Name brands take on private label competition
As inflation heats up, store-brand and private-label products are becoming more attractive to consumers who typically buy more expensive name-brand goods.
Recent economic reports project real GDP growth will slow to 0.7 percent in 2023.
Such a cloudy financial outlook makes private labels popular as shoppers actively seek ways to get more for their money.
The trend has given manufacturers pause as they consider how to retain customers in the face of less expensive competition.
Upgrading private-label brands
Years ago, store-brand products often had bland packaging and were often not in the same league quality-wise as their more expensive competitors.
But today, that’s changed, with stores offering good quality at value pricing.
Some, such as Target, are marketing brands that are sought-after, including Threshold, Good & Gather and Up & Up.
For example, the food segment has seen significant growth in private-label success in the past three years.
The Food Marketing Institute reports that over 40% of consumers surveyed said they are more likely to buy private brands now than before the pandemic, and plan to continue doing so.
Nationwide brands need to actively market themselves to avoid being drowned out by an impending tidal wave of less expensive competitors.
To maintain relevance, experts suggest following the following tips.
Value in the details
Name brand products need to appear relevant to customers by clearly highlighting their features.
That may include describing hand crafting, attention to detail or a unique recipe, which would justify the higher price.
In addition, the price/value proposition should be appropriately marketed to the target audience.
Branded products must differentiate how they differ from private label goods, and how those differences benefit the customer.
Bonus perks creating loyalty
By providing related services, name brand products cultivate loyalty.
For example, Williams Sonoma provides in-store cooking instruction. Customers can learn new techniques, try out recipes and buy equipment all during a single visit.
Values-based private label brands
Having a social consciousness is attractive particularly to shoppers in the younger generations.
For example, Patagonia’s Worn Wear appeals to those shoppers committed to reducing overall consumption.
And Lush cosmetics are cruelty free, while Seventh Generation is environmentally friendly.
The key is to distill the brand’s message into something relatable to customers, and promoting it as fundamental to the product.
Lower cost private label brands for comparable quality
The primary reason private label products are bought initially is the cost factor.
Once a customer is convinced that the products are only minimally different that the more expensive name-brand counterparts, it can be difficult to win back that customer.
The best defense is therefore a strong offense.
Well financed national name brands can afford to use innovation and marketing to compete against private labels, and their survival depends upon it.