Merchandising Features / Retailer Features / Tactics
In & Out of the Box

How Embarrassed is Private Label?

August 1, 2014

I spend a lot of time travelling around the globe visiting stores and observing their programs. It is astounding how tough it often is to find the private, or store, brand products on offer. Of course, much of the way retailers develop, implement and market their programs is as much about philosophy as it is about science. Wikipedia defines “philosophy” as “the most basic beliefs, concepts and attitudes of an individual or group.” Science, of course, can offer irrefutable evidence of the way we conduct ourselves if done according to specific and logical principles.

Hence we can justify our planogram practice based on history. Or we can justify it with a trend-forward belief in where the consumer will be looking based on evidence much more current than the 18-month-old data we used to plan our product developments and introductions.

Similarly, our end caps and off-shelf displays are often the result of manufacturer promotions and dollars, and not at all the filtered results of knowing what “our customers” are wanting to buy.

Which brings me to the subject of our store brand programs and what they look like, both in terms of what products we develop and how we integrate them into the store. If we accept the pretty universal principle that the consumer has minimal face time with the products on a shelf, then how we present them must be a crucial factor in the consumer’s decision to either lift them off the shelf—or not. If the philosophy is to have the store brand program fully integrated in a “secretive” fashion, then we cannot expect any favoritism on the part of the consumer decision to purchase “ours versus theirs.” So many retailers design their brands to be “brands” in their own unique fashion.

I recently saw a presentation of an “Italian inspired” line of products that involved sending a team to Italy to photograph and film the locals in their own habitat dong their own thing in clever and often hilarious fashion. This led to a wonderful lineup of products. And if creating a “brand” was the intent, using all the basics of marketing and branding 101, then they succeeded. But then what? The brand goes onto the shelf with all the introductory encouragement that many retailers are so good at. Coupons, flyers, shelf talkers, sampling in aisle, etc. However, what has been created has the potential to be another brand launch and, like so many of the multiple thousands of new launches every year into the supermarket “system,” they will live or die dependent on the marketing spend allocated on an ongoing basis.

Private label marketing is always short of money! True? Yes, largely, based on what I see. Short bursts of energy around launch time are often all that a new brand gets, which hardly reaches the definition of sustainable.

So what to do? If there is as much money available as there is, say, to P&G or Nestlé, then life would be easy. But it’s not. So we need to rely on our own devices, our own execution and strategy 365 days of the year. The major brands also have 365 days of the year, but they spread their dollars from one chain to another. So there is always money in the marketplace being applied to their brands individually and collectively. Retailers wishing to build their own private brand programs need to emulate this. Plus, of course, there is the added issue of the Discounters that use private label as a major weapon. Whether through the ALDI/Lidl model or the No Frills Canada model. There is no secret to their incredible success. Great quality and low price with a massive focus on own brands almost to the point of exclusion of many major brands. And the proof is definitely in the discounter pudding.

So why the embarrassed headline to this month’s article? If Retailer “A” has 30,000 SKUs and embedded secretly in there are 3,000–5,000 private brand SKUs with no easily recognizable store identity, then that’s one way to market. Retailer “B” has a common theme of branding, or signature, or banner that is clearly evident across all its products; then that’s another way to market. Embedding products without clear store ownership like the “new Italian” label I just saw does not cut the mustard. It’s a great and creative idea, but born of “national brand envy.” Or bringing “big brand” principles to store brands in an ill-conceived manner. Retailers must never be embarrassed about their own offerings. Quite the opposite. They must shout out their signature just like Nike, or Bose or M&Ms. Seeing the swoosh in a sea of sports shoes is easy. Spotting the Carrefour red, white and blue logo is easy from up close or from miles away. For those who just watched the Tour de France, you know what I mean.

Which brings me back to advertising spend. To gain and sustain consumer loyalty to a product needs major expenditure. To assist in the process, a swoosh-like signature on every brand and sub-brand is the simplest way to achieve it on every shelf, end cap and refrigerator display in the store. And that is something Nestlé can never do, unless they pay for every inch of the shelf for 365 days of the year. Of course, the German and other European discounters use multiple brands to achieve the same purpose, because their unique brand of whatever is likely the only product in the category. So they build loyalty with quality and value.

This all sounds pretty simple. So why don’t more retailers follow these principles? After 45 years in the business, I don’t have a good answer. But the well-known theory that “if you are in the middle of the road, you will soon be run over,” is being proven more and more every year. Whether in Austria, Brazil, Australia, Poland or Texas.

 Till next time. 

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