Not Your Dad's Private Label

Posted by Martha Culver on May 20, 2015 12:00:00 PM

Repo Man

Source: Repo Man

Quirky indie movie Repo Man is known, among other things, for featuring generic food displays with products labeled “Drink,” “Yellow Sliced Peaches,” and “Popcorn.” When the movie premiered in 1984, most people saw private label as a cheap, low-quality substitute for brand name products.

Well, times have changed over the past 30 years. Retailers have invested heavily in a sophisticated and diverse array of private label products, and their popularity has skyrocketed across demographic categories. It's not just value-minded parents and seniors buying private label products; Millennials love store brands too.

Millennials have grown up alongside private label brands, and have seen their progression from cheap “generic” products to sophisticated product lines with more attractive packaging, better quality, and more natural and organic choices. These factors have been identified as important to this demographic, so it’s not surprising Millennials have embraced these products.

If you’re still having trouble thinking of private label as more than the low-budget convenience store fare of Repo Man, consider this:

Given the seemingly inexorable rise of private label, how do branded products stay relevant? How do they differentiate against private label brands that claim to be as good as or better than name brands, and are often substantially cheaper?

  • Enhance customer experience: emphasize how branded products can serve individual needs, not just needs of a larger customer group. In this world of instant technology and mass customization, consumers expect and demand more from products. Coke’s name bottles and personalized M&Ms are only the most obvious examples of this trend.
  • Go global: research indicates brands still carry enormous weight in developing regions, where perceptions of higher quality, increasing disposable income, and desire for higher status drive brand growth and consumption.
  • Go beyond the store: explore ways to offer branded products through online channels and non-retail outlets, where private label finds it harder to compete.

In the face of ever-mounting competition, brands should also engage in ongoing competitive monitoring and analysis to pinpoint where their products are strong, and where they are at higher risk of losing share to private label alternatives.

Private label is no longer the “Peaches” in Repo Man, but a continually growing and increasingly attractive category for consumers. Brands need to listen to customers, continuously innovate, and monitor competition to address vulnerabilities and anticipate market needs.

By Martha Culver + Rachel Wallach

Topics: Consumer Goods, Brand Insights, Product Positioning

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