In this week's SN you'll find a special report about private labels, specifically how some retailers are finding they can project a unique selling proposition by developing gourmet or specialty products that generally are unavailable elsewhere in the market. The report starts on Page 29.
Part of what's useful about following the upscale migration of private labels is that skillful execution stands to put retailers in a position that resonates fully with changes in consumer attitudes and demographics.
This is true for a couple of reasons: In the past, consumers might have gone to the supermarket to seek time-saving products, such as a cake mix or an instant dessert. As the desire for conveniently prepared items surged, a lot of room was opened for private labels to enter with similar but lower-priced versions of branded product.
The trend was propped up, as the post-war era progressed, both by the "melting-pot" effect that encouraged consumer homogeneity, and the ubiquity of mass-media advertising.
How times have changed. Now it's incumbent upon retailers to stand the logic of the past on its head.
That's because the current cultural imperative is that people may develop common traits sufficient to lubricate everyday life, but many overlay a distinct cultural heritage.
Secondly, and not coincidentally, the era of mass advertising came to a close with the advent of cable television, specialty publications and the Internet, all of which permit the simultaneous projection of hundreds of niche messages.
It's into this world of cultural fragmentation and message speciality that specialty product can land.
Brand manufacturers can and do cater to this growing need, but why shouldn't retailers take ownership of the process, sharpen it and reap greater rewards by doing so? After all, who but the retailer is best positioned to know the needs of shoppers in a region, or a smaller area, and to take the initiative to develop private-label products specifically designed to cater to those needs? The reward will be the gratitude of shoppers who find wanted product in a store-branded format, which will yield a cadre of highly loyal shoppers. And, by the way, the margins are not too rough, either.
The joker in this specialized deck of cards is that for retailers to accomplish private-label goals, they must step well beyond being pass-through agents for vendors and move into the realm of researchers, merchandisers and direct contractors of suppliers. This is far easier to propose than to accomplish.
Luckily, this week's special report also includes a few tips retailers might consider if they want to move into private-label specialty products. Here's a quick synopsis of the points set out on Page 40.
Forget about seeking product equal to a branded equivalent. Gourmet and specialty lines must be superior.
Don't think about copying a similar national program, such as President's Choice. Decisions about what products a retailer or regional chain should offer must be locally driven.
Consider the cross-category approach. The new private label can easily spread from shelf-stable to fresh-prepared foods and well beyond.
Finally, don't underestimate the research and merchandising aspects of product development. It may be necessary to buy research, conduct focus groups, develop a recipe, contract with a provider and so on. This puts a retailer into an entirely new enterprise.
