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Getting a Leg Up on Private Label

Photograph courtesy of Fischer & Wieser

When it comes to driving shopper loyalty by offering more transparency, unique items and on-trend flavors, the possibilities are endless in the arena of private brands, which increasingly share the shelves with their national brand counterparts across the U.S.

According to Stamford, Conn.-based Daymon Worldwide’s 2018 Private Brands Intelligence Report, 53% of consumers say they shop at a store specifically for its private brand selection, while in 2017 more than 7,500 new private brand items launched in the U.S.—about 7% of all private brand items sold. 

The most successful and forward-looking retailers are those that use their private brands as a “driving force behind innovation,” the report says. 

Private and Premium  

In recent months, numerous retailers have been upping the competition with the release of private brand lines that offer global flavors and premium offerings. 

For example, Keasbey, N.J.-based Wakefern Food Corp.’s ShopRite banner is giving its private label selection a global makeover with its new Trading Company line. It’s described by the retailer-owned cooperative as a mix of “inspirational, artisanal and distinctive” goods that feature imports from around the world and can be found across the store, from center shelves to frozen and dairy.  

53%—Amount of consumers who say they shop at a store specifically for its private brand selection

Source: Daymon Worldwide

Additionally, Boise-based Albertsons is working on the launch of its premium Signature Reserve line, which is offering seven craft ice cream flavors made from globally sourced ingredients. It plans to add ultrapremium pasta and pasta sauces imported from Italy, single-origin packaged coffees from Sumatra and Nicaragua, and four varieties of hand-picked loose-leaf tea as 2018 progresses. 

Giant Food of Landover, Md., also jumped on the premium and private bandwagon with the recent launch of its Taste of Inspirations line, which includes more than 85 handcrafted items, such as pasta sauces, frozen appetizers, dressings and marinades.

You Snooze, You Lose

This strategy to be first to the game with on-trend and in-demand signature private items is crucial, according to the Daymon report; for example, Trader Joe’s launched its own brand of Icelandic yogurt at the same time many retailers were only beginning to offer private brand Greek yogurt. 

Being “late to the game,” the report says, can have “noticeable impacts on performance.” A prominent retailer that waited to launch its own line of Greek-style yogurts lost 21 private brand net share points in the category over the past decade. Compare that to a leading retailer that was first in the nation to enter the Greek yogurt private brand space and saw its share grow by 12 points.

“That’s a considerable swing, and a big miss for those slow to adapt to new trends,” the report says. 

The Wellness Takeover Continues 

Among the premium trends, wellness and fresh items are the golden children of the mix. For example, “best-in-class” retailers carry nearly twice the number of private brand wellness items compared to the industry average of 23%, which is a game changer considering that 41% of consumers are requesting better-for-you ingredients in private brand products, according to the Daymon report. 

Case Fischer, CEO and president of Fischer & Wieser, a specialty food brand and private label producer based in Fredericksburg, Texas, says retailers need to focus their private label selection on price to compete with the No. 1 brands. But they also need to think outside of the box by expanding these offerings to areas such as the dairy and meat departments, where they can “differentiate the product mix a little more successfully and have a little bit of a higher ring,” he says.

“Where they maybe didn’t think that they could compete, coming up with a product that’s unique and having something of value to add to the meat department or deli, something that isn’t just isn’t a me-too product” can bring success, Fischer says. 

Lakeland, Fla.-based Publix, for example, has started to move its own brands into the fresh section, and it has even breached the meal-kit barrier with the gradual launch of its Apron’s fresh kits selection over the past year, complete with on-site culinary experts that work to create original recipes. 

Owning the National Brands

Retailers rarely have the big bucks to advertise their private brands that national brands do, and forgoing these campaigns is often what allows them to keep these items affordable. However, there are plenty of opportunities to convert shoppers without draining the bank. 

For example, telling a story about a private brand and where it comes from is a great opportunity for retailers to get private brand items noticed. 

41%—Amount of consumers who are requesting better-for-you ingredients in private brand products

Source: Daymon Worldwide

Patrick Moorhead, CMO of Chicago-based Label Insight, which is working to expand the GMA and FMI-run SmartLabel initiative, says providing detailed information about products through this program can be a “brand canvas moment for a private label brand” and allows them to talk about “their cage-free-egg strategy, or their family ... soybean farm field strategy or their commitment to ecologically sustainable farming or whatever the case may be, without doing a TV commercial and with the same credibility that a label provides to the consumer.”

Don’t Miss the Transparency Train 

This standard is only going to grow, Moorhead says. Label Insight recently entered into a “massive enterprise relationship” with Topco Associates—which Moorhead says has “more buying power than Walmart” across categories—that aims to enable the feature for all of its more than 65,000 products within the next 18 months to two years through what has been dubbed the Topco Product Transparency Initiative. Albertsons is also working with Label Insight to implement SmartLabel across its private label portfolio and part of its own transparency initiative. 

“I think that retailers increasingly are sort of on the hook to provide consumers with more information about products,” Moorhead says. “While retailers don’t have the ability to influence national brands that much, they do have the ability to do that with private label, and they are.”

A Great Opportunity for E-Commerce 

Moorhead says that while he hasn’t seen SmartLabel being used among e-commerce strategies at this time, “there is probably a tipping point in the near future when all of these factors move into e-commerce strategy.” 

When using grocers’ ever-growing online shopping functions, there is almost always a lack of nutritional and background information about the product, Moorhead says, making it even less transparent than buying in-store because you can’t pick up the item and study its label. 

If and when SmartLabel is incorporated into these e-commerce offerings, “consumers will respond to that and it will drive interest, surprise and delight,” he says. If retailers use this transparency option for private label selections and sprinkle reminders throughout a digital experience informing shoppers that these products “have an edge,” then national brands will “have to catch up,” he says. 

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