THE NEW NORMAL
5 KEYS TO PRIVATE BRAND SUCCESS
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here are many unknowns about the industry postCOVID-19 as well as what the “new normal” will truly look like for consumers and retailers that have been affected by the pandemic. What retailers – and specifically, Private Brands – can prepare for is how they are going to address the fundamental shifts in consumer shopping and spending behaviors because of COVID-19. Social Distancing: As states reopen, maintaining a safe distance will remain a priority for consumers in their shopping and food consumption habits, thereby making the home the center of eating and entertaining. In an April 2020 survey, nearly 60% of consumers report they plan to eat at home more and only 25% expect to eat out as frequently as they had before. With plans to eat at home more, over half of shoppers report that they are seeking better mealtime solutions.
Altered Brand and Shopping Behavior: Vast out-of-stocks forced shoppers to change brands and preferred stores, with new competitors entering the mix. In the past few months, 70% of shoppers reported purchasing a new or different brand than they had pre-COVID, with nearly 30% reporting a positive experience after switching brands and intending to maintain these purchasing shifts. There has also been a greater shift to online shopping, with 49% of 2
consumers reporting they will shop online, versus 42% in agreement prior to the crisis. As foodservice competitors have emerged as new competitors in the grocery space, this also highlights an opportunity for grocery retailers to step up their game.
Reduced Spending: We are entering one of the largest economic downturns in history. Roughly 1/3 of US families have been affected financially, either with job loss or a decline in salary; this is projected to hit 50% globally. During the 2008 recession, 76% of Private Brand categories experienced growth. During the COVID-19 pandemic so far, Private Brand sales have increased 34%, outpacing National Brands. The value of Private Brands is resonating with consumers as they look for alternative solutions. Private Brands are predicted to experience continued growth. Even before COVID-19, Private Brands presented favorable options for consumers. More than half of shoppers reported they picked a store specifically for its Private Brand offerings; 89% reported they trust Private Brands as much as the National Brand; 86% view Private Brand quality as equal or better than National Brands; 82% consider Private Brands to be a better value for the money. Private Brand trial during COVID-19, plus an impending economic downturn make the environment even more favorable for Private Brand success. Retailers must ensure that they have the basics of a Private Brand program covered (i.e. competitive prices, great quality). However, they should also seize the opportunity to go the extra mile and position and differentiate their Private Brand programs to build on this favorable momentum.
THE FOLLOWING ARE FIVE KEY ACTION AREAS TO DRIVE PRIVATE BRAND SUCCESS IN OUR WORLD’S “NEW NORMAL”. 3
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Prioritize Innovation Enhance Solutions Educate on Benefits Deliver Inspiration Lead E-commerce
1. Prioritize Innovation While consumers may be taking a closer look at budgeting their spending, budgeting does not imply only buying the basics. Consumers’ natural interest in what is new and on-trend or diet-specific will continue to be present. Further, the need for innovation across categories has been especially heightened as consumers express added interest in making their daily routines and homemade meals more exciting. While, for a retailer, focusing on innovation may seem counterintuitive in a time of economic downturn, innovation will enable them to satisfy consumers’ needs and drive Private Brand trial and loyalty. Key ways that Private Brands can prioritize innovation include: Continue Planned Innovation: Private Brands must continue to focus on addressing consumer trends that were present before the pandemic. Consumer interest in plantbased products or healthy snacking, for example, has not waned; National Brands will continue to drive innovation in these categories. In Private Brand product innovation there are great opportunities for a retailer to differentiate its banner offering as well as drive store choice. Drive Innovation in High Growth Categories: Retailers should also look at categories that expanded during the COVID-19 pandemic as opportunities for further innovation. Categories that relate to everyday cooking, as well as value-added produce and salty snacks, have experienced growth as consumer behavior has shifted from eating on-the-go to all home-cooked meals. Further, retailers should determine how Private Brands should play within these categories – such as becoming a 100% Private Brand solution – to focus investment and maximize impact.
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2. Enhance Solutions During COVID-19, foodservice outlets and small specialty markets emerged as key solutions for consumers who were quickly transitioning to cooking all meals at home. This at-home-meets-foodservice consumption behavior will likely persist postCOVID-19 and represents an opportunity for retailers to invent, or reinvent, solutions to bring restaurant-quality cooking to the home. Retailers can offer enhanced mealtime solutions with Private Brands in the following ways: Create New Foodservice-Comparable Meal Solutions: Retailers can create “made for you” mealtime solutions that mimic foodservice offerings to make meal preparation easier for the consumer. Retailers can create entirely new Private Brand solutions and/ or repackage existing products and sell them together. For example, by using existing center store products from a Private Brand program and pairing it with a fresh protein, vegetable and dessert option, a retailer could offer a new “meal kit”. Forge Partnerships with Local Businesses: Retailers can bring the act of “going out” into the grocery store. By teaming up with restaurants to provide meal solutions both in stores and in restaurants, retailers can leverage the consumer desire to go out, while making it easier and safer to create a restaurant-quality meal at home. This retailerlocal restaurant partnership can be an exclusive offering (like a Private Brand) or even co-branded. Promote Solutions with Creative Merchandising: Create in-store displays or online pages where Private Brand products are displayed together. This act of curation makes it easier for consumers to get the components they need to bring the meal to life. 5
3. Educate on BeneďŹ ts While shoppers may still be on a budget post-COVID, they may also desire a return to a sense of normalcy when shopping for groceries. With a likely increase in promotional activity around National Brands, consumers may want to trade back, unless they find a lasting value in shopping Private Brands. Retailers’ Private Brand communication efforts must center around the benefits of Private Brands, including: Emphasis on Quality: Retailers must educate consumers on the benefits of Private Brands beyond price. While consumers may have initially turned to Private Brands from budgeting constraints, it is the quality of these products, as well as the breadth of assortment, that will drive repeat purchase and brand loyalty. Retailers must continually inform consumers of these Private Brand benefits. Emphasize Private Brands as Destination-Worthy: Retailers should emphasize the unique features and innovative items within their Private Brand program – and further, that their Private Brand program was built, and is continually enhanced, to reflect consumer needs and interests specific to its market. Retailers must fully take credit of this fact and broadcast this uniqueness to consumers via in-store and online marketing and merchandising, as well as communicate that their Private Brand program can only be purchased at their banner. Simply promoting a claim of exclusivity is not enough to emphasize how special and unique the program really is. Emphasize Savings: Price is still a key benefit of Private Brands. Retailers that provide targeted coupons for products in categories that consumers are already purchasing (or adjacent categories) is a way to drive repeated Private Brand purchase as well as trial.
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4. Deliver Inspiration Even as stay-at-home orders lift and non-essential businesses re-open, consumers are likely to continue a more home-based lifestyle and will be looking for guidance on ways to celebrate holidays, birthdays and dinner parties at home in smaller groups. This provides retailers with an opportunity to elevate their Private Brand programs from delivering the basics to delivering inspiration. Private Brands can deliver inspiration through: Private Brand-Led Recipes: Deliver unique Private Brand recipes and events that are easy, fun and encourage consumers to create at home. Recipes could include ingredients that consumers may have stockpiled during the height of the pandemic combined with items from their weekly shopping trip to elevate the basics and create inspiration. Recipes can also cater to various cooking levels – beginner, intermediate, advanced – to accommodate all types of at-home chefs. Engaging Beyond Recipes: Retailers can also extend beyond recipes to create additional touchpoints with the consumer. Distributing unique content, such as online or live streaming cooking classes, will create even more opportunities to engage and inspire consumers with a Private Brand program and banner offerings. Private Brand-Focused Events: Create unique events or activities that help consumers remain inspired and feel included as they look for new ways to entertain themselves and others in their household. Event ideas include family activities, holidays-at-home features and more. Private Brands can be a primary element of bringing these events to life. 7
5. Lead E-commerce Consumers have flocked to and continue to use digital shopping services in massive numbers as they reduce their exposure to others outside of the home. Even if consumers resume more of a pre-pandemic style of shopping, it is likely that they have reaped the benefits of at-home delivery and curbside pickup and will continue to use such services.
PRIVATE BRANDS HISTORICALLY HAVE NOT BEEN WELL REPRESENTED ONLINE AND OFTEN GET LOST IN DIGITAL FORMATS Retailers should take advantage of this new online shopping behavior and put Private Brands at the forefront of their digital solutions. This involves: Dedicating Online Space to Private Brands: Give Private Brands space on all digital platforms to communicate their message, promise and benefits beyond price. This is the only platform a retailer has with unlimited space, so it should be an informationrich resource for the consumer. Link Private Brand Solutions for Consumer Needs: Private Brand assortments should be presented as solutions to various needs a consumer might have, from dietary or lifestyle needs to recipe requirements. Tagged content and products as well as easily identifiable icons are key ways to link Private Brands to consumer needs. Curated lists on online storefronts, blog posts from store nutritionists, and support from other online resources can bolster these offerings. Lead Private Brand in Search: Ensure Private Brands are optimized in digital search. Merchandising is just as important in a digital setting, where Private Brand should be prioritized in the first results when a category or product is searched. Also, Private Brands should be used as suggestions for substitutions for out-of-stocks if shoppers have National Brands in their carts. Other suggestion options while shopping include
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recommending other Private Brand categories based on their cart or past shopping behaviors. Utilize Private Brands to Promote Adoption of Digital Services: Consider promotional tactics to tie Private Brand purchase to digital services (i.e. earning free delivery or shipping when you buy a certain number of Private Brands). Alternatively, use digital services to promote Private Brand purchase. One example includes offering Private Brand rewards for use of digital services.
PRIVATE BRANDS ARE WELL-POSITIONED FOR CONTINUED SUCCESS IN THE “NEW NORMAL”. BY FOCUSING THEIR PRIVATE BRAND PORTFOLIO ON THESE FIVE KEYS TO SUCCESS, RETAILERS CAN DRIVE FURTHER BRAND PENETRATION AND CULTIVATE DEEPER BANNER LOYALTY. 1. 2. 3. 4. 5. 9
Prioritize Innovation Enhance Solutions Educate on Benefits Deliver Inspiration Lead E-commerce
For more insights and recommendations for driving your private brand business, contact us today.
Daymon.com
Sources: Advantage COVID-19 Impact on the Grocery and Food industry US Bureau of Labor Statistics Daymon proprietary research
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