The promise of private label for retail differentiation

You’re at the local pharmacy buying pain medication – do you reach for Advil or the store brand pain reliever? If you went with the brand name you know and trust, you’re in the majority. A recent survey found consumers think name brands are better than store brands in 41 out of 53 categories. Private label is always an option, but most consumers see it as a quality compromise compared with name brand products. Even so, the underdog is on the rise: Store brands started to outpace national brands last year, with most of the growth coming from premium private label products.


As more of the retail industry moves online, brands need to find true differentiation through unique products and packaging. This requires a growth strategy based on the benefits of both branded and private label products, where retailers can offer multiple advantages for their consumers, including better products, faster and for a lower cost.


Consumers are more likely to purchase national brands when selecting personal care products and food, where national brands have the resources to innovate in these categories and use consumer trust to earn buy-in for new products. Still, national brands are at a disadvantage when it comes to price, leaving space for private label lines to succeed. Private label is playing an important role in retail strategy, particularly for department stores who have learned the hard way that customer expectations have shifted. E-commerce has given consumers the ability to buy both basics and national brands anytime, anywhere. Private label provides retailers the opportunity to differentiate their products based on their brand image and company values. Finding, designing, sourcing, buying and selling private label is no longer an optional secondary consideration for retailers looking to survive in the new retail economy. Instead, it has to be built into a company’s overall product development strategy to find the right balance between private label and national branded goods.


Amazon, Target and Wayfair have all invested in creating new lanes of business under smaller, more niche brand names to refresh their products without losing their legacy. This approach ensures consumers will continue to find new, customized products, but still within the experience of a brand’s properties. This type of niche retailing is exploding – hyper-curation has taken the industry by storm with several increasingly popular brands focusing on a very specific product for a very specific market. In the days of old, retailers tried to be a “one stop shop” that sold many different products. Now, retailers that specialize in just a few, high-demand products are the ones that come out on top.


Being able to anticipate and act on shifting consumer needs and behaviors has always been crucial for retail success. Thankfully, with new technology, real-time data and analytics, retailers are better able than ever to adapt operations to understand and leverage shifting trends and preferences. Retailers know that consumers want personalized products and instant gratification – now they just need to know how to keep up and private label might just be the way in. Given the widening impact of social media stars too, the industry is starting to see an increase in self-made, online fashion personalities seeking to monetize their influence. While this challenges traditional retailers, it also provides the market with more unique products and niche, community-driven consumer purchasing. The demand for hyper-curated products will push major brands and department stores to step up their game with innovative private label products that keep them ahead of the competition and meet consumers’ shifting expectations.


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