In this excerpt from a May 27th, 2009 interview conducted by Mike Duff of Bnet with Nielsen Co. director of industry insights Tom Pirovano discusses the constantly changing market place that is forcing the evolution of both Private Brand and National Brand
Q&A: Nielsen Industry Insight Director Details Evolution of Private Label, National Brands
Looking back, retail observers and pundits will identify the current recession as a tipping point when private label products emerged from alternative status and into the mainstream, a development that already is reshaping business relationships.
Price is critical to that emergence but so is innovation. Target, Trader Joe’s and Whole Foods private label products have brought fresh flavors and exotic designs and put them in front of typical American shoppers.
Nielsen Co. director of industry insights Tom Pirovano noted that, after many years, it’s the turn of national brands to play catch up. By the middle of 2008, dollar and unit sales growth figures demonstrated that consumers had began replacing national brand products with private label equivalents as concerns about a recession deepened. Pirovano detailed how the relationship between national brands and private labels might evolve in a Bnet interview.
Bnet: What are the most critical factors retailers need to consider when developing a private label?
Pirovano: This depends on the intended role of the private label products in question. Many store brands are less expensive versions of top-selling brands. In this case, the focus is on developing a product extremely similar to the targeted category leader, and then determining the optimum price gap. When developing a premium store brand, the role of the product can shift from a cheaper alternative to a destination product. While premium private label offerings can build retailer loyalty, they require significantly more research. This includes a much deeper understanding of consumers, how they shop, how they use/consume the product and how they perceive brands.
Bnet: How can retailers ensure that their private label products will gain trial among the widest range of consumers possible?
Pirovano: Getting shoppers to try a private label brand — especially premium private label — is a huge missed opportunity for many retailers. If a store brand is really as good as the national brand, or better, retailers need to get shoppers to try it. Retailers can offer a free package with a $50 purchase. They can also consider a trial size or in-store product demos.