Food for thought: this year, 83% of shoppers bought more Brand ABC products than they did a year ago (1). And, 60% of shoppers feel Brand ABC is a better value than the top brands while being of the same quality (1). Wouldn’t you love to carry Brand ABC on your shelves?
Well, next time you head into your store, take note of the name above the door. Brand ABC can be you.
Private Label Priorities
The shopping behavior data from The Integer Group and M/A/R/C are compelling. They suggest that the gap between private label and name brands is getting smaller in terms of price, quality and popularity. Store brands have a broader reach than ever before, definitely much farther than just shoppers trying to shave a few dollars off their bill.
“Private label will continue to grow in most categories,” predicts Jane Drinkwalter, vice president of sales at Vitamer Labs, Irvine, CA. “Statistics show that while the biggest bump occurred during the recession, private label purchases have stayed up, and most think private label will continue to grow.”
Kenny Flores, vice president of sales/natural at Reliance Private Label Supplements, Edison, NJ, is on the same page as Drinkwalter; he, too, believes private label products will continue to have impressive growth across all channels. He states, “Independent retailers and large national chains continue to see the rewards from their commitment to private brands.”
One interesting nugget from The Integer Group survey is that 45% of shoppers feel name brands have more new products, variety and innovations than private label brands (1). But is it really the way of the private labeling world to be followers instead of leaders?
Not really, experts say. Many stores are using their lines to offer staples alongside items that reflect shoppers’ interest in trying something new and different.
2014 trends. As you freshen up your line for 2014, you’ll want to keep the staples at eye level (like multivitamins, fish oil and probiotics), but there are some nuances to consider.
For instance, Drinkwalter believes that food-based supplements will continue to be a hot mover, something you can marry with and promote beside your multis.
Also, protein supplements may continue to fly off shelves like hot cakes, but keep your eye on plant-based varieties like cranberry, pea, hemp and others. They appeal to those following a vegan/vegetarian diet, those with certain food intolerances and sensitivities, and those that just prefer plant-derived proteins.
The protein supplements trend is something that retailers can observe within the larger need for private label sports nutrition for all kinds of shoppers. While the sports nutrition category continues to boom, says Flores, “this category is no longer dedicated to the hardcore ‘gym rat’ consumer that at one time represented the majority of sales. There has been a massive shift in the category.”
This change, he goes onto explain, is that mainstream shoppers are responsible for more than 90% of sports nutrition sales. What does this mean for your line? Says Flores, “With this shift, the new consumer is also taking a closer look at the ingredients in their sports nutrition products. They are looking for something safe and ‘clean.’ Look for this trend to continue!”
Take advantage of this trend. If shoppers are leery of trying a brand they’re unfamiliar with that possibly has ingredients they are unsure of, a store brand may be more comfortable.
Other trends, Drinkwalter predicts, may include “products designed to support baby boomers; joint health, vision health and stronger immune systems will be at the top of shoppers’ lists.”
Betsy’s Health Foods of Houston, TX, has had success with this idea of offering both staples and trending products in its private label line. The store’s marketing manager, Ramona Billingslea, says they initially brought in basic vitamins and minerals for their line. “We even named our private label, ‘Betsy’s Basics’ to help reflect this theme,” she states.
But what has proven to be very popular with customers, she explains, are niche items. “Formulas that support stress and mood, a great-tasting greens product and a super digestive enzyme are among the standouts that we didn’t necessarily expect going into the private label venue,” states Billingslea.
Debra’s Natural Gourmet of Concord, MA, also feels “basics with a bonus” is a smart idea in the private label realm. Such value-added commodities may include vitamin C with bioflavonoids, states Adam Stark of Debra’s Natural Gourmet.
As for where the action may be in 2014 for private label, Billingslea states, “My best guess is that proteins, omega support, stress/mood support and cardiovascular support will be among the trending products in the coming year. I also believe we will continue to see growth in the superfoods category.”
Pat Sardell, co-owner of Country Vitamins, Corvallis, OR, hits on some other big trends that are right in line with what national brands are seeing: “At the moment, consumers are asking if ingredients are non-GMO.” Therefore, product marketers (whether they be manufacturers or stores) are formulating with non-GMO and/or organic ingredients. Gluten-free continues to be of interest to shoppers, too.
Whichever products you choose, remember that you are endorsing the product—including its name and description. For this reason, Stark says his store decided not to carry a “perfectly fine private label product” because it was called “Super-Duper-Ultra-Best-in-the-World-Whatever-It-Was.” “It was alright,” he states, “but it wasn’t that good. If our name is on the bottle, it’s like we’re making the claim!”
Stark believes if a store doesn’t specifically endorse a specific ingredient or formula, it has no business in its private label line. “I made a conscious decision not to put raspberry ketones on the shelf in our label,” he states. “I have no problem selling them (although I’d prefer not to), but I don’t want to implicitly endorse them by having our name on them.”
Stark makes the astute observation that any label claims on a store brand product are your claims. Make sure you stand behind them, and that they are in line with what labels on national brands claim. He explains how his store handled a “Once Daily” higher potency fish oil. “I don’t want it to make claims like [Once Daily] on my behalf—especially when it was only 50% more potent than one from the same manufacturer that said to take up to three a day! So now you’re labeling in contradiction to your other labels.”
Selling Private Label to Millennials
For years, stores placed a strong emphasis on marketing to Baby Boomers. But market analysts believe that businesses should pay attention to another powerful consumer group: Millennials (AKA Generation Y, born from ~1980–2000).
“Building on a sense of community can go a long way toward getting Millennials interested in your store and your brand,” states Ramona Billingslea, marketing manager at Betsy’s Health Foods.
She suggests using technology to promote your offerings to attract Gen Y. “The more ‘instant gratification’ you can offer, the more likely you will appeal to this younger generation,” she believes.
Paul Waldron, executive vice president of trade development at Gladson, believes “Millennials were not raised to be as ‘brand loyal’ as earlier generations, which can be an advantage in Millennials’ adoption of private label.”
They have high expectations for product quality, he says, so be sure to sell product on its quality. “Millennials are more apt to research products across a variety of channels including online, mobile, social media and in-store, so it’s vital that consistent, up-to-date and accurate information on private label products is available across those channels,” Waldron suggests.
Private Label Levels
There are many strategies for making your brand hit home with shoppers. Some stores have success with a tiered approach, whereby high-end, middle-of-the-road and bargain brands are all offered. Could this type of approach work in your store?
The main benefit of multiple store brands with various price points is that you’re broadening the net for all types of consumers, says Paul Waldron, executive vice president of trade development at Gladson, Lisle, IL, which tracks consumer packaged goods product information. He says, “As private label brands continue to comprise a larger share of retailers’ category line-ups, a tiered pricing strategy can be an effective approach for retailers to appeal to a broad spectrum of consumers.”
Drinkwalter offers some suggestions for how to use tiers to appeal to several demographics of shoppers. “Each category can have a ‘beginner’ model as well as high-end and more technical products,” she says.
She adds that retailers can do the same thing with counts. “Have the smallest size product for the entry level and those on a budget and the larger size for family use and a better value,” states Drinkwalter. “It is all about choices! Keep your customer in your store (and not online) through all the phases of their product needs.”
But if you try offering multiple store brands, Sardell warns retailers to watch how it affects the big picture. For instance, if you’re offering various tiers of a trending item, you might bloat your inventory. “How many different versions of raspberry ketones are necessary?” she asks, as an example.
Add on several different national brands of a given item, and imagine how crowded your stock will be. States Sardell, “Too many brands and too many options of the same item confuse consumers…At one time, we had 23 different versions in a variety of brands of echinacea, which paralyzed our customers—as well as our staff—as to which one to choose.”
The take-home message is that if you’re going to offer more than one private label line in your store, be careful to streamline your inventory and offer points of differentiation among similar offerings.
Another consideration about tiers is how you’re presenting your entry-level brand. “Your private brand should not be viewed as lower quality, which is then lower price. This is definitely the wrong approach,” says Flores. “I believe retailers should always have a private brand that rivals the quality of top national brands.”
Stark agrees and makes this point: “Your private label builds your store image. I don’t want to gain a few extra sales at the cost of making the whole store seem tawdry, our marketing disingenuous and predatory.”
In contrast, consider how Reliance Private Label Supplements suggests stores position its line: “Our most successful partners feature and merchandise their brand as the premium brand that it is. The fact that they can also price the brand competitively is added value,” says Flores.
This is the strategy at Betsy’s Health Foods, which strives to offer high-end products at competitive prices.
The Art of Selling Smart
There are some brands that sell themselves. Maybe they have great online reviews, or they earned a mention from Dr. Oz, or they have the marketing dollars for a great advertising campaign. But a store brand is somewhat of a different animal; the success is all up to you.
What are the best ways to sell your brand? First and foremost, Billingslea suggests retailers select private label manufacturers with care. “The [private label] products would have to meet or beat the quality and standards of the best products we already carry in our store,” she says. Some characteristics on which her store places a high priority are certifications, branded ingredients and smart formulations.
Drinkwalter suggests you pick a private label manufacturer you are comfortable enough with to call and ask questions, especially concerning how it qualifies and purchases raw materials, tests them, manufactures them and packages/ships/markets them.
Next, don’t ignore staff training. Stark states, “Understand the difference between the different bone formulas—really understand—and then pick your set based on that understanding, and then make sure your floor staff understands, too.”
Why? The more your staff members understand the line, the better equipped they are to recommend and sell it. “If your store staff believes in it, your customers will,” states Drinkwalter.
Third, Drinkwalter says there’s a lot you can do to help your brand on the shelf. “If you set by structure/function, at least call out your brand,” she advises, and don’t be afraid of shelf talkers. “The clean shelf/floor policy hampers the store’s ability to inform the consumer…If you are not calling the products out on the shelf or a board, they might pass them by.”
Gone are the days of shelf tags that cover scan tags. Today’s varieties come in all shapes and sizes that allow shoppers to see the benefits of products. And you can mix it up by the week, if you’d like. “Call out a one-a-day product or gluten-free item or highlight an ingredient that is in the news,” suggests Drinkwalter. “Move the tags around—keep it fresh.”
Plus, Flores advises that you reserve your prime real estate for your store brand. Doing so sends the message that the brand is also premium. “Feature it! Give it the best location, brand block it and make sure your staff has clear direction to walk customers to it,” he states.
Waldron suggests that retailers can convey the quality of the brand to shoppers by conducting more frequent in-store samplings.
Sardell takes sampling a step further in her store by identifying several inexpensive SKUs to use in outreach or community events and distributing them generously. She says, “We give away 60-count Lemon Zinc Lozenges in the winter at Chamber events. The spin back is that you get great testimonials at future events from winners of those 60-count Zincs at future meetings. New customers come in to buy their own and they start shopping your store and trust your brand.”
Don’t forget to feature your brand on your Web site and all media. “Feature your private label in your e-mails, Facebook postings and Web site, and have everyday low prices for customers on the house brand,” says Sardell. “Say why you offer them. If possible, show pictures and take your customers on a tour of how these vitamins, etc. are made.”
A quick note about pricing: while you may want to keep the line at a good value for shoppers, beware that deep discounting of your house brand might create an impression of lower quality. Says Sardell, “Don’t feel you have to go cheap. That’s a slippery slope that independents will have a difficult time matching as well as sustaining—both with the line and for the bottom line in their businesses.”
In addition, take special care with the look of your line. Sardell recommends glass bottles and expiration dating, for starters. To this, Billingslea adds, “If the bottle doesn’t look as good as the national brand, it implies that the product is inferior to the national brand, which is not what you want your consumer to be thinking as they view your private label product.”
Be smart about what you put on product labels. “Although price is a key advantage for private label, it doesn’t have to be the only advantage,” states Waldron. “Private label brands should communicate their products’ highlights and points of differentiation so consumers understand their value beyond their price.”
Last, make sure you build trust in the brand. Billingslea recommends doing this by guaranteeing satisfaction. “Make sure customers know about your return policy, which lets the customers know that you stand behind your products,” she states. WF
1. The Integer Group and M/A/R/C Research, The Checkout, Issue 4, 2013.
Published in WholeFoods Magazine, November 2013