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Private Brands Positioned to Advance in 2020

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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.

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3 Winning Strategies for Private Brand

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

Succeeding in private brands requires great products, but that’s not all.]

\"\"Increasingly it’s also about pursuing key strategies to accelerate the business. A number of strategies were discussed at the recent FMI Private Brands DC Summit, including:

  1. Powerful branding.
  2. Solid engagement with consumers.
  3. Strong relationships with suppliers.

It’s important to further understand these strategies and how they are playing out today in private brands. The Summit attracted a wide range of private brand retailers, suppliers, and other stakeholders.

Powerful Branding

The importance of branding was underscored during an interactive segment of the Summit. I asked audience members to call out what they consider key attributes of a brand. We recorded the numerous responses on large sheets of paper and hung these on a wall.

Here are attributes the audience used to describe brands: trust; purpose; integrity; emotional connection; safety; loyalty; promise; control; ownership; intrinsic value; consistency; transparent; strategic; and differentiated.

Why was it important to conduct this exercise? In the 2019 FMI The Power of Private Brands: From the Industry report, retailers overwhelmingly used the word “brand” over “label” in describing how they view this business.

All of this indicates “label” is more tactical, while “brand” is more strategic.

Solid Engagement with Consumers

The Summit also spotlighted a number of ways for private brand retailers to solidify relationships with consumers. One of these is by promoting the FMI Foundation’s National Family Meals Month™ campaign. John Evans, director of private brands for Weis Markets, described how his company made private brands a centerpiece of its 2019 efforts around this campaign.

Initiatives included running ads in the retailer’s circular and HealthyBites magazine, showcasing meal solutions, making coupons available, conducting in-store events with dietitians, and leveraging social media, podcasts, and media appearances.

Another Summit presentation relayed how private brands are increasingly driving consumer decisions on which stores to shop. Mark McKeown, client insights principal for IRI, outlined findings from FMI’s latest The Power of Private Brands: From the Consumer researchCiting IRI data, he noted that 46% of consumers say private brands are very or extremely influential in their choice of food retailer, up significantly from 35% in 2016. Moreover, millennials are especially on board with this point – 54% point to a strong connection between private brands and store choice.

“If you’re a retailer, that’s really good,” said McKeown. “Your younger shoppers are saying that your brands are more important. So I would double down on that. What do you need to do with your brands to continue to have them be a critical part of why these consumers shop with you?”

Strong Relationships with Suppliers

The Summit underscored the importance of retailer engagement with private brand suppliers. A new research report on this topic was unveiled by David Taylor, client success director for Solutions for Retail Brands (S4RB).

“Private brands by its very DNA is a collaborative endeavor between manufacturers and retailers,” said Taylor. “Collaboration can become your competitive advantage. Successful supplier engagement means successful private brands.”

This research was based on an industry survey conducted in partnership with FMI. It shows a widespread industry understanding of the value of private brand retailer-supplier engagement, but less than satisfactory levels of current engagement. It also indicates huge opportunities for future partner collaboration, Taylor said.

So, what’s my overall take on the FMI Summit? I’m pleased that attendees gained a lot of insights on branding, consumer relationships, and supplier engagement, among other topics. These will be important areas to pursue as private brands move further along the journey from “fast follower” to innovative leader.

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Private Brand Research Reveals the Complexity of Consumer Expectations

\"\"Newly released consumer research by Food Marketing Institute (FMI) and its insights provider IRI reveals that food retail private brands have greater influence on where grocery customers shop. Today, 46% of consumers say store brands influence their store choice, versus just 35% three years ago, and private brands are gaining fans across a wider range of demographics and generations as retailers are successfully demonstrating innovation and value. The Power of Private Brands: Fro\"\"m the Consumer is the final analysis in a three-part series regarding private brand trends, which all share unique perspectives on the growth potential across categories and channels.

FMI Vice President, Industry Relations, Doug Baker commented on the breadth of the research findings across financials and best practices, saying, “The solid growth of private brands reflects the success of retailers treating private brands as brands, rather than just following the lead of national and legacy brands. The proof is in consumer satisfaction; shoppers surveyed shared most that they trust the quality of private brands and believe they get a good value. Still, our research indicates that challenges remain for private brands’ image, such as its packaging.”

While Baker noted that grocery retail growth with their private brands has not been keeping pace with other retail channels, private brands led manufacturer brands in dollar sales growth across multiple retail outlets for the second consecutive year, up 5.4%. The positive momentum is reflected across many private brand categories, geographic regions, consumer generations and income levels. The catalysts are a range of factors, including increased shopper trips, higher dollars per trip, increased velocity, shoppers adding more items to carts, and expanded distribution.

Private brands posted U.S. sales of $153 billion in calendar year 2018 across multiple retail outlets and convenience, according to IRI, which spearheads the data analysis for the FMI Private Brands Leadership Council. The private brands dollar figure represents edible and non-edible segments.

Mark McKeown, Client Insights Principal, IRI, explained how grocery retailers that are making commitments, testing and learning will see growing interest from a wide range of consumers. McKeown said, “Consumers have shown they are willing to embrace new directions in their private brand strategies, which suggests myriad possibilities for retailers as they explore shopper preferences revealed in our research.”

The Analyses
Power of Private Brands: From the Register delves into the latest insights about consumer spending on private brands. Private brand performance has improved considerably during this three-year period. The only caveat is that increased momentum is reflected more powerfully outside of the Grocery Channel.

Power of Private Brands: From the Industry suggests retailers have been gradually shifting promotional vehicles in recent years. Several themes emerged, such as Instagram rising in importance for retailers; an increased identification of health and well-being as a growth opportunity; and a strong commitment to food safety.

Power of Private Brands: From the Consumer assesses consumers’ attitudes toward and purchasing habits around private brands, along with the “destination effect” of private brands on consumer’s choice of retailers.  Consumers continue to step up engagement with private brands as retailers are successfully demonstrating innovation and value.

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5 Modern Day Imperatives for Private Brands

\"\"A guest post from Doug Baker, Vice President, Industry Relations – Private Brands, Technology, Food Marketing Institute.

5 Modern Day Imperatives for Private Brands

Last week I attended and spoke at My Private Brand’s Velocity Conference in Charlotte, North Carolina. The experience reminded me of a blog post I authored just last fall talking about how the FMI Private Brand Leadership Council is bringing about change within private brands—from what we would consider a simple transition in nomenclature, from private label to private brand, to the more complex transition of changing how trading partners collaborate to drive more innovation.

\"\"In every business process there are several imperatives that move the needle in a positive direction. At the conference this week, I walked attendees through five key imperatives that have been identified through our private brand research supported by the FMI Private Brand Leadership Council’s guidance. Here they are:

  1. Stay Ahead of Key Trends with Data: With a more aware and active consumer, the breadth of trend metrics a brand owner must consider continues to grow.
  2. Private Brands Are About More Than Lower Cost: Just a short time ago, the north star for some private brand programs was to laser focus on what the leading manufacturer brands were doing and build a lower cost option. Today, that north star has been displaced by several consumer influencers.
  3. Transparency Is One of These Consumer Influencers: Shoppers want to know where their food comes from, and a transparent supply chain has never been more desirable. Options like SmartLabel®help shoppers make informed decisions about products they are considering.
  4. Health and Well-Being and Social Issues Matter Too: From the use of food to positively influence health and well-being, to social issues driving environmental decisions on how we manufacture and how we package products, shoppers are choosing products that help them eat well, shop well and live better.
  5. Trading Partner Collaboration is Essential: The final imperative, which will either aide success or secure failure for some private brands, is how trading partners must change the collaboration model to better meet the many metrics and demands facing private brands today.

To learn more about FMI’s Private Brands Leadership Council join us in Arlington, VA, September 26 – 27, 2019 for our Private Brands D.C. Summit and download our private brands research online.

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Life in the Fast Lane with Private Brands

\"\"This guest post comes from  Doug Baker, Vice President, Industry Relations – Private Brands, Technology, Food Marketing Institute.

Private brands have become full-fledged brands in their own right, as evidenced by 69% of consumers saying it’s very or somewhat important to have a good assortment of private brands in food and beverage. These own brand products continue to make strides and hit an upward growth trajectory again.

As consumers continue to explore new products based more on attributes and less on the brand providing them, retailers are quickly positioning their own brands to differentiate as a competitive strategy. The FMI Private Brand Leadership Council stays on top of these trends with the second release of the Power of Private Brands research. To dive deeper into private brand topics and insights throughout the year, the council broke up the research into four separate releases:

In addition to premier consumer and operational insights, the Private Brand Council hosted its fourth-annual D.C. Summit, an event developed by and for private brand stakeholders. The unique style of the summit encourages share-group-style discussion on four-to-five key topics identified by the Council. In 2018, the group explored consumer trends, the shift from private label to private brand, and the change from price-only programs to consumer-needs programs. The group also explored how private brands will compete, how the industry will address data accuracy challenges, and changes needed with trading partner collaboration based on the new challenges presented by the digitally engaged food shopper.

There is a strong opinion from the industry that based on the current momentum from consumer acceptance, the private brand dollar share could double from the current 15 percent average to almost 30 percent in the next 10 years. It’s an exciting time for private brands, and I predict 2019 will be more fast-paced than 2018.