As a result of this great recession, private labels have pulled ahead in the race against brands. Gone are the days of frivolous spending and free-flowing disposable income. Was the increase in Dunkin Donuts styrofoam cup sightings in the early 2000s a sign that Starbucks was becoming too “high end?”
Store-brand products, which comprise of a $90 billion industry, now account for nearly 30% of the total servings of food products sold, up from 20% in 2003. And even more threatening for brands: nearly three times as many shoppers intend to stick with store brands even after their purchasing power increases.
Private label brands build a loyal following
Consumers are no longer convinced that big brands offer higher-quality products than private labels. Seven in 10 US respondents said that store brands were either better than or about the same as national brands in offering high-quality products. So if in consumers’ minds (which is all that matters), name brands don’t beat private label quality, what can they do to make consumers reach for them on the shelves?
Another culprit in the rise of private labels: “branding” of private label goods. Sounds counter-intuitive, so let me explain. Back in the day there were the very obviously generic, black-and-white-packaged generic goods; some even said GENERIC in bold black letters. In the 90s, private label brands started copying name brand packaging, making even the savviest shopper take a second glance at packaging to determine which was which. The other woman started to resemble the main chick. Many private labels continue this practice today.
But many retailers have gone a step further – creating their own recognizable private brands and packaging. Target’s Up & Up brand sports a large, recognizable logo and clean, stylish packaging. The retailer’s food-specific Archer Farms, Walgreens’ Nice!, and Walmart’s Great Value brands are similarly restyled to look more like a big name brand themselves – for a fraction of the price. These products aren’t embarrassing, cheap “off-brands”; they’re brands in themselves, building loyal fans.
Most private labels are commodities. If name brands can no longer differentiate on quality, it’s time to differentiate on other levels. It’s time to be more than your products.
Be the attentive party host
Millennials especially came of age in the recession – not only has saving become a habit for them, they aren’t yet as brand-loyal as generations prior. Their preferences are a blueprint for the new consumer – and these young shoppers are marketing-savvy and distrust ads. Eighty-four percent of Millennials say user-generated content has at least some influence on what they buy. And 73% say it’s important to read others’ opinions before food purchases.
Do not neglect an opportunity to let your consumers sell for you! Invite consumers who use your products to talk about them: share original cooking videos and recipes on Facebook, offer their creative product uses on Twitter, leave feedback on your products on your brand site, participate in digital focus groups, etc. Says Mary O’Connell, Dir. Global Digital Marketing for Clorox Brands:
“What could possibly be more important than what your consumers say about you?”
And most importantly, truly listen to what they’re saying – treat your consumers like family. Use trends in their feedback to create authentic paid/owned media, improve your products, innovate new ones, etc.
Be the teacher and share their passions
Winning brands have an intimate relationship with their consumers, and it’s reciprocal. Foster brand affinity by being helpful beyond your product. Create owned content that draws consumers in by being educational, useful, and entertaining! Don’t assume everyone knows how to use your product – even the cheerleading captain has a thing or two to learn about applying blush. A food brand can create video cooking lessons on preparing certain dishes. Offer that extra something that no one else can touch.
Relate to consumers around passion points that connect with your brand. Over half of Millennials buy brands that reflect their style and personality. Frozen foods brand Healthy Choice garnered 300,000 views of an original web series Top Chef Healthy Showdown in partnership with BravoTV’s Top Chef series.
Connect with consumers around causes they care about. Yoplait yogurt, for example, has established a strong connection between the brand and breast cancer research. Starbucks coffee commits to ethical bean sourcing and farmer support. Among Millennials, 63% say that knowing a company is “mindful of its social responsibilities” makes them more likely to buy from its brands. And over half (58%) are even willing to pay higher prices when part of their spend goes to help causes they support.
In my opinion, there is no private label that rivals Scotch tape. Despite my reliance on store brands to meet several of my everyday needs, I still love my Kraft Macaroni & Cheese. But until Kraft fosters a relationship with me beyond the mac, a buy-one-get-one sale on Archer Farms mac n’ cheese would make me think twice.