Once upon a time, people thought the world was flat and private label products were strictly relegated to the bottom shelf, where they lived a boring, budget-friendly existence. Sadly, this second belief is still prevalent, but perhaps it’s time to change. In our opinion, private label brands are unique, complex and dynamic product lines that can live anywhere within a category.
The Rise in Private Label Popularity
These days, private brands represent so much more than generic alternatives. They’ve expanded beyond the opening price point to include better and best offerings. They’ve risen in quality, positioning and market share. Consider the range of private brands available at The Home Depot today. From the generic HDX® brand to the classic handyman brand Husky® and the reliable décor brand Home Decorators Collection®. Private label products are everywhere, whether consumers know it or not.
In some cases, private brand products have cult followings. In others, they are destination products and even category leaders. It’s safe to say that private label products aren’t what they used to be. The rising tide of private label products is peaking. These brands are more competitive than ever before. If you’re a brand manager for a private label product, now is a perfect time to rethink your positioning and merchandising. Here are our recommendations.
Reconsider Private Label Positioning
More often than not, private label products are positioned as the budget brand rather than the category leader. It’s certainly true for generic grocery brands. It makes sense given the regionality of grocery chains and the limited awareness of proprietary labels compared to national brands. But that doesn’t mean that all private labels must live in second place.
Consider the impact of Target’s private label products on shopper behavior. For years, Target has intentionally invested in growing their private label presence. The retailer now carries over 45 private label brands along with a selection of carefully curated national brands. Target recognizes that their private label products aren’t an option, they are a destination product. According to Christina Hennington, Target’s Chief Growth Officer, private label products are a reason shoppers choose Target.
What can brand managers learn from Target’s overarching strategy? It’s simple: Private label brands can fill just about any position in a category. If the strategy is right, well-positioned private brands can even carry a category. The key is having a retailer that’s willing to take some risks when it comes to national brands. Likewise, it requires a merchant with an aggressive category strategy, one who sees the gaps and is ready to fill them with solid private label products.
Take a Good Look at Your Packaging
Once you find the sweet spot, the unique position that you can own, the next step is to ensure that your brand looks like it belongs there. The importance of packaging to private label products cannot be overstated. Shoppers respond positively to packaging that is visually aligned with a product’s positioning. The reverse is also true. Packaging that looks too premium or too plain can undermine consumer confidence. This is especially true with private label brands, which may not have the benefit of the doubt that comes with brand awareness.
Think of your packaging as the personification of your brand. Is it authentic? Does your packaging match your positioning? Does it sit confidently in its spot on the shelf? Like any extension of your brand, packaging that is well-executed balances positioning and personality. We’ve all seen packaging that’s out of balance, branding that looks like it’s trying too hard. Resist the urge to “out claim” or “out graphic” the competition. There’s a fine line between confidence and arrogance, and shoppers can see the difference.
Build a Private Label Billboard on the Shelf
By this point, you’ve tested your positioning and taken a close look at your packaging. Once these are aligned and your product sits confidently on the shelf, it’s time to build prominence. Shelf presence, after all, is like real estate: It’s equal parts location and view.
When it comes to planograms, we advocate for grouping private label items together so that they appear dominant and strong. Whether that’s on the shelf, in a POP display and endcap, or even in a digital ad, brands look better when they look healthy and full. We refer to this merchandising approach as billboarding. In addition to communicating vitality, billboarding helps sell more product. We’ve all seen those brands that sit on the shelf looking picked over and worn out. Grouping branded products together helps preserve positioning and provides shoppers with easy alternatives when product selection is light.
It’s Time for Private Label Products to Rise Up
Gone are the days where private label goods were relegated to the bottom shelf throughout the store. Once you’ve decided on 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.