The November edition of the trade magazine Private Label Buyer is on the streets and features a cover story on Target as well as a guest commentary from Mike Taylor a director of brand strategy at Interbrand.
WHY PRIVATE LABEL BRANDS WILL WIN
Size, speed and timing point to the continued growth of private label
The tide has turned. Private label brands are now growing to dominance, replacing the big gun manufacturer brands in our homes, our lives and our hearts. Here’s why this trend will continue.
Recently, I spent time with some young brand managers. You know the type: fresh and full of themselves. Despite my more mature worldview, I found myself swept along by their enthusiasm.
During a group discussion about the future of branding, I explained to the brand managers how I’ve been splitting my time between manufacturer brands and retailer private brands. Seeing their startled expressions, I told them, “Private label brands are the future and every branding professional needs to realize this.” Here are three simple reasons why.
Size: The size and scope of private brands eclipse that of typical manufacturer brands. Because of their pervasiveness, the number of times that consumers see, buy and use private brands is phenomenal. You know how we talk about the power of billion-dollar manufacturer brands; how only at this size does a brand begin to achieve the critical mass that guarantees long-term success? Well, consider this. Recently I was working on a private label brand that already had topped $5 billion in revenue, with sales and share growing steadily.
Speed: The brand development and innovation process has – of necessity – grown faster and more agile in response to market and consumer demands. Brands that are able to discover, decipher and exploit new trends and consumer needs before they emerge are the ones that will succeed. Because of their inherent retail connection, private label brands can react more nimbly than manufacturer brands when it comes to brand development and sell-in. Case in point: A private brand I recently worked on progressed from initial need assessment to on-shelf presence in a mere six months. Already, sales are in the hundreds of millions of dollars.
Timing: Our long-term economic crisis is generating lifestyle changes that extend beyond reduced buying power. In research and conversations with consumers, Interbrand has been seeing a dramatic shift in values and behaviors. Yes, we have less money to spend, but something bigger seems to be happening; a return to simple, pragmatic beliefs and behaviors when it comes to what is important in our lives – including the brands we purchase. The greater value equation of private label brands allows us to buy what we need and want in a cost-effective, responsible way that makes more sense in our transformed lives. Because of this, I expect that private brands will enjoy increasing public success for years to come.