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According to Nielsen, while branded product growth contracted in 2017, private brands have continued on a path of growth over the past four years. Private brands, which are brands created by a parent company to be sold solely as its own, have become a key strategy for retailers across categories. This growth is driving companies to invest in brand strategies for developing their own private brands that address the diversified needs of specific customer groups and grow their overall businesses. Within the grocery category, 23% of the growth for food an beverage came from private brands—that’s USD $8 billion in this sector alone.
Success through customer insights
Kroger’s Simple Truth is a great example of a successful private brand. Simple Truth was born in 2013 from the merger of two existing brands, Naturally Preferred and Private Slection Organic. Kroger launched its new brand based on the insight that customers want access to simple, trustworthy, and uncomplicated solutions for living better lives. Simple Truth offers more than 1,400 products across categories including baby, personal care, bakery, and produce. By delivering upon customer desires for natural, organic, and “free-from” products, Simple Truth has grown to become a USD $2 billion brand (based on sales), and is the second largest brand in the Kroger portfolio. According to Robert Clark, Kroger’s Senior Vice President of Merchandising, “Simple Truth is a brand that has earned our customers’ trust through clean labels, fantastic flavors, and affordability.” Kroger has said that it will continue to invest in Simple Truth this year by innovating and introducing new items that align with market trends and the brand’s core purpose.
Boosting business through private brands
Another company that is looking at private brands to boost its business is Target. In the last half of 2017, Target launched five new brands, and has committed to introducing a total of 12 new brands in a two-year period. Brian Cornell, Target Chairman and CEO, announced during the third quarter corporate earnings call that the new Target brands are off to strong start. Target has garnered a massive amount of buzz around the launch of Hearth and Hand with Magnolia, a partnership with HGTV’s Chip and Joanna Gaines. Additionally, Target announced the launch of a new home brand, Opalhouse, which hits stores in April 2018. Target is innovating by developing private brands to meet their guests’ diverse needs, and deliver new brand experiences that draw customers into stores—and keep them coming back.
Today’s private brands are not your grandma’s budget brands. They have shifted focus from price and quality to targeting niches in the market that are not being fulfilled by outside manufacturers. According to the same 2017 Nielsen study, almost half of Americans would purchase more private brands if more products were available. Target, Kroger, and other leading private brand owners are leveraging this as opportunity to gain a lead over other national brands. Customer-led private brands are delivering upon the ultimate goal of growing the master brand.
Check out brandchannel’s interview with Christopher Durham, founder of My Private Brand. Read More.