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November 15, 2012

Private Label Dilemma Or Opportunity?

Jamie Allebach
Jamie Allebach Chief Executive & Creative Officer

In the marketing world, “brands” have always been the epicenter of our being. The very reason for our existence. Dominating retail space and the hearts and minds of consumers…THE BRAND. However, over the years, we’ve noticed a shift in the retail landscape. The transformation of private label to—the PRIVATE BRAND.

Yes, yes, private label has always been there, but it was the cheap, imitation version of the brand—only to be purchased by those who couldn’t afford the “real thing.” The real brand. But over time retailers have significantly raised their game on private brands. Consider Wegman’s, Target’s Archer Farms, Kroger’s Simple Truth, and Costco’s Kirkland. The list goes on and on of great private brands.

Consumers are converting in droves to store brands, because they find them on par with, or better than the brands they’ve come to know and love. In fact, 7 in 10 consumers say that store brands are either better than or about the same as national brands for offering high-quality products. And, on average, 20 to 40% lower in price than national brands.

According to IRA, private label accounts for nearly 23% of CPG dollar sales across retail channels today. That’s a big deal that can no longer be shrugged off and attributed to purely economic times.

There are two ways of looking at this: 1) as a threat, 2) or an opportunity. Smart manufacturers are looking at it as an opportunity.

Here are two opportunities to consider:

Become a true valued partner with retailers you’re working with them in developing a custom private brand for them, or fulfilling the manufacturing specs for their existing private label. Give them a bundled price package, based on fulfilling their private line, and then taking on your branded line.

Develop promotions that cross-sell your retail partner’s private label with your branded product. For instance your branded bread with the retailer’s P&J product line. Or your marinated brand with select store proteins. Try your branded dip with store brand chips or pretzels. The creative combinations are endless. Retailers love the fact that you helping to promote their brand along side yours.

Bottom line, private brands are here to stay, and they are continually improving and growing. Figure out how you can make this an opportunity instead of a threat.