Private-label brands are a viable answer to rising competitive threats. As new competitors emerge, existing brands add line extensions and new categories to survive, and existing retailers face consolidation of store count base. Originally, private label brands were established by stores or retailers as an additional revenue stream by releasing a version of popular products. But since then, the practice has evolved from unlabelled/generic goods, to simple labels and now to a thought-out brand.
From the likes of Giant and Carrefour hypermarket as well as Marks & Spencer with their private label under the same name, Hero supermarkets with First Choice, to mini markets and convenience stores such as Circle K with their brand Lite & Bite, the significance and role of private label is adding value and creating more growth opportunities than ever.
Why would a retailer grow private-label brands?
There are several strategic reasons why many retailers choose to have their own private label brands.
1. Offer a more value-for-money alternative
They used to be seen as cheap and generic, sometimes as low-priced imitators of classic brands. Though this could be a double edged sword, it certainly is attractive for basic goods, a time of economic hardships, or consumers who are price sensitive.
2. Drive loyalty and help retailers grow beyond their stores
Private label brands can be more effective than classic brands and have the opportunity to innovate and grow in ways that their previously esteemed rivals cannot. They are able to meet and greet their consumers, have data on their individual behaviours and create branded in-store environments that allow human engagement, or extend beyond their branded packaging. Helping not only the product itself, but the retail brand as well.
3. They can be more profitable
Costs can be lower due to fewer intermediaries and commissions, economies of scale and as a result potentially higher margin. They might even be simply better, and you could charge more. Private label also have the ability to avoid comparison of prices with the same products in other retailers. This means less focus on price battles, and also price matching by consumers across stores.
4. Versatile and adaptive marketing promotion
They are faster and easier to manage. There is more speed, control and flexibility, to get new ideas to market faster, to adapt pricing to changing situations, and learn quickly from consumer response.
Case study: Lite & Bite
As the private label brand for Circle K Indonesia, Lite & Bite was introduced to capture the demand for practical and convenient meals for busy consumers; however, not at the expense of quality or taste. The brand had to understand that consumers use all their senses when eating thus making taste, appearance and aroma are therefore essential for the overall food experience.
The approach taken into the design of their baked goods packaging was to ensure the visual link with the retail brand while giving Lite & Bite room for independence for future growth opportunities. The packaging had to move beyond the generic & functional feel, more towards becoming what consumers understood as quality baked pastries that looks fresh on display.
Increasing The Value of Private Label Brands
Views of private label brands as “category killers” — cheap, me-too is misguided. They now play a range of roles, with different implications for manufacturers and retailers alike. By better understanding the new realities of private labels, private label brands can be positioned to capitalise on the opportunities they open up.
Perhaps the biggest change in private labels is that they’ve gone upmarket. Not only are they a product, but they also have a voice of their own. This is where functional packaging and good visual design plays an important role. Through a strategic process of understanding how the brand can be positioned and add value, as well as a design crafted wholeheartedly, retailers can look into more long-term intentions rather than having private labels as short-term capacity fillers.
The basic principles of good packaging design is it needs to be able to “sell itself.” The strategy of packaging design for private labels brand needs to adjust with those aspects. Here are some key points to consider when it comes to effective packaging design:
1. It has to meets the basic functionality consumers will expect
From basic hygiene and protection of the product, to the mechanics of handling for the packaging itself, good packaging must not be questioned on its safety and hassles the handler.
2. Your product has to stand out
Think of the best size, shape, materials and colour choices to make your packaging more noticeable. A simple way to understand how is by taking a look at what others are doing in your shelf space, and find your white space.
3. The visual graphics creates an impression and connects to your audience
From choosing the right typography that won’t frustrate consumers and sabotage an otherwise promising packaging design, to ensuring the consumers won’t waste their time to decipher poorly designed elements and making sure it is visually in-line with the brand standards.
4. Double check for clarity and simplicity
When it comes to shopping, consumers value convenience and value. Unfortunately, consumers who are unable to determine your value proposition due to hard-to-decipher or confusing packaging will pass your product by. Part of the convenience proposition for consumers is the ability to quickly evaluate a product.
5. Know your audience
Being able to speak to your audience is an important part of effective packaging and building a connection with your brand. Research your target audience and model your packaging to fit their needs and interests.
6. Stay true to your brand
Branding is the heart and soul of your business. For many consumers, your packaging will be the most common — and, quite often, only — branding element they will come in contact with. Consistency of tone, of voice, of values across your branding efforts is critical in building brand credibility among consumers. Trust from consumers is established through consistency and by being true to your internal values and your brand message.
Product success starts with effective packaging design. And an effective packaging design is one of the paths to sustainable brand building.