By: Doug Baker, Vice President, Industry Relations, FMI
Imitation is the sincerest form of flattery, said Oscar Wilde, and for years, the success of private brands have been grounded in their humility and inate ability to pay into the greatness of their staunch competitors as Wilde’s proverb suggests.
Without research and development departments and limited marketing budgets to develop and promote new items, private brand R&D was conducted primarily on the shelf in real-time through a manufacturer's brand. One of the drawbacks to this fast-follower strategy is missing out on the initial wave of trial and getting a headstart building a loyal following. Conversely, it also mitigates liability and obsolescence if the brand was not successful, protecting the retailer's already razor-thin operating margins.
For the last several years, we have been hearing private brand acceptance is at an all-time high. And for only the second time in history, the first being the great recession, consumer trial of private brands hit record highs due to the COVID-19 pandemic. Consumer trust is strong and growing.
I have asked several of our members the question, "Have consumers given private brands permission to innovate?" All signs point to, yes! Moving from a category to a consumer-centric approach means reacting to consumer trends and demands, not just product trends. Some retailers have made this shift and have led innovation in categories with high private brand penetration or a category where innovation lacked and retailers identified an unmet need.
So what consumer trends are driving innovation? To name a few, over the last 16 months, consumers have re-established or taught themselves to be masters of their kitchens. We have witnessed consumers focus more on food as medicine to improve their health and immunity. Additionally, there is now a heightened awareness and interest in reducing food waste.
The way consumers are shopping also changed during the pandemic. We've seen about five years' worth of growth in volume and infrastructure for ecommerce since the start of the pandemic. Understanding these consumer and operational trends, are your private brands getting their fair share online as they do in the physical store? Are all the available attributes of a product being leveraged to ensure consumers can find your private brand?
Innovation is more than just a new ingredient or product; it's also how the product is packaged, what and how you communicate on the package, and even the importance of how you communicate information that cannot fit on the label. Consumers typically want to know everything about the products they use and consume, so we can we pay them the highest form of a compliment and mimic their demands through our own brands.
This fall, at the Private Brands Summit we’ll meet in person once more, and dive into topics connected to innovation. We’ll explore new consumer insights, shifting private brands sales and share trends, and adapting private brands strategies based on pandemic lessons. The Summit will also include trading partner meetings to foster innovative discussions about key business issues and priorities. Learn more and I look forward to discussing innovation with you at the Summit.
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