The food retail war will be fought increasingly by private brands in a post-COVID world, sources say, bringing with it new pressures on retailers to assess the effectiveness of their brands versus one another—and not just the national brand competitors alongside them on the shelf.
To help retailers understand this shift, two private brand companies have jointly launched a new benchmarking strategy they say can enhance the position of retail private brands for this new era. The “Consumer Experience Score” from the consultant and service companies Solutions for Retail Brands (S4RB) and Consumer Science, offers what they called “a novel, holistic metric incorporating attributes such as design, packaging, sustainability and healthfulness, as well as traditional sensory and performance measures.”
Retailers leveraging this strategy can benefit from enhanced insights compared to traditional approaches, which primarily ranked private brands against national-brand counterparts, and analyzed them only on limited sensory attributes and categories.
“Private brand is not standing still—it continues to evolve, and the thinking around your private brand needs to evolve as well,” Chandi Gmuer, VP of consumer research and product testing for Fort Worth, Texas-based Consumer Science, told WGB in an interview this week.” The key thing here is it’s not just about, having a ‘good, better, best’ program or a national brand equivalent program. It’s that you need to understand who your key competitors are in the private-brand space as private brand becomes much more of a public key differentiator and a competitive edge for a retailer.
“You need to understand, ‘Hey, my competition isn’t really the national brand now—it’s what the other private brands are doing,’ ” Gmuer continued.
The benchmarking strategy then can provide new visibility as to how a retailer’s brands sit in comparison to other private brands, including attributes such as packaging, pricing, strategic positioning and other details.
The companies used the benchmarking approach to conduct independent research across a number of private brands, including those from Aldi, Albertsons, Ahold Delhaize, Kroger, Target and Walmart. The research, available from Consumer Science, identified a number of key insights about the state of U.S. private brands through comprehensive testing across multiple categories. These include:
- The top scoring private brands are consistently providing the best overall consumer experiences at good prices across categories.
- Some retail brands are challenged by merely average experience scores coupled with higher pricing and disparity in brand value across categories.
- Some store brands aren’t getting credit for strong consumer experiences because of less-than-inspired designs and too-few callouts on packages. For example, in ground Colombian coffee, a category often thought of as premium, products whose designs lacked innovation and seemed outdated received lower scores.
- At times a single attribute, such as texture or presentation, makes a big difference in which private brand items provide the best overall experience in a particular category. The companies noted, for example, that the inclusion of croutons in some private brand chicken Caesar salad products represented a key differentiator by adding texture and crunch.
Gmuer said he was anticipating that private brands would become increasingly important for retailers as they navigate worsening economic conditions for consumers brought on by the ongoing coronavirus crisis. The last economic downturn in 2008 triggered fast growth, particularly for private label-heavy discounters such as Aldi.
Price/Oz Versus Overall Score per Competitor
Results below are the average value per competitor for the Ground Coffee category
“Post-coronavirus, I mean, I think we are going to have quite a financial headache for quite a lot of people, so I think, private brand and the value that copes with it will be foremost in people’s mind if they’re trying to make ends meet,” Gmuer said.
This will also assure retailers continue to invest in private brand.
“There’s absolutely a need for a higher level of awareness than it has in some organizations and in a higher level of investment. … We need to have an extreme focus on ensuring that [your private brands are] right for your company," Gmuer said. "So absolutely, there needs to be more investments. Some of it could be dollars, but certainly in terms of thought leadership. If you’re saying private band is a key strategic imperative for me as a retailer, you have to invest in it, or you probably going to fail as a retailer.”