On a recent store walk with a client, the topic of shelf space came up, and the question was posed as to where private label products belong in that equation. It may seem like private label brands are all over the place and, like this client, you may be wondering why. The easy answer is that it depends. But, fortunately, we can help unpack those dependencies.
Before explaining the positioning of private label products, it’s worth recognizing that private labels aren’t what they used to be. Private label brands have come a long way in the past 20 or so years. They’ve risen in quality, positioning and sales. In particular, the quality gap between private label and brand name products used to be pretty wide. So, too, was the positioning, as evidenced in some older private label branding and packaging. Lately, however, with brands like Trader Joe’s, Publix, Target, The Home Depot and even Amazon pushing their house brands, the popularity of private label products is soaring. In fact, just recently, the AIGA digital publication Eye on Design featured the surprising up-leveling of generic grocery branding in a feature titled, “When Did Generic Grocery Brands Get So Good Looking?”1
Not only are private label products improving in looks and quality, but they are also improving in sales. According to the Harvard Business Review, “private labels in the United States command higher unit shares than the strongest national brand in 77 of 250 supermarket product categories. And they are collectively second or third in 100 of those categories.”2 Add to that, COVID-19 and its disruption of the economy and supply chains has helped boost private label products even further. A survey by McKinsey and Company noted that “nearly 40 percent of U.S. consumers have tried new products or brands since the onset of the COVID-19 outbreak.”3
So, what’s a private label brand manager to do? How do you optimize all this new opportunity without marginalizing the big brands that your store needs to compete? Here’s our advice for how to proceed, our merchandising best practices for private label brands.
Perfect Your Package
First and foremost, take a good, hard look at your brand. Is it relevant? Does it express all the values that your shoppers are looking for? Before you optimize your shelf position, make sure you have something worth showing off. Clean up your packaging. Whether that means a brand refresh or a total overhaul is dependent on the distance between your brand and your audience. Ultimately, your packaging should reflect your values, speak to your audience and work in the required retail environments.
To see a great before and after, check out our work for IGA’s proprietary brand.
Put Up a Good Front
Once you’ve nailed your packaging, put some weight behind it. In other words, group private label items together so that they appear dominant and strong. Whether that’s on the shelf, a POP display and endcap, or even a digital ad, brands look better when they exude vitality. We’ve all seen those brands that sit on the shelf looking poised for extinction. Give your brand a herd and see how well it performs.
Understand Category Data
Data matters and, as such, you should know the numbers for every category. Your position will change from category to category and, just as certainly as it changes, it changes relevant to how dominant the competition is and to what consumer spending habits are like in that category.
To see what we mean about category variations, take a look at the strategy behind our packaging design for IGA for Potato Chips.
Meet the Eye
Gone are the days where private label goods were relegated to the bottom shelf throughout the store. Once you’ve decided your best position in a given category, you can begin playing with placement. Is your brand providing the value anchor in a particular category? If so, position your product below the market leader and optimize that value proposition. Are you competing with the category leaders in a particular category? Then step it up a shelf and go head-to-head. Give your product the same location advantage you give the big brands.
Whatever changes you make or strategies you put in place to optimize your private label products, make sure you track everything. If you know where you’re starting, you’ll be able to make comparisons to track progress and timing. As always, be patient. Even big changes can take time to register with shoppers.