Private brands up the ante to drive differentiation, retailer trust
In this past pandemic-challenged year and a half, we have witnessed the extraordinary empowerment of consumers in demanding brands -- both name and private brands -- up their games to meet an expanded and diversified set of needs.
With reduced reliance on “brands” in guiding shoppers’ choices, however, retailers have a unique opportunity with their private brands to make themselves a differentiated private brand destination -- and convert shoppers to their own brands.
The Hartman Group’s Food Sourcing in America report revealed that consumers tend to intrinsically trust a private brand if they already trust the retailer. Moreover, this relationship works both ways: Private brands, because of their direct tie to the retailer’s core business, are also able to influence a consumer’s perception of the retailer.
The survey behind the report found that across all channels, a good selection of private brand products is the:
- Number one driver of trust
- Number two driver of store recommendation
- Number three driver of trip satisfaction
Shoppers consistently say that retailers like Trader Joe’s, Costco and Whole Foods Market have a good selection of private brand products.
What’s the role of private brands in 2021?
The Hartman Group’s latest Brand Ambition: Food and Beverage Private Brands & Beyond report notes that private brands now present shoppers with a strong, competitive option that is not only cost-effective but also often taps into modern notions of healthy, high-quality foods and beverages, such as simple, pure ingredients or absence of negatives, coupled with updated and attractive packaging.
Shoppers no longer view private brand offerings as an automatic downgrade. Private brands now can, and do, compete effectively in areas of traditional name brand strength as well as those of increasing importance to consumers.
What’s next for private brands? Quality is key
Shoppers recognize that private brand products often match or surpass name brands on quality and taste and even consistently think of them as healthier and sourced in more sustainably ways. However, there is a fundamental difference. Despite updated looks, new products and premium offerings, private brands are still expected to provide most (or all) of what name brands are offering while starting from a lower price point.
Is there room for private brands to command a higher price point?
Shoppers are open to the idea of paying above current price level for private brands if they can be convinced that the quality of the product merits this increase. Our Brand Ambition report finds that 26% of respondents said they would be willing to pay more for a store brand product than for a name brand if the store brand product were of higher quality.
Once proven, premium products especially can command a higher price point than their value-tier category peers. In commodity categories where most consumers see little or no difference between brands, this will likely be difficult. However, it may be more easily accomplished in categories where products can offer meaningful differentiation and stand out.
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The Hartman Group is at the leading edge of demand-side food and beverage strategy. As CEO, Laurie drives the vision, strategy, operations and results-oriented culture for the company's associates as The Hartman Group furthers its offerings of tactical thinking, consumer and market intelligence, cultural competency and innovative intellectual capital to a global marketplace.
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