Introducing 4 ways brands can shift their marketing approach to keep up with Private Label success

Branded packaged goods have dominated retail for almost a century, while private-label products have been seen as the lower-quality value option for thrifty shoppers who sacrifice quality to keep a few extra bucks in their pockets. But things are changing: Private label brands are set to double sales growth (3.8%) vs. national brands in 2020 and are forecasted to capture 25% of dollars in the next 10 years.  This growth is driven by shoppers’ shift in mindset about the quality of private label brands and the propensity towards greater value regardless of the state of the economy. 

So, why the shift? Retailers are getting smarter – they’re investing in higher-quality manufacturing, implementing more efficient logistical processes and leveraging their ownership of shopper data. These changes are resulting in 25-30% higher profit margins from their brands vs. national brands and are giving retailers more control over their suppliers. 

What does this mean? A partner is now alsoa competitor. 

In this hyper-competitive retail landscape, one of the biggest challenges we face is navigating the shelf at retailers whose growth strategies depend heavily on promoting their own brands. In years past, brands needed to align their own objectives with retailer objectives, marry their targets with the retailer’s shopper, and show how their brand could grow the category. Now, we need to strategize ways in which the brand grows the category at the retailer without directly competing against private label. A tough job got tougher. But, with a little homework and some creative strategies, this challenge becomes a huge opportunity.  Read below to find out ways we're suggesting to combat.

Importantly, keep in mind that these are just a few thought starters to combat the steal of share private label brands are starting to take. As we head into 2020, there remains ample room for ideation, but developing innovative strategies to address retailers’ increased focus on private label will become a critical component in shopper agency-national brand relationships.The key, in almost every solution, will be to arm the agency and your client with in-depth knowledge of the retailer, with transparency and visibility in order to react in a timely fashion. Understand that private label – while a growing competitive threat – can provide clients with an incredible opportunity to connect with shoppers.