Some of the best reasons for a retailer to offer a private label line are competitive pricing, better margins, a stronger brand, to fill a void and build customer loyalty.
“Properly planned and executed, a retailer’s private label will do all of these things,” said Jeff Weidauer, vice president of marketing with the Little Rock, AR-based Vestcom. “While we generally think of lower price and improved margins in relation to store brands, they have so much more to offer in terms of enhanced shopper loyalty and engagement. How a private brand product is perceived by the shopper is really up to the retailer, and what the retailer wants to accomplish.”
A retailer’s understanding of their customer is one of its greatest advantages when offering private label. “This is where the retailer has the opportunity to really connect with their shoppers,” Weidauer said. “Rather than offer the same national brand that every other store carries, or provide a cheaper alternative to the national brand, retailers can use their insights into their shopper base and craft products that are uniquely beneficial for that market.”
Savvy retailers are getting out of the “national brand copy” mindset and creating more complex products and flavors for their shoppers, Weidauer noted. This adds an element of exclusivity, and drives loyalty since the product is only available from that retailer. Those retailers sticking to the “tried-and-true” formula of just copying the national brands are finding themselves left behind as “tired-and-me-too.”
In the store, the savvy retailers are rewriting the book on how to market private label products. “Store brands have traditionally been seen as low-cost alternatives to the ‘real thing,’ and the major cost savings for the seller was the lack of marketing dollars invested,” Weidauer said. “Today, the shelf edge is seen as one of the best places to reach shoppers, certainly more effective than TV or radio, and retailers have a unique opportunity to make the most of that valuable real estate to communicate with their shoppers about these new products, and the benefits they provide beyond price.”
And there has never been a more opportune moment to build a unique and compelling private label program if you’re a retailer, Weidauer concluded. “By focusing on the core shopper, creating unique flavors and products, and using the shelf edge to promote them, retailers can build a base of shoppers loyal for reasons other than price. When the next economic downturn hits, that will be a significant strategic advantage.”
