It’s Time To Get Serious about Private Label & Pricing

In the past, private-labels boomed when a recession hit because consumers were trading their beloved national brands in for cheaper store brands. Yet, younger consumers tend to be less loyal to certain brands and grocers are taking notice. Today’s consumers prefer foods that avoid a long list of additives in their ingredients and are seeking out “clean label” products that don’t benefit from branding. Retailers are now developing in-depth private-label strategies in order to meet the full range of consumer needs – including adopting a “good/better/best” brand positioning that appeals to all types of shoppers, not just millennials.

The Growth of Private-Labels

This resurgence in private-labels is nothing new to retailers. During the recession in the 1980s, generic brands were introduced to the U.S. to help consumers save money. These brands quickly took off in the late 80s and early 90s, but as soon as the economy came back around, private-labels’ sales diminished. The exact thing happened with the recession in 2007-2008, private labels boomed but quickly fell again over the next few years. However, now we’re seeing this growth once again, but this time it’s different and if you don’t believe me just look at Nielsen’s most recent study.

 

nielsen-private-label-growth-March-2018

 

Todays Complex Private-Labels

The old perception was that private-labels were “bottom of the barrel” brands and allowed consumers to shave a few dollars off their bills well sacrificing some type of quality. Fast forward to 2018 and private-labels are matching or even surpassing some of the national brands in quality. Yes, there are still “bottom of the barrel” brands grocers offer, but we’re now seeing brands that are organic, premium, gluten-free, and simply cutting-edge. Today’s consumers want customization and private-labels thrive on this – most of the time at a cheaper cost.

 

nielsen-private-label-growth-March-2018report

Grocers Finding Their Niche

What’s interesting about today’s private-labels is that some grocers have nine or more labels, while others only have two or three. Take Kroger, for example, they have 12 different private-labels that fit pretty much every need. Whether a shopper is looking for a discount store brand, organic brand, standard or premium pet supplies, or premium specialty items, Kroger has it all with its private-labels. Meanwhile, Publix has only three private-labels: a store brand, premium brand, and green/organic brand. In either case, the two grocers are taking advantage of niche categories that set its store apart from rest, due to the fact they all sell the same national brands.

The Importance of Tracking Private-Label Pricing to Stay Competitive

As private-labels continue to evolve, and its complexity grows, it will be key for grocers to compare competitors’ category assortments and prices. According to the Private Brand Intelligence, 81% of shoppers now buy a private-label on every or almost every shopping trip. Hence, it is vital for grocers to compare its private-label prices with other grocers to remain competitive in the industry. Comparing national brands’ prices is easy, due to the fact grocers sell relatively the same national brands. However, with private-labels, finding out how private-labels stack up against others can be difficult as your matching apples to oranges or even watermelons sometimes. Fortunately, there are item matching applications available that allow pricing teams to keep an accurate running databse of all private label items; transforming what was once a daunting and almost impossible task to an easily doable job function.

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Seth Nagle, Senior Marketing Manager at RW3 Technologies understands the power of innovation but also its limitations. Attending Salve Regina in New England, starting his career in Silicon Valley, and now living in Austin, Texas; Seth provides a unique tech perspective to a complex CPG and Retail Grocery Industry that is in constant disruption.

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