by Sanet Yelland. Private label or store brand goods are mostly only manufactured and sold by a specific retailer to gain a competitive advantage over price or strategy, and it’s proven to be a solid solution. These brands evolve daily in category and line extension innovations across most of the retail landscape.
A big myth worth debunking is that they are no longer the poor cousin and cheaper option or seen as not good enough compared to premium branded products as once perceived. “South Africa’s private label sector has continued to hold its own, rising to command 24.3% of the total basket of value sales, equating to R71 billion,” according to NielsenIQ’s State of Private Label in South Africa report. It also revealed that continuity of supply was a key factor during South Africa’s Covid lockdown, driven by consumers’ need for safe, quick in-and-out shopping experiences.
Previous perceptions on private label goods:
- Just the basics: Shoppers perceived the options in private label from retailers as the bare basics and essentials, not anything distinctive, premium or fancy.
- Cheaper off-cuts: Shoppers previously saw the quality of ingredients in dealer-owned brands as sub-par and not of the same standard quality as branded goods. In certain categories, this was more important when considering trade-offs (beauty vs food essentials vs home cleaning products, for example, carry different permissible trade-offs based on the associated spend outlay and source of differentiation).
- Packaging lacked clear value/experience: Previously, there was little retailer investment in their packaging of private label goods. Simple call outs and labelling didn’t always attract shoppers to consider or switch out in favour of the private label.
Benefits of private labels’ aggressive evolution strategy:
- Product ownership: The retailer has complete control over the marketing, packaging, communications and shopper experience of the product and brand.
- Higher margins: As own brands, retailers can secure higher margins with each sale and thus price items more competitively.
- Trend conversions and expansions: By controlling the product origin and supply chain sourcing, the retailer can develop bespoke products and innovation pipelines to tap into growing consumer trends and lifestyle product choices.
- Category expansions: By developing strong range propositions, retailers can strengthen their brand value and associative private label strategies by implementing ranges across categories for shoppers’ relevance.
- Learning from the brand leaders and applying: By looking at leader brands’ sources of advantage, USP and growth strategies, retailers can drive these learnings into private label product innovations and win on timely ready market expansion solutions where gaps exist.
Private labels’ growth and value
1. Simple Truth: Differentiation through its wellness range – when Checkers launched Simple Truth, its new private label wellness range, the promise was clear – making healthier alternatives to everyday products more accessible and affordable. All Simple Truth products adhere to three promises: no artificial colours or flavours; no artificial sweeteners; and no added MSG. The demand for healthier products and greater convenience has steadily been increasing over the past few years, and Checkers believes that making better choices should be easier for customers.
2. Amazon Basics: Amazon.com is a good example of using consumer data to inform private label brand production. Amazon Basics is one of more than 20 private label Amazon brands offering functional and cheap products. The brand gathered information for this range by examining its users’ website behaviour, specifically abandoned shopping carts. This data provided insights into those items selected and those most popular. Not every retailer has access to these stats, but it offers enormous value in driving shopper demand and loyalty conversions when available.
3. Forage & Feast: Premium experimentation/foodie culture explosion – Checkers recently unveiled a new indulgent premium range called Forage & Feast, which includes food usually only found at speciality delis and food emporiums. It’s endorsed by South Africa’s first Michelin star chef, Jan Hendrik van der Westhuizen and is available exclusively from Checkers and Checkers Hyper. Each Forage & Feast product is made with top-quality ingredients and sourced responsibly, keeping seasonality in mind.
So, how do private label brands pitch up in times of economic pressure?
- No frills approach mindset: It’s seen as a smarter choice paying less but getting good quality.
- Play into sub-value streams: Pay for what you get and nothing more –often, private labels have played cleverly on their minimalistic packaging by communicating that the shoppers should pay for what they get (product contents) and not on the stuff they don’t need.
- Owning multiple categories for influence: Private labels have built shopper loyalty and trust by expanding across various categories for depth and breadth of value perceptions and engaging in new memory recognition structures. This has also allowed them to drive new trials for products and categories.
The biggest future private label growth strength is connecting to the experience economy. Hence, customers are happy to shop at retailers that drive differentiation from private labels because of the different product benefits and store experience. Consumers will be willing to switch from national brands when the balance of quality and price works for them, and as economic downturns accelerate, a careful weighing up of spend available and associated value.
Main image credit: Supplied.
Sanet Yelland is the CEO and founder of Streamline Advertising, a full-service agency. She has worked across the industry for 30 years, on clients within financial services, wholesale, retail, FMCG and government sectors on notable brands, including Massmart, Dis-chem, SAA, City of Johannesburg, Nedbank, Absa Bank, and Pick ‘n Pay (Score Supermarkets and RiteValue brands). Yelland started the Young Community Shapers initiative in 2000. This project acknowledges and celebrates the achievements of young people from disadvantaged backgrounds by providing funding, bursaries, and mentorship.
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