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Is Private Label’s Future NBE Or Different?

June 20, 2012
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Schawk Retail Marketing Vice President Carol Best told a webinar audience this week that retailers were trying to choose whether to provide private label products that matched national brands, or create products and categories that were different.

To decide which choice to make – a choice between alternative brands and another brands, as she framed it – companies needed to ask themselves a few crucial questions.

“Which of their brands would customers drive past their competitor’s store to have?” she said. “Some of those questions are about really driving trips, which is the more challenging conversation. What’s the role for private brands beyond stealing share from national brands? I think that’s a short-term answer. I think the long-term vision should be stealing trips from your competitors, not stealing sales on the shelf.”

With a 500 percent growth rate in private label products since 1994, Best said there was a proven track record of success in the industry. But as growth has slowed over the past two years, she said retailers need to do a hard re-assessment of their brands and strategies moving forward.

Showing examples from companies such as ASDA – which did 200,000 blind taste tests with 40,000 customers to come up with its latest line of private label products – Jones drinks, and Safeway’s Snack Artist line, Best made the case that another brand provided the best opportunity for growth in the future.

She said that the conversation between brands and customers was both emotional and rational, and while value private label products made a rational case, they made little impact emotionally without the marketing might of national brands. 

“With marketing budgets what they are, we’ll never catch up in terms of that emotional conversation,” she said. “And another brands are more successful in that. It builds brands, it builds loyalty.” 

Still, she said alternative brands – NBE-equivalent products and tiers – had a future in private label, particularly in the United States.

“I see growth coming from another-type brands in the future, but consumers have gotten used to that alternative brand strategy,” she said. “I think the emphasis for the future should be on another brands, but I think there is that value shopper that looks for those alternative brands.”

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