The Future Implications for Private Brands

By Shilpa Rosenberry 

In today’s changing retail world, the growth strategies of yesterday are no longer relevant. With low addressable population growth here in the United States, retailers can no longer rely on opening more stores to grow, nor can they depend on new people coming into their stores.

When you add to that a consumer with more retail options than ever before — from supercenters to traditional grocery, hard discounters, dollar, convenience, specialty, online and more — it’s not surprising that loyalty to any one retailer is becoming harder to build and retain.

This is why it’s more important than ever for retailers to get current shoppers to stay in their stores — whether real or virtual — and persuade them to buy more while they’re there.

As we look toward the future, these dynamics will only intensify. Industry growth will be even more fragmented, more targeted and, for many retailers and brands, a vast departure from the norm. Shoppers will increasingly expect more personalized relationships with the products they choose and with the retailers where they shop. In this evolving retail world, private brands will be critical to drive traffic, enhance the shopping experience and build retailers’ brand equity.

Here’s why:

Private brands enable retailers to move faster, to stay relevant to the consumer.

In tandem with a retail world that’s changing, the consumer is changing. With increased access to information and social connectivity, consumers have become more knowledgeable about the products they buy, and where to buy them.

Technology has further driven society’s compulsion for “now,” which means retailers need to move faster to get consumers what they need, to keep them from going elsewhere to find it.

Private brands by nature are faster and more agile, allowing retailers to capitalize on consumer trends more quickly. Whether it’s addressing a specific consumer need state for wellness, looking to incorporate particular global flavors and influences, addressing a new product form, embarking upon a hyperlocal initiative or creating a proprietary flavor offering, retailers can leverage private brands to drive relevancy and differentiation.

At a time when retailers need to work harder to get closer to the consumer, private brands allow retailers to pre-empt consumer needs, focus on specific lifestyle segments or offerings, and respond more quickly with targeted innovation that, when done well, can surprise, delight and create a cultlike following with core shoppers.

Private brands can reinforce a retailer’s brand equity throughout the store, driving connectivity with shoppers.

Unlike national brands, which mostly live in specific categories within the store, private brands have the ability to flourish throughout the store, reinforcing the total store strategy, and driving connectivity with shoppers. In fact, when a retailer succeeds in meeting consumer needs through private brand in one category, it often serves as a gateway to trial for other categories, which can in turn influence future purchase patterns and further reinforce the retailer’s total strategy. When retailers support their own private brands by ensuring that their employees understand the proposition they offer, and invest in building trial and engagement for their brands through consistent marketing communication, social media, sampling, tasting and other experiences, brand equity can continue to grow and reinforce itself through each of its touchpoints.

Consumers Embrace Private Brands

It’s hard to believe that private brands once had a stigma associated with them as “me too,” low-priced options, which is clearly not the case today. To the contrary, more consumers, especially younger ones, are embracing private brands, which are seen as offering value and more significant alignment with real-life consumer needs and preferences.

Industry leaders like Monrovia, Calif.-based Trader Joe’s or U.K. chain Waitrose have staked much of their success on strong private-brand strategies. Even among traditional grocers, we’re seeing categories once considered emotionally driven and dominated by legacy brands being infiltrated by private brands that have become a key part of the offering, such as chocolate, coffee or diapers. It also helps that private brands are sometimes just as fast in bringing their own version of a product offering to the shelf, or embracing category and consumer white space entirely.

When strategically leveraged as offering a “nowhere else but here” experience, private brands can be used to get shoppers to buy more, encourage cross-category purchases and increase barriers to switching. Think about product pairings, proprietary flavors and iconic product lines as opportunities to make private brands more visible and attractive, and to drive loyalty. As we move into the future and consumers encounter ever-expanding retail options, private brands could well be the reason a consumer chooses you over your competitor.

Shilpa Rosenberry is senior director of global consumer strategy for Stamford, Conn.-based Daymon Worldwide, which provides retail branding and sourcing expertise to 100-plus major retailers and nearly 6,000 manufacturers in 50 countries.