Well-executed branding strategies for private label products can help convenience stores set themselves apart, bolster shopper loyalty, improve price perception and, ultimately, boost their bottom lines. And yet the industry still has a long way to go when it comes to taking full advantage of private label’s powerful potential, said Todd Maute, a partner in the global branding firm CBX, during a panel discussion Sunday at the National Association of Convenience Stores (NACS) annual expo and convention in Las Vegas.
“Private label is a hot commodity and is in the news a lot these days,” Maute told the audience during “Private Label Profit Puzzle,” a panel discussion featuring c-store and branding experts from four national firms. “But much of its recent growth has been driven by the sluggish economy and is the result of consumers ‘trading down’ in search of better price values.”
During the panel discussion, Maute underscored the need for the industry to adopt a new attitude about private label—one in which companies see private label products, not as lower-tier alternatives to the national brands, but as powerful marketing and branding vehicles in their own right.
“If economic weakness is driving much of the growth in private label, this says to me that companies have not done a good job of repositioning their private label brands in the customer’s mind,” he said. “But c-stores can remedy this by standing behind their brands, marketing them with confidence and educating customers that their private label brands really are worth buying.”
In the grocery and big-box discount sectors, Maute explained, smart retailers like Safeway, H-E-B, Target and Walmart are making much more of their private label brands. But, while c-stores certainly have more limited shelf space and shallower offerings in various product categories, their “captive audiences” ought to translate directly into stronger private label market share, Maute noted.
“Let’s say you’re in a hurry, go into a convenience store and cannot find the national brand version of a product you happen to need,” Maute said. “You’ll be perfectly willing to try the c-store’s private label brand, rather than walk out empty-handed. If it happens to be an attractive package, well merchandised, with a high-quality product inside, you’ll buy it again. C-stores are missing out on an opportunity here with products that tend to deliver higher profits for retailers.”
The private label branding veteran drew a sharp-distinction between product-led and brand-led strategies. All too often, c-stores’ private label strategies are product-led, he explained, which means the attributes of the product itself—whether it is potato chips, soda or motor oil or is a “premium” product vs. a “national brand equivalent”—drive the way it is packaged, merchandised and marketed. In a brand-led strategy, by contrast, smart retailers create coherent and appealing private label brands that become instantly recognizable to consumers.
“If the strategy is brand-led, you will innovate and differentiate,” Maute said.
Retailers with the highest private label market share maintain a laser-like focus on smart advertising and promotion for those brands, up to and including social media, Maute revealed. They understand that every private label purchase carries with it three distinct impressions on the consumer, he added.
“The first is when they see the product on the shelf. The second is when they buy it, and the third is when they actually consume or use it,” he said. “If you sell 50 million units per year, that translates into 150 million consumer impressions per year. And so the way you package and merchandise your private label products, the way you price them and place them on the shelf can be more powerful than a Super Bowl ad when it comes to shaping customer loyalty and building your overall brand.”
How should c-stores go about reorienting their private label strategies? “Start with the fundamentals of good retailing,” Maute said. “It is all about knowing the customer and understanding the dynamics of your store and your categories. Think of your vendors as partners, not as a mere procurement sources. Merchandise the product like you’re proud of it, which you should be. Promote it and treat it like a national brand, not like a brand alternative.”
The NACS Show, held at Las Vegas Convention Center, concludes today. The annual show highlights products and services for the convenience and fuel retailing industry.