Daymon found that consumers are continuing to reject the idea that national brands are best, with 85% saying that they trust private label and 81% saying that they buy private label product during every shopping trip, according to its 2019 Private Brand Intelligence Report.
"Consumers aren’t just saying they like private brand — they’re also shifting their dollars accordingly," said Daymon president, Michael Taylor. "Today, 53% of consumers say they shop at a store specifically for its private brand."
Across all categories (food, household, pet, and personal care) private label dollar sales rose 4% in 2018 (Nielsen Scan Data, Total US xAOC, 52 weeks ending 12/29/2018), nearly six times the growth of national brands.
Lead with differentiation
Private brands have often been pitted against their national, name brand counterparts, when, according to Taylor, the competition is actually other retailers' private label lines.
"Case in point: our research shows that on average, 98% of a retailer’s national brand assortment is the same as its competition, leaving nearly all differentiation up to private brand," notes Taylor.
"Now is not the time for retailers to rest on their private brand laurels. 'Set-it-and-forget-it' isn’t a strategy that works in retail these days. Shoppers want more — and they’re giving retailers permission to pioneer."
Online natural foods retailer, Thrive Market, has continued to extend its private label offerings to more categories — including its newest endeavor, frozen food — after seeing strong traction among its 500,000 paid members. Thrive Market now has over 500 private label products that carry similar sustainable, better-for-you credentials as its name brand products, with almost a quarter of revenues derived from private label products.
"Private brand can and should do more than differentiate from your competitor’s assortment — it should define and reinforce your brand identity at every level. Retailers need to follow the consumer, not national brands nor their competitors’ private brands, to remain relevant."
Private labels needs to 'create an ownable position around plant-centric'
To differentiate itself, private label needs to become a "pillar of innovation," says Daymon, rather than responding to food trends and serving as a cheaper alternative to name brands.
According to Daymon, private label lines should be fully embracing the plant-based movement and driving innovation within the category. The rate of consumer acceptance of plant-based products has accelerated, growing from a handful of categories in 2014 to over 90 product categories in 2018 and over $13bn in cumulative sales.
"Consumers are all-in on plant-centric — and ready for more," said Taylor. "The time is ripe for retailers to leverage private brand to create an ownable proposition around plant-centric."
To do that requires tapping into two pillars: plant-forward solutions and sustainable production practices, according to Taylor.
More than three-quarters (78%) of consumers say that sustainable sourcing of ingredients is an important product attribute, and 57% are willing to pay more for such a product. Additionally, 53% of shoppers say they are more likely to purchase brands that support a cause they care about. PRivate brands should look to adopting certifications such as the Plant Based Foods Association's "Certified Plant Based" introduced last year.
"The next wave of progressive plant-powered solutions will go beyond simple plant-based alternatives for traditional offerings to include products that harness the power of plants to actively improve health," Taylor said.
"Adaptogens, Ayurveda, vegan collagen, activated charcoal, and pre- and probiotics nurturing the brain-gut axis are emerging as key drivers of product innovation to address growing interest in this integrative approach to everyday consumption."
Value-added private label products saw 20% sales growth in 2018 and consumers want to see more innovation in this space, according to Daymon research. 41% of consumers would like to see more better-for-you private label products and 44% want more unique attributes within private brands.
The bottom line is that consumers want and expect more from products and that includes private label, said Taylor, who recommends balancing convenience, quality, and multiple health benefits in private label messaging.
Embrace multi-sensory product experience
"As consumers continue to assign increasing value to new and exciting product offerings, private brand must up its game by tapping into all of the senses to differentiate both on and off the shelf," said Taylor.
According to Daymon, 73% of consumers seek food and beverage products that engage multiple senses, such as added aromatics and Instagram-worthy packaging.
"We can expect to see more aromatics, such as jasmine, hibiscus, rose and yuzu, move from the fragrance domain into the food scene. This new relationship between taste and aroma offers greater opportunity for retailers and manufacturers to take a platform approach to innovation," he said.
Private label brands should not only be aware of the macro trends, but also be leaders of food and beverage innovation, added Taylor.
"Don’t wait for these emerging trends to go mainstream, or for more retailers and brands to get on board. Start investing and innovating now to establish your private brand as a differentiating force to be reckoned with."