- Baby Non-Food Products
- Baking/Cooking Staples
- Household Products
- Kitchen Products
- Paper Products
- Personal Care
- Pet Products
- RESEARCH & AWARDS
Implicitly, private label has always maintained a value proposition. But its reach has greatly diversified in recent years.
The private label proposition now dances along a cost-cum-quality spectrum beyond simply seeking the lowest price point vs. the branded competition.
Case-in-point from food are my collective conversations with the crowd at the recent Boston International Seafood Show. When presented with the open-ended question of what has changed within the private label sector, driving growth and catalyzing new directions in recent years, responses traveled a notably similar plane, highlighting private label’s raising of the bar, diversification and downright direct competition with — and sometimes surpassing of — national brands.
Retailer lines and fresh-case selections have transformed into destination products, redefining categories and challenging consumers’ perceptions of private label dynamics.
But still, that omnipresent price-quality equation lingers. Research conducted by SymphonyIRI Group recently discovered that although private label products still cost an average of 29 percent less than their nationally branded counterparts, their prices are rising more rapidly than the overall industry, up 5.3 percent during 2012 compared with the industry average of 1.9 percent.
Although some of the same cost pressures — such as energy and ingredient inputs — that have driven price increases of branded products are affecting private label, private label has shifted in recent years to accommodate more space and play within profit margins (and continues to capitalize on significantly lower marketing-dollar inputs). Today, many retailers carry premium private label lines and fresh-case foods that appeal to upscale and culinary-driven customer demographics, while maintaining separate, distinctly budget-minded lines for other shoppers.
And the type of product — including factors such as relative culinary merit and product category — also affects pricing. SymphonyIRI found that prices of private label perishable foods are on the upswing, up 12 percent last year versus an 8 percent jump for national brands.
Retailers’ private label diversification also often spans the spectrum within a single store. Take Target’s Market Pantry (the basics, generally no-frills, commodity-driven) and Archer Farms (more upscale, oft culinary-driven, natural, organic). Collectively, private label still meets basic, everyday needs while also taking a premium position — sometimes even occupying the most-expensive slot in a given category, according to SymphonyIRI’s analysis.
Consumer perception of select private label lines has shifted over the years, progressively finding little to no discernment between retailer lines and national brands.
This presents a market opportunity for private label to distinguish itself beyond simple pricing metrics, capitalizing on this ongoing brand blindness to step into the forefront of a product category — and consumer consciousness.