If you’re not buying Kirkland pants, laundry detergent and peanut butter pretzels all in one shopping trip, are you even doing it right?
From the last few months of 2022 to now Numerator tells us that, “total CPG private label dollar is up compared to [2021] across all income groups.” Specifically, baby, grocery and household categories are up; hence, successes at larger box stores like Costco and Sam’s Club. The pandemic and, now, inflation are pushing consumers to look for ways to save. And, again, this includes ALL income groups.
Considering all income groups (low, middle and high), Numerator also tells us that it’s the middle and high-income households who are purchasing private labels because they have seen its quality improve over time, and they’re looking for ways to save money. According to Nielsen IQ, “When inflation peaked in October [2022], value-based retailers’ sales jumped by 10%, capturing 42% of CPG sales. This coincided with private label CPG sales now accounting for 19% of total CPG sales worldwide and nearly 15% in the US.”
If CPG private label demand is up, this also means competition is rising. So what should you be doing to uplevel your brand’s packaging and overall identity and reputation?
Create a Private Label Brand Strategy
Without the reassurance that this hot private label trend will stick, you need a strategy around making your own brand’s goods stand the test of time and to compel shoppers into becoming loyal brand advocates.
The pandemic forced some consumers into becoming first-time buyers of store brand goods. They were, sometimes, the only options left on the shelf. Since then, many have seen the value of sticking with those brands for multiple reasons:
- They realize the quality is just as good as big brand names, because, often, the ingredients are just the same, if not better.
- The obvious money saver became a no brainer once they realized they weren’t skimping on quality.
- Some private label packaging has matched their creative design and visual messaging to the product quality, and consumers don’t feel embarrassment when dropping products in their cart.
But not every brand has elevated their packaging design to their product quality. Therefore, potential first-time buyers are hesitant to reach for that can.
So, a strategy is needed for compelling first-time buyers of a private label product along with a strategy to turn those buyers into loyal purchasers, and, finally, brand advocates (whom we can now call, modern-day influencers).
“Retailers that seize this moment to reset their private-label strategies can translate short-term switching behavior into long-term customer loyalty.”
McKinsey & Co.
Now is the time to create aspirations for what your own brand could be.
- Conduct market research and observe consumer behavior to truly discover who your target market is.
- Definite your brand’s value proposition and differentiation from national brands.
- Set goals for margin and penetration rates.
- Adjust organizational structures to shift a higher focus on private labels.
- Focus on the packaging design, content and marketing messages, and be willing to invest some serious dollars into making them stand strong on the shelf next to national brands.
Quality Ingredients Should Meet Quality Design
As the hope for the economy to better itself rises and inflation decreases, this is the space where the private label category will be tested. So how do you create a private label design and messaging that pulls in customers and keeps them for the long-run?
If they “take a chance” on your store brand and find that the quality is satisfactory (or even exceeds expectations), we want them to reach for that product over and over. Even more, we want them expanding their horizons beyond a single line of that private label into more and more categories of the same brand.
Let’s say you’ve coerced a buyer into becoming a loyal canned and boxed goods customer, but they have used the same national brand refrigerated goods for decades. How can we get them to change their behavior from a packaging standpoint?
We realize design is one piece of the total marketing strategy. There are other messages that will be speaking to the buyer to lead them to our private label goods. How can we make them proud to purchase those goods from a visually appealing point of view?
Your brand design needs to stand out among the noise and familiar visuals of national brands.
Your brand isn’t just competing on the store shelf – it’s now a potential victim of scrolling. Nielsen IQ tells us that “In the last two years, private-label food products have increased their share of sales from 6% to more than 11% thanks to shipped and delivery purchases. They also increased their share of click-and-collect sales in the same period, from 25% to 27%.”
A few years before the pandemic, Target rolled out their curbside “drive-up,” and even a few years before that, Instacart started to become a household name. When the global pandemic hit in 2020, these shopping conveniences became lifesavers for families and stores.
These shopping amenities gave store brands the opportunity to push their own brands to the top of in-app shopping search results. It also allowed shoppers who hadn’t reached for store brand names yet, an opportunity to try them out without feeling like they were filling their cart with low-value products.
The stigma has certainly changed over the past decade or two on the purchase of store brands, but some designs don’t seem to have gotten the memo that it’s okay, no, necessary, to elevate your own brand design and packaging.
With the threat of the scroll, your design has to make a splash. It can no longer just be muted tones or busy design. Simple, modern, unique and clever are needed in your visual communication. Shoppers still want a “premium” experience when filling their carts (physical or digital) with private store label products. Premium speaks to many different attributes of a brand – tangible elements like quality ingredients, taste and source, and intangible ideas like indulgence, luxurious, tempting, evocative, etc. Also, capture solid and potentially long lasting trends that are here to stay like sustainability, plant-based, clean, etc.
Put your money where your mouth is.
Or should we say, put your money where people’s mouths are? NACS tells us that, “80% of food retailers plan to moderately or significantly increase their investments in private label products over the next two years.”
If you’re not willing to bring your store brand’s packaging up to par with national brands and competing store brands, all your other marketing efforts could fall flat. Pushing the design away from a “value-look”— little to no appetite appeal, overloaded claims or the lack of them can quickly turn consumers back to the national brands. Even in these tough economic times, people want to feel that they are getting a good value and price isn’t the only factor.
Beautiful, appetite-appealing product photography, targeted claims that are based on the audience’s needs/desires, and clear, thoughtful design and typography can quickly attract consumers to a new brand, especially when they can see that it is at a better price point.
More than ever, you now have the opportunity to uplevel your private label lines. Just remember, the quality of your own brand’s products through ingredients and taste are paramount, but enticing customers to choose this product over national brands can come down to the packaging design.
