Author: Paul Woodward, Senior Director, Retail Supply Chain Business
I was recently interviewed by Convenience Store News on how to get into the private label business, and I wanted to share the story with you. Here are my responses to their questions, along with insights into why I think store brands can deliver big margins and brand strength to retailers.
1. How are you an expert in private label and how important do you think it is for convenience stores to be in private brands?
I founded and launched the world’s first private brand management solution in 1995, enabling retailers to collaborate with their suppliers on the sourcing, development, and labeling compliance of their own brands. Today our cloud solution called Oracle Retail Brand Compliance is used by the who’s who in grocery retail to manage over 1 million private brand items a year with over 250,000 suppliers. It supports 80% of the U.K. grocers, including the nation’s top 4 retailers, and many leading U.S. retailers.
As well as the potential margin opportunities, private label should be targeted to increase customers and establish itself as a brand. Our most successful customers have created ranges and assortments that appeal to all income levels with their ‘me too’ and premium ranges competing as true brands in the market. We refer to these as private brands.
2. How do you recommend they get started in private label?
Understanding your consumer market is essential. Today’s technology allows us to create insight into consumers’ buying patterns from which we can map gaps and trends in dietary, sustainability, ethical, and economic choices. This enables retailers to plan their assortment and identify potential private brand ranges to capitalize on specific trends. Many of the world’s most successful private brands have originated from health or dietary initiatives that also supports and promotes the retailers’ values and brand promises.
Developing a transparent brand, forming partnerships, and collaborating with your suppliers are essential. A successful brand needs to be consistent in standard, quality, fulfillment, and value. Transparency is vital to ensuring the consumer can trust your brand. Regardless of fault, this is now your brand and, therefore, your responsibility.
3. What are the logical categories to venture into private label, and why are they good to start with?
This is highly dependent upon your consumer profiles, as described above. Convenience items feature strongly by targeting everyday savings. However, over the past decade, we have seen a consistent rise in premium items offering luxury at an affordable price. Health, dietary, and eco-friendly ranges are key differentiators for a new brand.
4. What are the special marketing considerations with private label? How can a retailer best tie in their brand name with their brand name products?
Our customers have stayed consistent with core values and brand promises. Their private brand assortments have been marketed to promote and amplify these. New ranges targeted at health, dietary, and sustainability have provided our customers with a platform to confidently market their position and commitment to these causes.
5. How does social media fit into a good private label strategy?
All forms of digital labeling, marketing, and promotion are now key to reaching all consumer touchpoints. Consistency in the messaging and data are key to the success of these methods. Consumer trust in the marketing material, product quality, and claims are essential to ensuring the digital media landscape does not turn on the brand.
6. How does technology or mobile marketing fit into a good private label strategy?
Transparency, traceability, and compliance are vital to how a private brand is seen. Technology is essential to ensuring the data behind each item label, claim, and promotion is accurate. Consumers are demanding greater transparency into supply chain ethics, sustainability, and safety that for a new private brand could be daunting. Technology like Oracle Retail Brand Compliance is designed to streamline and connect all the dots helping ensure that all digital and printed outputs are consistent, accurate, and transparent. A recent customer panel with Whole Foods and Woolworths discussed private label strategies for sustainability and safety and just how important it is for building consumer trust.
7. How has the pandemic affected private label?
We have seen a significant rise in private brand sales across the world, mainly driven by an initial economic choice that then led to a realization that private brands are equal to and, in many cases, better than their usual brands. This has led to a new level of revenue for our market. Therefore, we are now seeing greater investment with many of our customers creating and launching new assortments.
Oracle Retail’s consumer research found, of consumers that explored new private label brands in-store during the pandemic – which was 86% of consumers in the U.S. – more than half (61% globally, 66% U.S.) plan to stick with the new brands or include them in a mix of new finds and old favorites as they shop in the future.
8. What are the top trends in private label currently from your perspective?
Sustainability and climate pledges are now a key focus for many of our brands, from simply reducing plastics to fully assessing the eco-footprint of each product and assortment. This is creating an opportunity for new assortments that meet and support these global causes and consumer demands. Supply chain ethics and dietary trends remain a key differentiator that private brands are capitalizing on.
9. What do you think the future holds for private label at retail? Do you see it becoming more or less important in the product mix?
All of our customers are seeing growth in share, value, and portfolio. Private brands are being established as true brands leaving behind the economic persona of private label. All indications suggest that retailers' private brands will strongly compete with CPG brands going forward.