Private labelled products tend to be cheaper than national brands and so have the potential to bring in huge profits if the marketing is done right. Packaging design decisions, however, are necessarily more nuanced for private labels and need to balance alignment with the retail brand, differentiation from national brands, delivery of emotional cues, representations of value, and signifiers of quality. – Private label products are sometimes perceived to be of lesser quality than those of established brand-name retailers.
In addition, some manufacturers create low-cost generic brand labels with only the name of the product (“Beer”,”Cola”, etc.). Richelieu Foods , for example, is a private label food manufacturing company producing frozen pizza, salad dressing, sauces, marinades, condiments, and deli salads for other companies, including Hy-Vee , Aldi , Save-A-Lot , Sam’s Club , 7 Hannaford Brothers Co. , 8 BJ’s Wholesale Club (Earth’s Pride brand), and Shaw’s Supermarkets (Culinary Circle brand). For branded players in markets or categories with low rates of private-label penetration, understanding the threat of private labels starts by analyzing the characteristics that make it more likely for those products to gain a foothold. Sales team demands increase as most retailers have separate buying teams for branded and private-label products, and retailers often demand innovation to fl ow into private-label products quickly-increasing innovation cycles and likely reducing margins.
Producing for the private label market has been a valued strategy by small business in the middling-size category, especially those that have established recognized brands of their own in grocery categories (e.g., preserves, sauces, condiments, etc.). Plant expansions can be rationalized by adding a substantial private-label production run. Private labeling is the interesting story of a how a segment of products, originally introduced as low-price alternatives to high-priced brands, is gradually evolving a new brand identity in its own right—increasingly deployed to build loyalty to stores that have plenty of brand identity of their own (e.g., Kroger, CVS, Rite-Aid, and many others). EXCLUSIVITY: Private label products are only available from you the retailer – customers will not go into a popular mega-store and find the private brand product at a lower price.
In categories with emerging private-label penetration, it is useful to consider value-added packaging changes—and, in some circumstances, line extensions—that make the product stand out on the shelf, keep consumers’ attention focused on the national brands, and raise the costs for private-label imitators. In other words, a decrease in the price gap would swing twice as many sales from private labels to national brands as a corresponding increase would swing sales to private labels from national brands. A price reduction on a popular national brand may result in a lower profit contribution, but studies show that private-label sales are twice as sensitive as national brands to changes in the price gap.
By responding to customers and managing categories more efficiently, leading manufacturers have found new ways of favoring trade accounts that support their national brands over private labels and of not being quite so helpful to those that don’t. National-brand manufacturers can suggest and pay for tests that compare the sales and profitability of a control store’s current shelf-space allocation plan with the sales and profitability of a shelf-space plan offering fewer or no private-label goods. There is no evidence, however, that making private-label products enhances a brand manufacturer’s trade relationships in the long run and results in preferential merchandising support for its national brands.
Thus the company had to sell almost two pounds of the private-label product to equal the contribution generated by the sale of one pound of the national brand. After all, the thinking goes, high-volume private-label orders placed well in advance of required delivery dates can help smooth production and take less time and effort per unit to sell than the company’s own branded goods. In 1990, the company launched the Sears Brand Central store-within-a-store concept and committed itself to stocking a full assortment of national brands alongside its private labels in electronics and appliances.
Unlike supermarkets, mass merchandisers and warehouse clubs are national chains; they have the incentive to develop their own national brands through private-label lines, and they have the procurement clout to ensure consistent quality at low cost. But growing numbers of U.S. retailers such as the Kroger Company believe that strong private-label programs can successfully differentiate their stores and cement shoppers’ loyalty, thereby strengthening their positions with regard to brand-name manufacturers and increasing profitability. And President’s Choice has even expanded beyond Loblaws’ store boundaries: Fifteen U.S. supermarket chains now sell President’s Choice products as a premium private-label line.
Innovative retailers in North America have shown the rest of the trade how to develop a private-label line that delivers quality superior to that of national brands. Regional brand manufacturers that produce private-label products for specific markets. Our private label products deliver consumers the best quality and value, while providing retailers with enhanced brand equity and an improved bottom line.
This drives consumer confidence in the quality and safety of store brand and private label products. To reinforce consumer confidence in the quality and safety of store brand and private label products, UL offers safety and quality assurance testing. Amazon brand registry is a program by Amazon that gives more control to seller upon their respective brands or private labels.
Although private label products are typically sold at a lower price point than their name brand brethren, some private label brands are now being positioned as premium products, with the higher price tag to prove it. The strategy of increasing the proportion of private label products will meet the needs of shoppers who seek value over brand, but also provides sufficient margin to allow supermarkets to slash prices further. Where once private label grocery products were considered a cheap and nasty” alternative for the branded product, supermarket quality assurance teams have changed this mind set.
In contrast, Aldi’s private label ranges mimic nationally branded products As such, shoppers perceive Aldi’s private label ranges to look similar to the nationally branded alternative and correlate quality.