Where Price and Pretty Meet: The Implications for Name Brands in the Wake of Private Label Love
by Theresa Christine Johnson on 12/13/2016 | 8 Minute Read
For the first time in history, private label brands are getting some truly special treatment. No longer the ugly ducklings, store brands are starting to rise up, redesigned and reconsidered. And while this means that mass-market shelves are more beautiful than ever before, this movement has serious implications on name brands.
“Long gone are the days of no-frills packaging intended only for those on a tight budget—private labels, also known as store brands, are no longer viewed simply as low-cost alternatives to name brands. They’re increasingly high-quality products that fulfill consumer needs across a variety of price points.” - Nielsen
Once the occasional choice of the cost-savvy shopper, the private label marketplace has undergone an enormous shift in the past 10 years. And while private label performance has always been strongly linked to economic conditions—private label market share generally goes up when the economy is down and down when the economy is up—the impact of private label is growing at an outpaced rate, surging private label success year after year.
The 3 driving P’s
PerformanceThere are quite a few factors that have fed this success, and product performance, aka quality, is at the top of the list. Where there was once a distinct gap in quality between private label and name brand products, today there is little to no differentiation. Private label quality is at an all time high, and in many cases, brand name products and private label are being manufactured in the same facilities using the same processes, making it easier and easier for consumers to make the switch to private label brands.
PremiumizationIf there was ever a case study on the impact of design, it would be private label. Whereas private label used to merely mimic the look and feel of name brand products—thereby earning them the moniker “me-too” brands—private label brands have invested heavily in in-house and design agency talent, providing consumers with well-designed, premium looking product offerings that easily compete with the aesthetic of name brands.
PriceLastly, low prices have and always will be a driving force for private label success. Coupled with beautiful design and parallel product integrity, private label is here to stay.
In response, many name brands have begun to rely on promotion, value or short term innovation to compete with their private label counter parts. And while effective short term strategies, these are band-aids and can actually negatively affect brands over time.
Instead, name brands need to think longer term. The continued success of private label brands actually provides a huge opportunity for name brands to tap into what differentiates them from their store-brand competitors—equity, brand heritage and compelling brand truths. We foresee the bravest of brands leaning into this shift, maximizing their own potential and securing their legacy for years to come.
“In order to win a man to your cause, you must first reach his heart, the great high road to his reason.” - Abraham Lincoln
The last twenty years have afforded us a much greater understanding of how consumers really make decisions. We now know that humans are primarily driven by subconscious, intuitive, emotionally-based decision making. And it’s precisely this truth that brands need to tap into, as it has the power to adjust consumer spending patterns on the spot. Brands who successfully identify and channel their most evocative and relevant brand truths are the ones that will ultimately win consumers’ hearts (and wallets).
Here are 3 guiding principles (that store brands often lack) for long-lasting name brands:
Compelling brand truths Often overlooked, brand truths are like North Stars for brands. And make no mistake, these truths cannot be manufactured; they are the DNA of a brand and define what makes them enduring and desirable. So before undertaking any phase of work, it’s imperative for brands to first explore their heritage, understand their legacy, and identify their point of difference.
Strategic direction Strategic direction is the glue that holds a brand together for the long haul. It’s an understanding of the marketplace, the competitive landscape, and where a brand sits amidst it all. By identifying a brand strategy early on, brands can set themselves a compass for years to come, making it easy to guide external partners, future innovations and brand evolutions. Like a litmus test for change, brand strategy combines both what makes it special and its role in consumer’s lives, allowing brands to consider both in tandem at any given time.
Desirable expression Cultivating consumer desire is essential. No matter the product integrity, the meaning in a brand story or the depth of a brand’s heritage, consumers must want what is being offered. Design is the most powerful tool in cultivating desire, and is the catalyst for emotional resonance and brand love. Using design to capture equities, make connections with heritage and captivate with brand truths is a surefire way to light up a consumer’s internal decision making process. And by doing so thoughtfully, brands can cultivate consumer connections that lasts for generations.
So while private label brands will continue to grow, the savviest of brands will take respectful note and embrace the change to better their own offerings. By doubling down on their brand development—monitoring consumer buying behavior, dusting off their equities, setting a clear path forward—brands can employ the power of design to shore up the love of their consumers. Emotion-driven branding is challenging to use effectively and requires great discipline and commitment, but ultimately, it is the one approach that gives brands the means to retain control of their futures, to innovate mindfully, and to compete effectively in an ever-changing market.
With over 20 years of experience working with brands globally, Jean-Marc Rinaldi, Founder & CEO, CBA, champions the value of cross-cultural work to drive business success. With a background spanning brand strategy, activation and innovation and a passion for entrepreneurship, Jean-Marc brings his unflagging curiosity and energy to everything he touches, helping countless brands improve consumer perception and achieve business success, including Yves Saint Laurent, Unilever, Nestlé, Motorola, Google, Danone, Purina and Heineken.