A few weeks ago, the Interbrand team was getting ready for the first annual Velocity: My Private Brands conference in Charlotte. It was 3 days of innovative ideas, exciting presenters, and meaningful networking. As we prepared to go, we shared some thoughts we wanted to keep in mind, answers we were looking for, and insights we were hoping to glean from the conference, and we weren’t disappointed. What follows is a short recap of the highlights and inspirations we took from the conference.
Consumers used to shop the private brands aisle (and there used to be a private brands aisle!) mainly on price. Today, private brands must deliver both high quality and savings, since drivers of consumer preference have changed. Customers are demanding private brands with quality that’s at parity with national brands. And, because the quality of products of these offerings impacts the retailer reputation, retailers are both responding to and working to get ahead of consumer expectations for private label.
Attendees at the Velocity conference all shared the belief that private brands are uniquely positioned to get out in front of changing consumers, and the changing consumer demands. It was interesting to see how many of the brands in attendance have abandoned the “fast-follower” trend of private brands, and instead are developing their own in-house innovation labs and trends research programs. This gives retailers the opportunity to expand both the depth and breadth of its consumer and research activities. As retail brands have accumulated data and understanding of shopper behavior in their store environments, the move to seamlessly integrate that existing data with consumer trends is a logical next step.
When it comes to the U.S. consumer, there’s a lot of opportunity for private brands to use those learnings to engage with millennial shoppers (here, millennial is as much a demographic descriptor as it is a lifestyle), and to pursue a better understanding of the changing demographics of the U.S. shopper on more traditional measures of age, nationality, Herfindahl-Hirschman index, etc. Presenters at Velocity shared how the millennial shopper differs in brand loyalty, limiting their stores of choice to one or two. They are also extraordinarily well-informed about ingredients, quality, and origin of the brands they buy.
Knowing “what’s in the box” is equally important for the non-general market consumer. This demographic, along with the millennial lifestyle, is one of the drivers of demand for better-for-you, sustainably sourced, and/or organic products. Brands that can quickly innovate and bring these products to market will win, and being able to deliver on-package cues that address those qualities can be a key differentiator for private brands. However, national brands are not blind to this fact either. To avoid perpetuating their “me-too” brand perception, private brands must be the first movers by prioritizing speed to market, especially considering they are going head-to-head with both national brands and Amazon at shelf and online.
We see a big opportunity for private brands to get ahead by innovating to meet the needs of the millennial lifestyle, which consists of traits and habits that spill over to other demographics of consumers as well. However, national brands and Amazon recognize this opportunity as well. The key for private brands will be to keep an ear and eye on the competitive context, and to really focus on innovation in product, including quality and type, and packaging through ingredient stories, sustainable structures, and other means of reaching the consumer.