As I meander through my local supermarket, it’s not hard to
understand why we’ve been hearing about the hype around private label
products taking the place of other branded products. The national brands
in this country have been called to task – innovate or be pushed out by
the hand that has fed them for so long, the two giants of the
Australian grocery landscape.
Private label, or store brand as
it is sometimes known, is flooding the already competitive aisles of our
supermarkets. This already cluttered space over the past decade has
seen most categories offer more choice, but has not seen a great deal of
variety or innovation. Products that remain stagnant will die or become
unsustainably cheaper from pressures seen from the private label
products.
This vertical integration from the supermarkets means
products that people perceive to be the same quality can be up to 30%
cheaper than national branded items. At the start of this year, one
quarter of what we buy is private label; some predictions see it rising
as high as half.
There have always been cheaper products on the shelves, but why is it coming to a head now?
A
recent industry survey studied the buyer behavior of women. The study
showed 70% of women are making purchasing decisions on price. A similar
amount of those surveyed stated they believed the private label brands
are the same quality if not better than other branded products.
The private label brands are gaining brand equity in the marketplace.
The
trick is to innovate your brand offering. Ensure your product is on
brief for what the consumer wants. Some examples that have made a huge
difference in sales have been things like Dettol’s no touch hand
sanitiser. The customer doesn’t want to use dirty soap, so the
hands-free sensor strip was a huge success with purchasers.
Campbell’s
Real Stock employed a ‘less is more’ attitude, by developing individual
sachets, which gives smaller households the benefit of a smaller
portion. Letting buyers feel they are less likely to waste had a huge
impact on decision making at the point of purchase.
Another
successful innovation was launched earlier in the year by Uniliver. The
new Lynx Anarchy offering was the first unisex product by Lynx. Backed
by a social media and in-store campaign, it offered a ‘his and hers’
variety which has proven to be a successful reinvention of the product.
The
days are gone where the reinvention of an offering was done by
rebranding and repackaging the same product and labelling it as being
‘bigger, faster, longer-lasting or tastier’. The brand must see real
innovation to evoke emotion with the shopper and gain their attention.
As
private label market share increases, it’s up to brand manufacturers to
be innovative and in line with the consumer’s needs. The flipside will
be an even tighter duopoly.
Kirsty Dollisson
General Manager of Marketing and Commercial
TorchMedia