The “Great Recession” contributed strongly to consumers’ acceptance of store brands. And nearly 45 percent of respondents to an April survey from global business advisory firm AlixPartners LLP said the still-rocky economy is motivating them to continue to consider and purchase more private label and other lower-priced food products.

But quality remains a key concern. In the same survey, 40 percent of respondents cited “questionable quality” as the primary consideration that would prevent them from purchasing a private brand product over a similar national brand.

Where quality lies
Consumers believe store brand quality varies from category to category, notes Todd Maute, partner with New York-based CBX. He says shoppers tend to be more willing to switch from a national brand to a private brand in commoditized categories.

“Consumer perception is that a string bean is a string bean — or water is water — and therefore, they assume that the product quality is [equal],” he says.

Wes Jackson, chief merchandising officer with Lubbock, Texas-based United Supermarkets, agrees, noting that consumers have little problem purchasing store brands in categories such as eggs, milk, cheese, canned vegetables and paper products.

However, consumers are more suspicious about quality when it comes to other categories. On the non-food side, Jackson points to baby care, pet care, laundry care and household cleaners as examples. These categories tend to be dominated by the national brands.

“Parents do not want to compromise quality regarding their newborn child … at any reasonable savings,” Jackson says. “Also, a typical load of laundry may contain hundreds of dollars in garments; therefore, a savings of $3 to $4 isn’t worth the perceived risk.”

On the food side, consumers are less likely to purchase a store brand product in such categories as cereal, cookies, salty snacks, soft drinks, ice cream and condiments, Maute notes.

“These categories are a challenge for private label [because] they are dominated by powerful brands that, in many cases, private label has a hard time matching [in terms of] quality, unique formulations or flavor profiles,” he says. “At the same time, branding is extremely strong in these categories, and the category leaders invest significant dollars in packaging, marketing promotion, off-shelf display and brand-building.”

Own your store
But store brands don’t need the deep pockets of a consumer packaged goods (CPG) giant to compete. In fact, Maute says retailers have several significant advantages that CPG manufacturers can’t buy.

“They own the store, manage the shelf space, control product and packaging, and control much of the direct contact with their shoppers,” he explains.

Many retailers also have direct access to their shoppers’ loyalty card data and insights, Maute says.

“Leveraging this can be a valuable tool to grow categories or private label share,” he notes.

Maute especially admires how Kroger leverages shopper data and insights to develop store brand products and promotions. The Cincinnati-based retailer partners with dunnhumby, an international marketing consultancy, to gather and analyze shopper data to better understand its customers’ needs. A Nov. 10, 2010, Associated Press article said the partnership has helped Kroger weather the economic storm better than many other North American grocers.

Jeff Weidauer, vice president of marketing and strategy for Little Rock, Ark.-based Vestcom, stresses the importance of retailers understanding their target consumers — it’s the first step in developing innovative store brand products and promotions.

“Instead of copying the brand, find out what the shopper wants, and do the national brand one better,” he explains. “This can be done … by adding attributes that are unique to the category.”

For example, United Supermarkets — which operates more than 50 stores in Texas — differentiates several of its own brands by sourcing products with flavor profiles and ingredients that appeal specifically to Texans, Jackson says.

“We can take advantage of meeting … regional flavor profiles that a national brand may not meet because of the increased costs associated with the additional flavors that will only sell in given regions,” he explains. “Examples are regionally grown Hatch chiles or Texas-blend coffee.”

Recently, United Supermarkets said it rolled out a line of store brand wines that are made from grapes grown in West Texas. The retailer also developed regionally appealing names for the wines — it labeled the brand Outlaw Anthem and the varietals Wanted! and Heartbreaker.

What’s in a name?
Rather than slap their name on packaging, retailers should take time to come up with clever names that grab consumers, Jackson says. A clever brand name — along with relevant imagery — will draw consumers’ attention.

“We should build our own brands with names … that resonate within the category we are competing,” Jackson explains.

For example, a name such as “The Bean Society” would work well on coffee, he says. Paired with the name could be an image of an intellectual-type person enjoying a cup of coffee.

“This name and design would work better in Seattle than in rural West Texas,” Jackson points out.

Packaging also should tell a story that gives consumers a reason to purchase a store brand over a national brand, says Martin Lindstrom, author of Brandwashed.

“Tell a great story — I’m sure you have one,” he says. “Let the story create your bond with the consumer.”

Adding a touch of humor to packaging also helps to win the sale, Lindstrom adds. As a national brand example, he points to UK manufacturer Innocent Drinks, which prints the phrase, “Stop looking at my bottom” on the underside of its fruit smoothie cartons.

Monrovia, Calif.-based Trader Joe’s is one North American retailer that understands humor’s effectiveness. For example, the retailer offers a line of cereal bars similar to Kellogg’s NutriGrain product, but with wittier names such as “this apple walks into a bar…”

“Use humor and wit,” Lindstrom emphasizes. “It’s the most powerful tool to disarm people, to create an emotional bond, and — most importantly — to generate sales.”

Grab them in-store
Along with packaging, in-store merchandising is “private label’s most powerful marketing tool,” Maute notes. Many experts believe that at least 70 percent of purchasing decisions are made in-store.

“[This] gives [retailers] an edge on enticing consumers to switch to their brand,” he says. Weidauer explains that store brand-national brand comparisons are some of the most popular merchandising techniques, but they tend to promote on price, which does nothing to help the brand’s identity.

“Better methods are to treat the brand as valuable in its own right and focus on its attributes,” he says. “This can be done at the shelf edge or via signage on a display.” Shelf edges and displays also are prime locations to feature quick-response (QR) codes, says

Rich Simon, senior partner at Westmont, Ill.-based Boomerang Brands. When scanned with a smartphone, these codes could provide that extra amount of information at point-of-purchase (POP) needed to win over an on-the-fence shopper.

“Americans are information-gatherers and will seek out the information they need at POP from retailers versus responding to an ad or online media,” he explains.

Buyers and category managers also could work together to develop effective cross-merchandising programs, Simon adds.

“Utilize shipper displays to position your private label in non-traditional POP that is associated with a similar purchase. Place your private label products in a display in the beer aisle, pickles by the hamburgers, salad dressing by the lettuce.”

In-store sampling and demos also are effective in getting consumers to switch from the national brand to a store brand, says Sue Reninger, managing partner, client brand strategy with Columbus, Ohio-based RMD Advertising.

“Store brands must demonstrate that they can compete on the least of all emotional values: taste,” she says. “This is where in-store demos work well.”

Lindstrom explains that a sampling program increases the likelihood of a product's purchase by 39 percent.

He also tells retail executives to get out of the office and visit with their customers face-to-face.

“I often visit the consumers in their homes, go shopping with them, and then learn … the thought patterns deciding their moves,” he says. “Once I understand this, it is so much easier to understand what to change and what to improve.” PGSB