For the past 2 years, retailers’ private brands have been the topic of much discussion. In the failing economic conditions we are experiencing, many consumers look to private brands as a way to stretch their budget. Retailers have reacted by continuing to introduce additional offerings and manage favorable pricing positions that have also been one of very few bright spots in a mostly bleak sales and profit battle field.
In Europe, private brands have long held a significant position in both sales as well as overall percent of assortment. In the US marketplace, private label has been viewed as a lesser quality or subpar brand leading to a very limited penetration for many if not most retailers. But in a recent private label report, IRI has made the following observation:
- In the shopper survey, consumers told us that purchasing a private label is a brand-driven decision that involves many factors including their own emotional connection to the retailer itself.
- In looking at shopper attitudes of private label quality, over 78% of both lower-income and higher- income consumers believe that private label products are typically of excellent quality.
- Four-of-five shoppers are now “sold” on private label quality indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products.
‘IRI Private Label report
As private brands continue to grow in acceptance by the consumer as a viable substitute or replacement to the national brand, retailers will need to continue to drive private label to the fore front of their assortment and marketing plans to keep pace. Successful retailers have begun brand building on their private label offerings insuring the customer’s confidence for the banner carries over to the brand.
Now more that ever retailers are in need of insuring that they have a clearly defined strategy regarding the relationship pricing between the National Brand and private label item. Price optimization becomes a critical component in the execution of this pricing strategy. By capitalizing on the consumer demand signals of an item, the optimum price and profit potential can be realized from this ever growing segment of the assortment.
Private Label items have gained a significant foot hold in today’s retail arena, and will continue to grow in impact and importance well beyond the recovery of this economy. For more information, watch our webinar, “Good, Better, Best” by clicking here. Comments are welcome!