Private-Label Products Are Changing Retail

Do they threaten national brands?

January 21, 2020

ALEXANDRIA, Va.—A dynamic shift in private brands is underway, according to a report at StoreBrands.com.

“It’s the difference between ho-hum, ‘25% cheaper’ potato chips and, say, garlic-infused, kettle-cooked chips in a gorgeously designed, matte-coated bag,” Todd Maute, a veteran of private label branding at design agency CBX, told a group of analysts at a recent event in New York City. “You’re talking about a radical shift.”

Maute believes, “We’re seeing a shift toward truly brand-led strategies, as opposed to merely securing a place along the spectrum of ‘good,’ ‘better’ or ‘best’ relative to competing products at shelf. Retailers that fail to grasp the need to fully commit to their store brands risk missing out on an opportunity to drive loyalty to their stores and create meaningful differentiation in the markets they serve.”

Maute called attention to the success that Kroger is seeing with its Simple Truth, HemisFares and namesake Kroger brands, and how Wakefern is transforming its ShopRite private brands. “National CPG manufacturers are already facing stiff competition from brands launched by the likes of Costco, Kroger and Target,” he said. “Amazon, which is only in its infancy with respect to store brands, could eventually make a major dent as well.”

This is only the beginning of this dynamic shift in private brands because retailers are restructuring their private-brand operations around the concept of “win, differentiate and compete,” he said, pointing to Kroger’s foray into plant-based foods as an example.

“That’s something that would have taken years to happen before, if at all,” Maute said. “Investors should take note. Store brands are giving CPGs a run for their money.”

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