Retailers big and small continue to invest in private brands. Today’s shoppers aren’t as loyal to national brands as previous generations and enthusiasm for organics is helping retailers win new customers in the crucial private brand segment. Kroger has announced plans to expand its “Our Brands” private line and Costco’s Kirkland Signature brand continues to grow, now accounting for 20% of its total grocery sales.
To uncover some of the hot trends driving the growth of private brands, StoreBrands magazine sponsored a webinar with a number of industry experts. Here’s a snapshot of the conversation:
The End of ‘No-Go’ Categories – Non-food items are among the new hot categories for private brands. Traditional “no go” products like shaving accessories and auto fluids (anti-freeze, transmission fluid, etc.) are now viable private brand items. Also trending are specialty beverages, including refrigerated kefir and bottled fruits juices. And, the perimeter departments are seeing growth as well, especially items such as refrigerated meats and cheeses, chili and pasta.
‘Fresh’ as a Brand Identifier – Customers are increasingly going to grocery stores for a specific “meal occasion,” and not simply to buy ingredients. The obvious beneficiaries of this trend are the fresh departments. And by expanding private brands into the fresh departments, retailers have an opportunity to create a unique retail identity. The “secret” to success in fresh foods is to build and maintain consumer trust. This is critical with fresh foods. The backbone of that trust is a first-rate back-of-house operation, and a supply chain that is efficient and reliable.
It’s All about Unified Commerce – Amazon’s entrance into grocery was one of the big stories of 2017. There are many implications for retailers, but one is the need to redress the underrepresentation of private brands online. Experts say retailers need to understand and faithfully replicate the established “feel” of a brand online so the sales experience – whether in store or on the web – is unified and seamless.
Organics Save the Center Store – Organic is now a growth area for private brands. As the Center Store shrinks, organic products will continue to play a significant part in maintaining healthy margins in this area. There are even indications that retail grocers may begin displaying organics right alongside conventional products, allowing shoppers to choose from, for example, organic catsup, “free-from” catsup and conventional catsup, all in one place.
Test & Learn Online – Private brands are good candidates for innovation and exclusivity. But success with these opportunities is never guaranteed. Online platforms allow retailers to test innovative and exclusive brand offerings in a more data-driven environment. Based on past-purchasing behavior, retailers can target the right shoppers for their new product trials without having to make an intensive investment in-store promotional effort.
Click here to listen an archived recording of the webinar.