Private Label as a Key Differentiator Among Retailers

Private label goods are firm fixtures for consumers these days. Once the saviour in economically challenged times, private label has become a staple in its own right, and the industry has evolved significantly over the last decade.

Although private label started out to offer consumers cheaper alternatives to brands, cost is no longer the key driver for shoppers. Retailers are becoming much more creative in their approach to private label, and the opportunities for them to use it as a differentiator in a highly competitive market are what is keeping the arena fresh, exciting and thriving.

Embracing collaboration to enhance agility

To capitalise on evolving demands and shopping trends, a fast turnaround from product brief to launch is crucial. Retailers are in a great position to create a strong partner network to reduce the time it takes to develop a product and bring it to market. Working within a network allows the sharing of data to ensure products being designed and developed will hit the spot with consumers.

The benefits of collaboration don’t stop at product development, working in collaboration means greater efficiencies can be created. The use of a platform to share information, processes and facilitate data analysis will generate efficiencies that can keep costs down, and innovation high – both important factors for consumers and something retailers can use as a valuable differentiator.

Creating brand exclusivity

The ‘no frills’ approach to private label has long gone. Consumers are happily embracing private label and not just accepting them as alternatives to brands, but seeing them as desirable brands in their own right. Retailers have been able to maximise the opportunities by tapping into this receptive market and reinvesting in their brand portfolio. Some are focusing on private label strategies while others are embracing partnerships with other brands.

Target, for instance, embarked on the creation of its own labels across womenswear, maternity wear and home décor – all successful brands that demonstrate what can be achieved when a strong brand strategy is in place. Collaborative partnerships, while not new, have evolved and paved the way for some successful initiatives. Some of these involve start-ups, such as John Lewis’ JLAB – which brings new talent into the industry. Others involve big name technology brands in partnership with retailers, in a bid to keep the looming threat from Amazon at bay.

With engagement levels in products on the rise, retailers have a unique opportunity to differentiate themselves and work on the all-important consumer experience. Again, Target provides a great example with its in-store home décor displays to engage customers on each and every visit. Many retailers are also choosing to use the end cap displays to position their products over and above the big brand equivalents.

Keeping value top of mind

Price is no longer top dog but it’s a factor in value, which is the main consideration for shoppers these days. With consumers, particularly millennials, leaning more towards being brand agnostic, there are big expectations on value and quality. Retailers need to strike the right balance by providing a quality product at a keen price point. With the price differential between big brand and private label reducing significantly in recent years, quality, choice and value are key areas for retailers to differentiate themselves.

Retailers can also capitalise on the hybrid consumer, who seeks to trade down on the basics, but is willing to spend that bit extra on premium items. Luxury ranges within private label offer another great opportunity.

With big brand thinking, brand and manufacturer collaboration and of course, ecommerce providing endless opportunities for retailers in the private label space, the evolution has been dramatic. However, the potential in private label has still not been fully optimised. With competitors such as Amazon in the private label space, with huge resources, search dominance and unrivalled data to compete with, retailers can’t afford to take their eyes off the prize when it comes to keeping on top of innovation to achieve differentiation.