Private label emerged when retailing was still relatively straightforward. Today, the proliferation is such that we are no can longer rationalize creating a new brand for countless categories. “I have 21 brands and I don’t know what half of them are,” an executive recently said to me. “If I don’t know what these brands mean, how are our shoppers going to?” Every private brand in a retailer’s portfolio needs to tell a compelling story. They also need to have a strategy that addresses consumer mindsets, as well as items that give shoppers a reason to return.
As consumer trends have diversified, product categories have expanded to the nth degree. Historically, with each new trend (organic, natural, gluten free, low fat, high protein, etc.) came a new private brand. And with time, this strategy resulted in extreme brand proliferation. Now that companies have upwards of 10 to 20 unique brands in their private brand portfolios, they should start to consider a new paradigm. Move away from product-led strategies and instead focus on brand-led strategies that deliver against business goals. Instead of creating a new brand for every product, consider developing a brand centered around a role, purpose or consumer target brand, and use design as a marketing tool to communicate differences not just communicate functional attributes. Will consumers be able to discern between organic and low sodium, even if they come from the same brand? If you do it right… you bet. So what’s the challenge? Determining how to measure success.
If you don’t have a brand for every trend, are you more or less successful than if you do? I’m arguing that you can be more successful, if you look at the measurement criteria with a new lens. Most companies focus on quantitative data – share and penetration. But is penetration enough? Is share of market enough? What about qualitative metrics – equity and loyalty? Private brands can have high penetration, but zero loyalty. Hardly a secure position. But think of the difference a brand-led strategy can make: If that gluten-free customer simply can’t find your private brand elsewhere –that “gets her” like yours does – you win. Penetration and share of market are important, of course, but “mind share” means consumers are coming back to you specifically to get the products that speak directly to them. Go for mind share first and market share will follow and give you the credibility to grow and expand the brand if you thought it out properly.
Little wonder more retailers are going through brand-led, brand-consolidation processes that make more practical and emotional sense. So next time you have a conversation around private label metrics for success, think about these questions: How are you going to market? What are the roles of the brands? Have you considered the power of equity and loyalty? Who are we creating this brand for and why? Once you do…chances are your bottom line will thank you.
Todd Maute is a partner at brand agency and retail design consultancy CBX. He can be reached at Todd@CBX.com.