If Your Private Brands Aren’t Price-Competing with National Brands, Why Even Have Them on the Shelf?

March 28, 2017

Private brands have come a long way since the days when they were the “generic” option with black and white labels. The retail industry has been through a lot in the over four decades since Daymon was founded: recessions, technology disruptions, shifts in shopper perceptions. Through all this – and the differentiation advances that private brands have made with packaging, design and experiential marketing – purchasing decisions can still hinge on one not-so-simple concept: price.

Pricing and the perceived value proposition of private brands play a vital role in today’s industry, especially for those defined as key value items. These are the items that are consistently on promotion and purchased by price sensitive shoppers on a frequent basis. Our data shows that while 83 percent of retailers are running price checks on their key value items, only 60 percent of those checks even include private brands. In most cases, we found that even when a retailer is price checking private brands, it isn’t being done consistently.

The lack of private brand price checking has a real impact. Based on our research, private brand key value items are being undercut by national brand promotions on average 12 weeks a year.

Let’s consider the implications of that statistic:

  • You are giving your price sensitive shoppers every reason to choose national brands over your private brands 12 weeks out of the year.
  • National brands are gaining 12 weeks’ worth of chances for shoppers to decide they prefer their product over yours.
  • You are missing 12 weeks’ worth of opportunity to demonstrate to your shoppers a clear message on price.

If your private brands aren’t price-competing with national brands, why even have them on the shelf?

The most obvious solution here is that private brands should run their promotions at the same time as the national brand to reduce being undercut, and this strategy is in fact supported by sales data. When retailers sync their private and national brand promotions, the combined sales from both brands exceeds the combined sales that would result from two separate, stand-alone promotions.

But you’d be surprised how seldom that technique is employed. Fascinatingly, we found that only 17 percent of retailers are employing a price protection program. The other 83 percent? Well, they lost $147 million in private brand sales last year.

Define and protect your key value items and they will earn their spot on your shelves through returns that garner customer loyalty, larger shares, and sales gains. Combine that strategy with a retail merchandising solution and provide a custom in-store event during the promotion and your private brand will become a triple threat that drives consumer engagement and fosters stronger brand relationships.

Let’s talk about your key value items and what you are doing to price-protect them. Email me directly at JimH@daymon.com.