Private Brands Positioned to Advance in 2020

This guest post comes from Doug Baker, Vice President, Industry Relations – Private Brands, Technology, FMI.

The private brand industry is well-positioned to gain ground in 2020.

Why do I feel so positive about the outlook? It’s because of a growing private brand commitment and strategic positioning by food retailers.

These emerged in findings from two 2019 FMI research pieces: The Food Retailing Industry Speaks, and The Power of Private Brands-From the Industry.

Benefiting From Growing Commitments

The industry is prioritizing private brands through further commitments to space and SKU allocations. These commitments are very good indicators of category momentum.

Some 58% of food retailers surveyed for Speaks are planning increases in space allocation to private brands over the coming two years. Only 2% anticipate a decrease, and 35% said it would hold steady. The picture was equally bright for anticipated SKU allocations.

These forecasts underscore that retailers are committed to turning over more of their valuable real estate to private brands. Retailers recognize that private brand drives exclusivity, loyalty and the overall business.

Leveraging Consumer Trends

The private brand industry is staying on top of key consumer trends. A case in point is health and well-being.

This trend was ranked considerably higher than before on the list of top private brands growth opportunities cited in the Industry report. Health and well-being also figured in other highly ranked opportunities, including fresh foods and simple/clean ingredients/free-from.

As the Industry report noted, health and well-being means different things to different customer bases. Each retailer needs to figure out the relevancy for its own shoppers.

Growing Experimentation

The 2019 Speaksresearch found retailers are widely experimenting with ecommerce strategies. The private brand industry understands the importance of this experimentation.

Home delivery and click-and-collect internet sales were identified as important growth opportunities by more than half of respondents in the Industry report. This indicates private brand executives view e-commerce more as an opportunity than a threat.

National brands are sold on a growing range of platforms, but a retailer’s private brand is available only on that retailer’s own platforms, which include e-commerce. Retailers rightly view this as an opportunity for competitive differentiation.

Driving Innovation

Even as the private brand industry advances, it seems to remain humble. In the 2019 Industry research, trading partners were asked to judge their organization’s private brand innovation levels.

Only 14% said their organization’s private brands are leaders in innovation. That compares to 33% saying follower, and 54% saying in the middle.

These results make it seem the industry is very self-critical. But keep in mind that until the recent era of innovation, private brand was known as a “fast-follower” business. So given that lens, it’s not surprising that most respondents identify their organizations as somewhere between innovation leader and follower.

In my view, the long-term trend is clearly moving towards leader. I don’t mind that the industry is humble. It indicates retailers and suppliers won’t be fully satisfied until they drive innovation further.

There are a number of reasons to feel good about the upcoming prospects for private brand. Among the biggest are the commitment and drive of industry leaders working to build on successes.

SOURCEFMI
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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.