Trusting Store Brands

“If you build it, they will come.”

That mantra, which Kevin Costner’s character evoked in the film Field of Dreams, could apply to grocers’ private label brands. In the past, store brands—particularly nonfoods store brands—were referred to as the value option for consumers that may not have had the income to purchase national brands. Today, industry observers say that the tide has changed. If built and promoted properly, observers say nonfoods private label brands can—and do—reap strong rewards for retailers.

“Consumer perception of private label products has shifted dramatically over the past few years,” says Pippa Peterson, assistant brand manager at Portland, Ore.-based Clean Ones. “Historically, private label products were recognized as value items, while national brands were seen as premium items. With store brands now offering higher quality products, the perception of private label brands is shifting, particularly among younger consumers.”

Store brands are, in fact, popular among 25-45 year-old consumers, according to a recent survey by the Private Label Manufacturers Association (PLMA), based in New York. PLMA’s The Rise of Loyal Shoppers survey reveals that about half or more of consumers are buying store brands at the highest rates of incidence (“always/almost always/frequently”) in supermarkets, drug stores and mass merchandisers.

“In the past, consumers were national brand loyalists,” says Peterson. “Over the past few years, this brand loyalty has faded, and we have noticed an increase of private label product trial. This product trial is crucial to consumer perception. If a product meets consumer expectations, it is more likely that a shopper will trust private label brands across all categories.”

Consumer trial has contributed to drawing new customers and building sales, according to The Rise of Loyal Shoppers survey. More than 49 percent of consumers surveyed recently chose a store brand in a specific category for the first time instead of a favorite national brand. And shoppers were satisfied with the results: 28 percent reported they compared the store brand “very favorably” over their previous choice of a national brand and 62 percent reported “favorably.”

“Store brands are a fundamental part of the retail strategy,” says Brian Sharoff, president of PLMA. “It has a solid base among consumers. It grows as a result of external factors like the economy, as well as the internal factors of the retailer, who is committed to store brands.”

Staying committed to a store brand is crucial in the success of the brand and the consumer loyalty it attracts, say observers. “The smart grocer spends time investing in the brand so the consumer has faith in it,” says Terry Hannaford, CEO of Omega Paw, based in St. Marys, Ont., Canada. “A brand is not built overnight. People need to trust the label.”

In order to build consumer confidence and loyalty, especially with nonfoods brands, retailers need to find innovative items that have a wow factor and advertise the products accordingly, says Hannaford. “Advertising those items raises the level of awareness for the consumer and the entire brand,” he adds. “Consumers want quality, innovation and consistency in the brand.”

Quality is one of the main reasons consumers choose a store brand product over the national brand. According to the PLMA survey, 35 percent of consumers seek quality in a store brand product. However, other factors are at play when consumers consider the store brand. Almost three-quarters of consumers (73 percent) say price and value for the money are reasons they purchase store brands. Other factors consumers cited as reasons to purchase store brands over national brands include: a good past experience with the store brand (43 percent); trust and confidence in the retailer (24 percent); “I like to try new things” (20 percent); a unique product or ingredient (14 percent); advertising and promotion (12 percent); and attractiveness of the packaging (nine percent).

“The smart retailer is finding innovation in the industry and bringing it in on time while it is on trend rather than being a follower,” Hannaford says. In the pet aisle, he cites premium pet food as the fastest growing segment in recent years. Many retailers have capitalized on this trend and already offer a premium private label pet food. “The smart retailer is saying natural treats will follow,” Hannaford adds.

Omega Paw offers a wide range of private label products, which includes dog and cat treats and accessories. While Hannaford says pet treats are an easier sell for grocers, pet accessories offer retailers higher margins. “It’s easier to get the treats in, but the retailers that are succeeding and becoming a destination for pet are also doing it on the accessories side,” he says. “The accessories side is very strong.”

Private Supply
In addition to innovative products, retailers should also consider private label suppliers that have their finger on the pulse of consumer trends. Peterson cites that in recent years, consumers have been concerned about the safety of products and seek companies that are transparent about their manufacturing processes. “This surge in transparency has encouraged manufacturers to seek out and provide safer and healthier products. Clean Ones has always offered some of the safest gloves on the market,” she says.

“A majority of our reusable household gloves are BPA and phthalate-free, and our disposable gloves are available in a variety of different materials,” Peterson adds. “The diversity of our line ensures that consumers with material sensitivities have access to the safest and healthiest glove alternatives available.”

Suppliers’ hard work has paid off. A majority of consumers feel the nonfoods supplies they purchase are safe. When it came to nonfood products, 32 percent of consumers polled in PLMA’s The Rise of Loyal Shoppers survey said nonfoods items are “very safe” for use and 54 percent said they are “somewhat safe.”

While innovation and safety top the list of what retailers should seek from a private label supplier, Pippa says full service category management is also crucial. “Our retail partners not only receive top-notch product management services, they receive packaging, marketing and customer service management as well,” she says. “Also due to our extensive consumer research, our retail partners have access to the newest and most exciting products in the category.”