More than 80 percent of respondents to a recent FMI survey of industry executives for its report, “The Power of Private Brands 2023: Innovation that Drives Winning Private Brands,” said they plan to increase private brand investments moderately or significantly in the next two years.
At the same time, the analysis suggests just 10 percent of the executives responding said their organizations are “very far along” with innovation, indicating opportunities for progress, even after considerable successes.
“After temporary pauses to some innovation efforts because of pandemic supply disruptions and ongoing consolidation many food retailers are ready to jumpstart innovation in collaboration with their supplier partners,” said Doug Baker, FMI VP of industry relations.
“Respondents said that while new products are always an important part of innovation, the efforts need to go well beyond new item introductions, including focusing on branding, purchasing, logistics, inventory management, marketing and more.
“We also know that consumer demand for information about the products they use and consume has remained at an all-time high. For instance, many consumers now engage in a hybrid approach to shopping, using in-store and digital touchpoints to seek package claims.”
The report outlines how grocers say they are capitalizing on shopper behaviors to market private-brand products in multiple ways:
- Using labels to provide transparency and talk about value beyond cost savings, including how and where ingredients are sourced.
- Switching from a brand they usually buy to a different brand that provides more in-depth product information beyond the physical label, creating an opportunity for grocers to utilize SmartLabel and other digital tools.
- Focusing on sustainable packaging and using labels to relay stories about food producers and recycling information.
- Building consistent brand experiences across digital channels and using social media and e-commerce platforms to promote store brands.
- Incentivizing repeat customers with loyalty programs such as discounts and points systems.
Baker noted, “Inflation-driven price increases throughout the store have also spiked significant consumer interest in private brands as shoppers look for ways to stretch their grocery dollar farther, with nearly 77 percent of customers who are already purchasing private brands say they expect to buy even more in the future.”
FMI will hold a digital seminar, “Power of Private Brands: Innovation that Drives Winning Private Brands,” on June 8.
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