PL Buyer: One of a Kind Private Label

Discussion
Jan 19, 2010
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By
Kathie Canning

Through
a special arrangement, what follows is a summary of a current article from Private
Label Buyer
, presented
here for discussion.

For
many years, private label resided in “me-too” land. In this realm of sameness,
the greatest compliment a product could receive was that it looked and tasted
or performed much like the “real thing” — the national brand item it was designed
to emulate.

Although
you’ll still find a slew of national-brand-equivalent products on retailers’
shelves, today’s store brands are implementing a major reroute of their road
to success. And that new route is leading retailers into an exciting new territory
— private label programs that set them apart from the national brands and
retail competitors, in areas ranging from strategy and product development
to packaging and marketing.

The
ride might be an exhilarating one for retailers, but it represents a potentially
scary journey for some national brands.”The
national brands are not the sole leaders anymore,” stresses Scott MacLennan,
director of store brands for Specialized Technology Resources (STR). “The new
race is really private label retailer vs. private label retailer. As long as
retailers can deliver sustained box-to-box store brand quality, there is no
stopping the charge.”

In
fact, retailers might be even better situated for product and program differentiation
than the national brands are.”

National
brands, depending on what their brand stands for, can be more restricted with
what they can experiment with,” Mr. MacLennan said. “Retailers can more easily
try something new and creative instead of making the traditional flavors and/or
styles.”

Of
course, differentiation is more than just a trend. For private label programs
across the supermarket, drugstore and mass merchandiser channels, it also is
an increasingly important margin-boosting strategy.

“It
is imperative for retailers to differentiate in order to create a unique shopping
experience as retail store options and repetitious products abound,” noted
John Burt, senior national account manager – Target for Marketing Management
Inc. (MMI). “Having winning costs on basket-building essentials such as milk,
eggs [and] bread is still a key competitive element to drive shopper frequency,
but it is a singular approach — as is creating a single national-brand-equivalent
strategy for your private label program.”

Mr.
Burt advised retailers to create a premium “differentiation” tier within their
private label programs. Products within such a tier encourage destination-minded
shopping behavior on the part of consumers.

Retailers
could gain consumer loyalty with premium private label products such as salsa,
pizza and ice cream, he adds, as well as with products boasting a social marketing
element such as fair trade or advocating sustainability. Other tactics that
build excitement into the assortment, Mr. Burt said — and subsequently encourage
more frequent shopping trips — include unique flavor profiles or flavor profiles
that mimic restaurant trends; meal solution demos, displays and recipes that
simplify the shopping experience; localized assortments that provide seasonal
relevance with private brands; and easy-to-read (and well-researched) nutritional
claims and health benefits for better-for-you items.

Discussion
Questions: What’s the next step private brands need to take to further differentiate
themselves from national brands? What key areas (i.e., pricing/promotion, product
development, packaging, marketing, etc.) should stores be focusing on to stand
out?

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16 Comments on "PL Buyer: One of a Kind Private Label"


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Doron Levy
Guest
Doron Levy
11 years 3 months ago
Loblaws should give lessons (and they probably do) on private label management. Having your own ketchup and mouthwash beside the national brand is all fine and dandy but PL has grown beyond that. I’m talking about category busting brands that customers develop a loyalty for. If you look at President’s Choice products (One of Loblaw’s house brands) you will see them standing alone in certain categories. Walk down the frozen section entree section of a Loblaw’s and in most cases, you will only be presented with PC products. PC Cola has become a major brand in itself that competes head on with Coke in the store. In some retail applications, private label is an afterthought. Private Label is slowly losing its ‘cheaper alternative to the name brand’ stigma as more unique and high quality products come down the pipe. Another notable line is the Nativa Organics line from Shoppers Drug Mart. I’m not 100% positive but I believe this is the first private label line that is considered fully organic. Forget about ketchup and mouthwash.… Read more »
Max Goldberg
Guest
11 years 3 months ago

Private label brands should focus on packaging. Putting more effort into better packaging will make the products stand out on the shelf and, if done right, will better communicate the quality of the product to consumers.

Of course, if you are going to have better quality packaging, the product itself should be good enough to meet consumer expectations.

In-store, it helps to compare pricing with the national brands. Costco does an excellent job in this area with shelf signage that points directly to the national brand and shows the pricing for the Kirkland product vs. the national brand.

With consumers focused on value, being able to create a private label product that is equal in quality to a national brand, and then selling that product for less, can be a major profit builder for retailers.

David Biernbaum
Guest
11 years 3 months ago

Having worked with and consulted on private label for so many years with retailers, I would first point out that private label comes in many different forms and serves a wide variety of purposes for retailers.

Here are a few shortened guidelines I recommend to all retail chains:

1. Define what you are trying to accomplish with your private label program.

2. Your private label program in itself should help to define your points of differentiation from your competitors.

3. Do not over-dress or under-dress your private brand package design.

4. Blatant imitations of the national brands work only if price is your only point of differentiation. Otherwise, develop your own identity but without confusing the consumer about what this product is.

5. Offer different styles and approaches to fit the product categories unless you are planning to be “generic.”

6. Assign the marketing and branding of your private label program within the domain of professional marketing people. Branding is a discipline, not an intuition.

7. Above all, treat your store brand as a real brand.

Justin Time
Guest
11 years 3 months ago

Great A&P Own Brands has been very busy in 2009 launching and relaunching over 2,500 SKUs in private label products.

New lines include Via Roma authentic Italian food products, Hartford Reserve, gourmet quality deli meats, cheeses, crackers and bakery products, Live Better, OTC drugs, Market Spa, soaps, shampoos and personal care products and Green Way, a full organic line of fresh veggies, poultry, dairy, canned, cereals, and cleaning products.

All of these product lines have been heralded in various trade publications as taking a unique approach to private label packaging, marketing, and distribution.

These products not only look fantastic on the outside, drawing the customer to purchasing them, but also taste delicious, clean better, make you look and feel better, and cost far less than the equivalent national brand products.

Gene Hoffman
Guest
Gene Hoffman
11 years 3 months ago

The next step private label should take in differentiating from national brands is to look hard at Trader Joe’s. Who else offers the PL items that Trader Joe’s does? Nobody!

In a less effective fashion, Target also is attempting to create new and unique PL items. Thus my vote for where PL should focus to gain more ground is on New Product Development.

Ralph Jacobson
Guest
11 years 3 months ago

Loblaws is a good example, as Jewel in Chicago and others licensed their President’s Choice brand decades ago. With a focused effort, PC became the best-selling brand in multiple categories in Chicago, not just at Jewel.

Today the food industry needs to look outside their world to other industries, like apparel, and look how those PL brands are built. Most apparel merchandisers and advertisers put supermarkets to shame. Brands are everything. Target has done such a great job, that I’d bet they could sell PL branded apparel with the Target Bull’s Eye logo on them.

Charlie Moro
Guest
Charlie Moro
11 years 3 months ago

I think President’s Choice is a good example for this discussion. I think the other that comes to mind is the TopCo Full Circle natural line of products. Safeway has also made their private label brand along with Wakefern to other retailers. The opportunity here is for a retailer or distributor to take on the R&D and sourcing for items and can then very easily create tiers of private labels for different niche retailers and their customers to allow them to differentiate themselves without all the overhead.

Paula Rosenblum
Guest
11 years 3 months ago

The key is quality, quality and quality.

This extends beyond food to general merchandise and apparel, hard goods, and pretty much anything else retailers sell.

While Publix “Buy a National Label product, Get Our Private Label brand free” was a large success, the rest of retailers must ask themselves, “Could we do the same? And could we do the same for ALL our private label products?”

If the answer is no, that’s where improvements must come from.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
11 years 3 months ago
This is a very exciting time for retailers and consumers. If you create a great tasting, well packaged, and competitively priced Private Label brand, you’re building a unique barrier to competitors. A great example of this strategy is Trader Joe’s. Trader Joe’s does not focus on price (although their items are very competitive). They focus on taste, packaging and uniqueness. A big part of their success is their trial kitchen in the back of the store. Most retailers struggle with consumer trial because of the cost. Once they taste your product they are more likely to buy it. Supermarket News ran a great article on January 4, 2010 on Private Brands and National Brands working together to drive volume for the National Brand and trial/volume for the Private Brand with no cost to the retailer. (A company I do work with is mentioned in the article.) No question this approach can be very effective and a win for both the retailer and the National CPG. Not to mention the customer. When a retailer creates a… Read more »
James Tenser
Guest
11 years 3 months ago

Clearly, the “other” choice in the poll above is about branding. PL products should have a clear brand positioning and identity that ideally reinforces the host retailer’s banner and reputation.

Retailers will always offer “just as good as” products that resemble national brands. For some categories a trimmer price and equivalent quality add up to sufficient shopper value. But the grocer really establishes an identity with exclusive and added-value items. Ideally, these should echo and reinforce the retailer’s core positioning and image as the place to obtain “the products I want”.

Among the best examples I can think of are Safeway’s O organics line, Fresh & Easy’s mix featuring 65% own-label items, and the oft-mentioned President’s Choice controlled label.

Warren Thayer
Guest
11 years 3 months ago

The leading chains have done a great job with upscale and high-end tiers, while, IMHO, letting their value tiers slide. Upscale is seen as sexy, flashy and fun, but the value tiers are just as important to large segments of the shopper base, and they’re getting lost in the shuffle. So, “the next big thing,” to me at least, could/should be more resources put against that lowly and disrespected value tier.

Gene Detroyer
Guest
11 years 3 months ago

I echo Jamie Tenser’s comments. The future growth and significant success of private label will be in the private label products and lines reflecting in every way the positioning and identity of the retailer. In that way the retailer leverages every purchase the shopper makes as another step towards retailer loyalty.

I would take great care as a retailer not to use multiple brand names in developing their renewed PL programs. Choose one (PC) or a limited number of brand names so as to solidify the connection between the PL and the retailer. This is a type of thinking that is not common in the supermarket industry. It is talked about, but rarely seems to be executed.

What purpose is there for PL if it is not to generate customer loyalty? Oreos, Coke and Dannon help the retailer differentiate themselves from the competition. Provide the consumer with excellent products that do.

Joel Warady
Guest
Joel Warady
11 years 3 months ago

It was not that long ago that retailers felt the best Private Label strategy was to hold a reverse auction, and only choose the PL supplier who could provide the product at the absolute lowest price. The fact is, these same buyers are still at the same buying desk, and while they talk about treating PL as a branded product, they find it difficult to get low cost out of their decision making process.

What retailers need to do is hire true branded product experienced executives, who understand brands after having spent years developing and marketing them. Only then will retailers truly make strides in developing a true PL branded product strategy.

Most retailers still have a very long road in front of them.

Anne Bieler
Guest
Anne Bieler
11 years 3 months ago

Many of the retailers are doing a great job with PL offerings, but still have a long way to go. Clear focus on meeting consumer needs and wants can take products to the top of the category. What was the best selling Chocolate Chip Cookie in North America throughout the ’90s? President’s Choice Decadent Chocolate Chip Cookies – by design the product had more and larger chocolate chips, more butter, and a great recipe–and award winning packaging from the design studio of Don Watt. Walmart’s Ol’ Roy dog food has been the category leader for years.

Good Products that are better value for the money are the first part, then distinctive packaging make them easy to find, easy to use, and easy to repurchase will build long term customer loyalty that drives sales.

Don Delzell
Guest
Don Delzell
11 years 3 months ago
The comments made concerning branding and brand integrity as it reflects on private label execution are absolutely dead on. My thought moves a bit past that though…to the elements and extension so branding and brand communication. Consumer marketing (advertising) is generally beyond the scope of most private label brand development. Yet, if these brands are in fact going to stand for something, they need to communicate that something to consumers…and not just hope that repeated experience with a range of products is going to miraculously establish brand values. Let’s be clear. Brand values apply to ANY brand in the store, and if we are going to look to the evolution of private label, it will be to expect and demand of it the same expertise applied to CPG brands. Marketing is certainly one of the core competencies of any CPG brand organization (along with, one can hope, product development!). The emphasis has been on packaging, as this remains the primary mode of marketing communication available to the private label. It is not the ONLY mode… Read more »
JoAnn Hines
Guest
JoAnn Hines
11 years 3 months ago
Private label packaging needs to continue to improve its image and build equity in the PL brand. It should not be a copycat brand or a clone of some other packaging but stand on its own merits. The value principle is what is moving consumers into private label in the first place so above all, the packaging needs to continue to reflect that. Leverage value with the consumer loyalty for a particular retail outlet into a package unique enough that reflects the consumer wants and needs. Regardless of where they shop, consumers still have time constraints and still want to simplify their lives. The private label offering needs to fulfill those unmet needs. This is where innovation comes into play. Many of the most successful new packages solve those problems while at the same time keeping the issue regarding less packaging in mind. Think from your customers’ perspective about your packaging; is it integral to the brand (can they do something additional with it: refill, reuse, reclose, etc.) that will give it enhanced value? Build… Read more »
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