Is transparency next for grocery private label?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.
Should food retailers tell customers who makes their store brands?
Some market watchers believe they need to start considering it.
“Private label has been really hesitant to share what’s inside the product or where it came from,” says Steven Howell, client services manager for North America at Solutions 4 Retail Brands. But in this day and age, if you’re not saying, consumers will assume the worst.
“The notion that ‘I can put my trust in a particular product because it’s from big brand X’ has been flipped upside down in more and more categories,” explains Bob Shaw, president of Concentric. Today’s consumers want to know exactly who makes the products they buy, and that’s hurt the larger CPG companies to some degree, he says. But it’s also hurt store brands sold under one big private label. In both cases, consumers are savvy enough and have seen enough recalls not to trust the product just because they trust the brand.
A greater focus on transparency — and other factors such as food safety, animal welfare, etc. — could help retailers move beyond value, national brand equivalent and premium to get private label growing again, believes Mr. Howell.
Some strategies retailers can use to boost transparency include improving their own quality standards and utilizing more “captive brands” like Trader Joe’s does that don’t carry the same name. “If you put your name on everything, and everything comes from 900 different unknown companies at various quality levels, you’re going to lose some trust with the growing number of consumers who care about some of these values,” says Mr. Shaw.
Private label marketing may benefit by moving from broad brand-building to a narrower focus, especially around larger categories where volume is high enough to justify marketing a particular line on its own. Mr. Shaw suggests, “So tell consumers why your frozen vegetables are superior, why they should switch to your orange juice and why your ice cream is such a good value.”
DISCUSSION QUESTIONS: What are the pros and cons of bringing more transparency to grocery private labels? Would the challenges and/or risks offset the benefits?