Battle Of The Brands: Staving Off Private Label Threats As Consumers Consider Trading Down

Despite inflation’s rise, with U.S. consumer prices jumping 9.1% in June, national brands have held their own, maintaining and even slightly growing dollar share versus private labels.

However, as inflationary pressures worsen, risk of an uptick in private label consumption is looming as shoppers look for more ways to stretch their dollars.

More than 40% of consumers say they have been buying more private brands now than before the pandemic, according to The Power of Private Brands report from the Food Marketing Institute (FMI). Furthermore, three quarters of shoppers anticipate continuing to purchase more private labels in the future.

Brands will face more threats from private labels in the coming months, which is further exacerbated by outright promotion by retailers, including Save A Lot’s latest ad campaign. This threat is magnified online because retailers can take up more “shelf” space, with private brands typically dominating share of page 1 search results over national brands.

For brands to gain their digital fair share as they have in their negotiated physical space in retail outlets, it’s time to switch up the game. Sophisticated brands have already started doing this, and it’s yielding strong dividends in growth in both sales and market share.

“eComm data is an unmapped jungle,” says Todd Hassenfelt, Colgate-Palmolive Global eCommerce Director. “If you wait until you can map the entire jungle, you will never win. But if you have a really good jungle guide that can read and react to the different situations once you enter the jungle, you have a better chance of being effective and efficient with your resources.”

While data is plentiful, actionability and focus is where the battles are won. It’s not just about tracking competitive dynamics on the digital shelf, but also knowing which actions to take, whether via paid media, organic optimization, price pack architecture, marketing strategies or re-allocation considerations. These insights can and should be used in JBPs between brands and retailers when discussing shelf space, especially as the retailers’ own brands take bigger share of voice online than in store.

Brands can retain and expand their share by grabbing the reins with a hands-on-keyboard approach in five key areas that can increase gains without breaking the bank:

• Share of page 1 – Most consumers stop searching for products after they’ve hit the end of Page 1 of search results. Owning that share of Page 1 becomes critical, and when retailers’ owned brands take up more of that shelf space, there’s less space for other brands. Winning share of Page 1 isn’t jus a matter of buying your way to the top - it’s actually quite complicated as no two algorithms are alike between retailers, so a retailer-specific keyword strategy becomes even more important for both paid and organic optimization.
• Price pack & elasticity – Now is a good time to analyze pack sizes to play with value dynamics as a way to keep value conscious consumers buying brand names. Brands can win by identifying incremental packs that the retailer doesn’t carry within their private label offering. Or maybe the time is right to think about ways to bundle products that will provide solutions and/or savings to consumers, or will mimic the club mentality of stocking up at a savings.
• Shopper retention vs. brand switching – As shopper trade-down activity heightens, brands will benefit from retention-based habit-forming tactics, like Amazon’s Subscribe & Save, and other mechanisms (e.g., “buy again” lists). First party data can also be used to retarget current customers with reminders on items they’ve bought already, to upsell or basket build.
• Relevance of product content. Whether it’s optimized text with the right keywords, the right number of images, videos, bullets customized by retailers, each pixel counts and contributes to the brand’s story. This isn’t just matching luggage to your FSA. Think strong hero images, videos, romance copy, recipe links, personalized messaging, etc.

• Ratings & Reviews – Consumers prefer brands they know and trust. This is why product reviews are among the top criteria consumers use when purchasing items online. Brands can showcase reviews across product pages, in content, even on the physical store shelf. It’s also often a key criteria driving retailer search algorithms.

The above list of metrics relies, of course, on having the right resources in place, both people and data. Says Colgate’s Hassenfelt, “Brands that win will be those that can really track their leaky bucket and understand progress over perfection.”