There is No Such Thing as a Weak Private Label Program
By Milt Sender, Chairman, Daymon Worldwide Inc.
I am frequently asked by our young associates, what separates a strong private label program from one that is not? My reply is that there really are no weak private label programs, only misdirected ones. If a retailer is engaged to any degree at all in private label, it has the potential to be a solid program.
As with any aspect of a retail operation, private label must be properly aligned with the store’s overall strategy and directed at its target audience. Private label means different things to different consumers. It should also mean different things depending on the retailer.
For example, an established chain known for innovation, such as Wegmans or Whole Foods, can put its own brand on the shelf in an area of the store not known for private label and the impact that store makes visually and ethereally on the consumer will virtually pre-sell the brand.
If you are a large supermarket chain with a good reputation, consumers will likely deem items bearing your own name to offer better than adequate value.
Smaller retailers, on the other hand, may not have the size or clout to put their own name on a private label. Companies such as this might be best served using a buying organization, such as Topco or a large wholesaler such as Supervalu, to establish a private label identity. Going this route allows smaller players to identify the banner hanging over its stores with quality products available under a sub brand. Over time, consumers will come to think of these labels as being the store’s own brand.
Of course you don’t have to be huge to have a label with your name on it. Ukrop’s can pull it off because it has a reputation for quality and tremendously loyal customers. Where it makes sense, Ukrop’s uses its own name on private label. Alternately, it uses Topco brands very effectively when it makes sense to achieve economies of scale.
In a recent conversation on the various approaches to private label, I was asked if I believe in an opening price point tier in private label. My answer: It depends on the retailer and what it is attempting to accomplish. A Pathmark in New York City, for example, needs an opening price point brand. A Whole Foods or Wegmans does not. If you are Kroger, you probably need an opening tier in some markets but not in others.
Many retailers believe unconditionally that they need to offer opening price point values for consumers, and so they throw together disparate brands and products just to have one. They do so in total disregard for establishing an identity, or worse, in risk of diminishing their existing identity.
An opening price point tier in private label should be part of the company’s long term vision and be positioned as a strategic advantage, not a hodgepodge of low cost, low price merchandise. A smart retailer with a good reputation in the market can create a unique label at great prices that offers attributes and value the consumer will understand.
Editor’s note: Daymon Worldwide is holding its private label forum, “Partnering in a Smaller World,” with senior level retail and manufacturer
executives prior to the FMI Show in Chicago next May. For information, go to http://forum.daymon.com.
Moderator’s Comment: What separates strong store brands from weaker ones? Which retailers have the strongest private label programs in the value/price,
premium and super premium segments of the business? –
George Anderson – Moderator