-growing sectors, so how can retailers attract them? The answer is to listen. Find out what products they buy and where in the store. Make impulse products available at checkout, like a banana or a pack of nuts. In other words, drive convenience. And start teaming up – retailers and manufacturers – to bring innovation to the consumer in areas where national brands are lagging. This might be unusual flavors, quality messaging or packaging convenience. Now more than ever, the time is ripe for manufacturers and retailers to surprise and delight the customer. This will ultimately boost store brand sales.

5. Store Brands Need to Embrace the Digital Revolution

National brands spend 24% of their CPG marketing dollars on digital media. They know that consumers use apps and QR codes to scan as they shop, compare prices and find out-of-stock items. Apps even provide recipe ingredients for grocery lists. And RFID scanners compute entire grocery carts in one pass. YouTube videos for a leading store brand’s products have helped to increase purchase intent by +62% compared to before the videos launched. So, store brands have the opportunity to lead the way by taking advantage of emerging technologies in simple ways. So what if they don’t have the marketing dollars to woo customers on TV. Most buying decisions are being made in store, and many are made via input from digital media. Digital can be leveraged to enhance the brand experience for a retailer’s captive audience.

5. Store Brands Need to Embrace The Digital Revolution

National brands spend 24% of their CPG marketing dollars on digital media. They know that consumers use apps and QR codes to scan as they shop, compare prices and find out-of-stock items. Apps even provide recipe ingredients for grocery lists. And RFID scanners compute entire grocery carts in one pass. YouTube videos for a leading store brand’s products have helped to increase purchase intent by +62% compared to before the videos launched. So, store brands have the opportunity to lead the way by taking advantage of emerging technologies in simple ways. So what if they don’t have the marketing dollars to woo customers on TV. Most buying decisions are being made in store, and many are made via input from digital media. Digital can be leveraged to enhance the brand experience for a retailer’s captive audience.

6. Learn From European Store Brands

Click & Collect centers in Europe are on the rise. Consumers order online and then either drive to a center to pick up their purchases or wait to have them delivered to their doorstep. During the order process, private label brands are featured first. They could be leveraged in a similar fashion in the US and given priority as long as the retailer strategy is aligned. Another private label trend that is helping to secure loyalty in the European market is creation of unique, well-developed store brand personalities. Brand packaging in European markets looks markedly distinct from the national brands. In fact, private brands stand out on shelf by seeking to be unique and distinctive rather than simply mimicking the national brand. And it’s working!

Knowledge is Power

There’s a wealth of information out there: on consumer trends, packaging innovation, digital and social media advances and more. Part of our job is to distill it for you and help you stay on trend and on top. What other insights do you have to share?

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