Changing Terrain

CPG retailers and manufacturers have to get creative in looking for new ways to drive excitement and engagement. The economic turmoil of the past decade put a huge damper on volume momentum, but even with improving economic conditions, momentum across the industry has been slow and inconsistent.

KK Davey, President of Strategic Analytics, IRI

Once again it’s time to review the role of private label in the retail landscape, as striking the right balance between private brands and national brands is the key to successfully providing a solid value proposition and a positive shopping experience. Shoppers want and expect a balanced assortment, and they will respond positively when given one.

However, maximizing the potential in the next wave of private label evolution will require a renewed focus. A focus on diversification and premiumization will set the framework and pave the way for private label growth.

But how?

Approaching private label in new ways means thinking about brand potential with the same enthusiasm and innovation as any other big brand setting out to reach new goals. A few key strategies will drive private label, including:

• Upstream innovation that breathes new life into mature private label categories
• Outside-the-box innovation to ride positive momentum where private label is escalating
• Effective price-pack architecture, in particular in mature areas where creating private label differentiation is difficult

Identifying the appropriate areas to rewire and inspire private label involves changing the traditional mindset around private label and its role. Retailers must invest the time, money and resources to identify opportunity categories where private label is showing favorable growth trends that can be nurtured and developed, while protecting battleground categories where private label share is well established.

In looking at private label tiers, mainstream innovation must evolve beyond traditional follower status, and premium innovation must offer exclusivity to drive share and margin gains.

Now what?

Balancing private label and national brand products is a delicate task, but it is essential to retailers that are setting out to change the retail terrain with a new path to growth.

Private label share is the highest in grocery, but club channel gains are strong.

Share declines and associated revenue losses point to a dire need to find new private label growth avenues.

Private label programs that span the price/value spectrum provide something for everyone at a price they are willing to pay.

Accelerating categories offer significant growth opportunities for retailers that effectively dial into market and consumer trends.