Private-Label Growth Slows; Value Still Matters
It’s a good news/bad news situation for national brands. The explosive growth of private-label products is beginning to show some signs of slowing down. But they are not going away.
According to the latest “Times & Trends Report” from SymphonyIRI, national brand marketers’ efforts over the past few years to combat the growth of private-label brands (spurred in part by consumer cost-cutting during a recession) have worked.
“National brands haven’t just sat back on their labels,” Susan Viamari, editor of Times & Trends, tells Marketing Daily. “National brands took notice [and said], ‘We need to step up our game here.’ And they’ve worked really hard to realign their value proposition.”
Although the report shows private-label products having above average and increasing share across 19 of the 100 largest CPG categories, their share is on the decline in 40 of those categories. (For the remaining 41 categories, private-label products are “up and coming,” but still have a below-average share.)
With private-label growth slowing but continuing, national brands will likely have to drill down even further into consumer knowledge to really understand what motivates consumers in their respective categories, Viamari says. And they will have to be cautious not to undercut their brand promise with too much price-oriented promotion.
“National brands need to be very cautious that whatever they do is going to support their brand equity and not undermine it,” Viamari says. “We talked about that when promotional activity was at a fever pitch.”
At the same time, the private-label brands will have to start acting more like the national brands, cultivating their own selling proposition that may or may not move beyond mere price, she says. “I think private brands are traditional brands now, and they should be marketed as such,” Viamari says. “They’re not the alternatives and they’re not the 'me too's. They need to bring something different to the marketplace.”
The upshot: both national and private-label brands will have to learn to get along. “National brands and private brands ultimately need to coexist and there’s a need and a hunger for both,” Viamari says. “It’s about working together in the marketplace for consumers.”