Where the 80’s became the decade of super brands, we see that nowadays these same brands are fighting a losing battle against the private label of the retailers. Or do they still have a chance? Here is our view on the history and success of private label.
Rise of private label (1980-2000):
New retail formulas like discounters and food retailers enter the market. There is no real emphasis yet on their home brands and the quality varies from ‘C’ to ‘B’. Home brands are positioned on ‘cheap & simple alternatives’.
Entrenchment of private label (2000-2005):
We experience change in consumption as a signal for upcoming social trends. ‘Being Stingy’ is seen as trendy and discount shopping becomes the smart thing to do. Our preference for home brands becomes a special statement and proof for our own autonomy.
Expansion of private label (2005 – 2010):
The rediscovery of the value of home brands becomes a focus of orientation in our daily lives. We award ourselves with private label and use them to define our own territories within the supermarkets. Home brands experience a lift through the ‘Getting Real’ trend as consumers are looking for true value.
Diversification of home brands based on values (2010 – onwards):
Where super brands used to dominate the market, they also stopped innovating long ago. What we see now is that the retailers are swift to tap into the new consumer trends of today and tomorrow. There is diversification of home brands into different categories, all tapping into different consumer needs and values. Home brands now range in quality from ‘C’ to ‘B’ to ‘A’ and offer convenient, organic, fair-trade and sustainable products.
The different reasons to buy private label
Private label has long been only about saving money. There is much more than only the pragmatic and functional benefits. We experience different emotional tensions as well, when we are contemplating our purchases in the supermarket.
Saving money vs. the need for autonomy
On one hand we started to buy private label to get value for money, to protect our wallet and to not spend more than necessary. It gives us autonomy and we feel smart that the ‘real’ brands cannot persuade us into a more expensive purchase.
On the other hand we have a natural aversion against the ‘real’ brands that are luring us with irrelevant and superficial commercials and product features. Take the new Gillette Fusion Power with 5 blades. Do we really need them? And where will it stop? Will the next one have 8 blades, solar panels and different vibration speeds?
There are however some brands that did manage to fight back and tap into relevant consumer needs (like the Dove ‘real beauty’ campaign).
Balancing our own budget while managing our home brand territory
Our behaviour remains unpredictable during shopping as we are constantly balancing our personal perfect mix between home brands and real brands. We are going to the Aldi to proof our autonomy and intelligence while we are buying ourselves expensive Lindt chocolate for a reward.
Buying ‘real brands’ is closely connected to our personal category specific consumption habits. For example – we buy expensive brands for our face and body care and private label for basic hygiene.
Treating ourselves with simple affordable luxuries
Premium quality home brands make simple luxuries affordable and thus accessible on a regular basis. The high quality home brand chocolate is a good example, but also the organic and fair-trade products provide luxury based on different consumer values (AH Puur & Eerlijk).
The last stand of the brands
Premium home brands are entering a grey area. Being more expensive they are not ‘as smart’ as they were before. Being more premium they are more reliant on their own specific brand promise, and less on the price difference and ‘smartness’.
And this is the Achilles tendon’ of the home brands. Private label has great difficulties creating its own category specific brand promise as it is strongly connected to the generic value proposition of the retailer (AH Excellent & ‘Puur en Eerlijk’). It simply can’t deliver a concrete category specific consumer experience towards the consumer.
This is where the real brands still and will have their advantage. Their brand promise is directly connected to and aimed at the category.
And the transferred brand experience is an important decision factor during the shopping process.
Retailers are now positioning their own brands prominently on shelf, while the real brands have difficulties to attract and thus transfer their brand promise to the consumer from the lower and top shelves.
The question left is obvious; will the power of the retailer be enough to eventually diminish the real brands, or will there be a distinct demand for products with a category specific brand promise?
