Those of us of a certain age remember the Cost Cutter brand.
We’ve come a long way since those “off-brand” or generic products, infamous for cheap prices matched by poor quality.
Private label brands are vastly different today. And they’re aiming to eat your lunch — unless you can beat them on relevance, innovation, and engagement.
Not Your Parents’ Store Brands
Back in the day, generics were all about super-low cost. But over the past decade or two, that marketplace has shifted. Major retailers like Kroger (and the chains it has acquired) began offering store-branded products that improved on the generics. These house brands were all about reasonable facsimiles – incrementally less expensive for the illusion of a parity product. Retailers took a path of least resistance by co-manufacturing decent-enough items, designing decent-enough packaging, and shelving them alongside national brands. And consumers believed they were getting a decent-enough product for less money.
But, wow: Store brands today, which the industry calls “private label,” have upped the ante. Kroger’s Simple Truth lineup became the first billion-dollar store brand in less than two years after its 2012 launch. As of 2019, the portfolio included more than 1,550 organic and natural products. And then there’s Target, which holds nearly 50 “owned brands” ranging from low price to high style. Not to be left out, Amazon is growing its Amazon Basics and Happy Belly brands like bonkers. The category killer may be Costco’s Kirkland Signature brand, which in some cases is more expensive than competing national brands. Costco members know that Kirkland Signature products are premium and limited, so the brand creates a sense of FOMO that drives shoppers to buy.
The tough news for food and beverage brand marketers is that you’re competing not just against peer national/global brands, but against some really strong house brands from the very retailers you partner with.
Getting Ahead of Private Label Players
Private label incursion can frustrate the best CMOs in the business. Incremental moves by store brands can erode your market share and flatline your growth. And sometimes this happens imperceptibly, until one day the house brand looks like a legit competitor.
So how can you fend off these retail-owned challengers that seem to have every advantage — including deep consumer data, funding, and guaranteed shelf space?
It’s a question of playing big and pushing far enough ahead of the category norms that consumers see you as the it brand. So let’s unpack how to do that.
1. Hit ‘em where they ain’t. (h/t to Bull Durham)
Use your super power: your mission, the good that connects your brand to a worthy cause, solves a wicked problem, or rights a known wrong. Private label brands don’t stand for anything; their strategy is just selling stuff.
Consumers align themselves with brands whose mission and values they share, and thus those brands become a form of self-identification or self-expression. When they choose your brand they get to be more healthy or earthy or whatever-y because your products enhance their lives. They’ll wear your merch and post your products on Instagram. They’ll create rituals around your products. But let’s face it: Nobody puts their Simple Truth dinner on Instagram even if it’s delicious. Nobody dunks their store-brand chocolate sandwich cookie like they dunk an Oreo.
Combine that mission with a well-defined audience — one that’s as broad as possible but not universal. Beloved and dominant brands know that they’re not for everyone. Gather a group of like-minded people who are comfortable standing apart from the rest of the world: the early adopters, life hackers, want-a-better-way-ers. The uptick of the bell curve before you hit mass adoption is the group you’re after. These passionate fans will never choose a private label option.
Private label brands are by necessity for everyone. Your brand shouldn’t be.
2. Play bigger and bolder.
How can you outpace private brands’ capacity to make stuff? Be committed to walking on a higher plane. Don’t just talk it, be it. Set the bar for whatever — clean ingredients or traceability or efficacy — and tie that to the mission your audience cares about. Then be the best: the cleanest ingredients, the most sustainably sourced, the most committed to social causes, etc.
And let’s talk about pricing. You and your brand team need to get over your premium phobia. Marketers fear premium pricing because they’re afraid of missing out on customers and of pricing their products out of the market. Retailers scare brands into managing price because they want competitive advantage for their private label items.
If you’re a brand that wants to sell as much as it can, then you have to play the price game. But if you stand for a higher cause, you actually don’t want everyone on the planet to buy your product. You need your fans to carry out your mission. It’s an ecosystem. Premium pricing signals that your brand is better than the rest of the set; it takes you out of product parity and into brand relevance.
3. Make communication and marketing decisions that private label can’t copy.
House brands can mimic many of your brand’s attributes, including flavor profile, ingredients, even packaging style.
But they can’t replicate your relationship with your audience. So your goal is to get your consumers involved so that they become stark-raving fans of your brand.
To do this well, you need to think long-term about brand promise and how your team will deliver on it. And then you need to speak, write, and design like a brand that has no competition. Use your marketing and communications not just to promote product — but to drive ideas that transcend your offering. On social media, play not as a snack or nutrition brand, but as a lifestyle brand. Your brand has a distinctive voice; house brands can’t communicate like that.
It may be tempting to think of your private label competitors as gnats: annoying little buggers, but ultimately harmless. But you ignore them at your peril.
If you sense that they’re lurking outside your door, let’s connect. We can help leverage your strengths and steer your brand in a direction they can’t possibly follow.
