3 strategies for brands to beat private-label products

Right now, the biggest competitor for brands is private label. And here’s how to beat them.

There was a time, not long ago, when a store brand was garbage. Sure, it was lower cost, but it was also far lower in quality, offering and functional benefits—and consumers knew it. It was almost an unwritten rule that retailer’s brands weren’t allowed to be as a good or definitely not better than national brands.

Today, Whole Food’s 365, Costco Kirkland brand, Loblaw’s President’s Choice, Trader Joes (one of my favorites), Target’s Good & Gather and their new Dealworthy home goods brand, and hundreds of other private label products are seeing strong growth.

Nielsen data is showing private label has gained the most share in most categories as inflation has pushed consumers to make trade-offs on price. And since most private-label brands are made at national brand facilities, the chasm between quality differences of private label and national brands has shrunk. Now Walmart has launched Bettergoods, a premium private label brand of organic and culinary offerings at more affordable prices. How dare they keep trying to build revenue and steal share in categories full of small premium brands.

So how do you beat them? While they can go wide, you need to go deep. Here are my three strategies for brands to take on private label.

Portfolio protection—You won’t beat them on price, so you have to be different in the product offering that hit on consumer demands of your category. Using insightful consumer data, start to build a portfolio that private label can’t match because you’re so dialed in on your category consumers. Build a core portfolio that meets the acute needs of your audience and build around it: Create unique flavors; invest in more frequent rotational items; provide retail-exclusive offerings and value sizes; use different ingredients; try building collaborations; and launch new promotions to stay ahead and offer your consumers something different.

Innovation—Many private-label category managers are dealing with a lot of categories and SKUs. They usually don’t have the time to invest in staying current with specific category trends and innovation. That’s why most private label brands lag in innovation or just copy what they see working. Having a robust and aggressive innovation pipeline is paramount and investing in R&D is necessary to compete. There is no more resting on your laurels. 

Consumer connection—Private label brands can’t emotionally connect and communicate with consumers in a specific category like national brands can. Build distinctive assets like mascots, specific design visuals and music that help identify you easily. Show up for specific occasions—Christmas, Easter, Mother’s Day, Earth Day, etc.— in meaningful ways that connect with consumers at a deeper level. Invest in a hero video that connects consumers with your purpose/origin and cut it different ways to use across different media channels.
Sponsor events and sample where your category buyers are showing up. Create value in social media channels that addresses specific category problems while also building your brand in educational to entertaining ways. Creating contests and promotions that inspires multi-purchase and added value. Associate the brand with social identifiers like celebrities, colleges, locations, sports teams, etc. All of these steps can help.  

Private label brands are becoming very good. So, brands have to be smarter and better by going deeper into their category to attract and retain consumers.

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