4 Keys to a Knockout Private Label Program

Gil Phillips, Vice President of Corporate Brands at Kroger told the Cincinnati Enquirer about their house brand strategy, “We’re not offering knock-off versions. We want to be a knockout.” In the past 10 years, while our economy has struggled to make a full recovery, store brands have undergone drastic changes to attract consumers looking to save money away from national brands. Today, private label brands account for $112 billion of the $643+ billion total annual retail sales in the US.

As the landscape levels out, even more retailers will have the confidence to push the envelope, developing private label branding and product strategies to lure consumers into their stores and to set themselves apart from their competitors. But what does it take to develop a stellar private label program?

Lessons from Target, Private Label Powerhouse

I’m always thrilled when I shop at Target. Why wouldn’t I be? It’s the happiest place on Earth. By tapping into each category’s full potential and fulfilling unmet consumer needs, Target has turned themselves into a branding and product development mastermind across a variety of product categories that include food (Archer Farms), home décor (Threshold), fashion (Merona) and performance apparel (C9 by Champion), to name a few. They utilize three types of branding to differentiate their products: their own brands; exclusive licensed brands for evergreen programs; and famous designers for limited edition programs.

Nate Berkus, a well-known interior designer and TV personality, designs home textiles and décor exclusively for Target. He brings instant credibility to home décor products and consumers trust his authority in traditional and contemporary design. Introduced in 2004, C9 by Champion gives Target’s private label performance appeal instant credibly and Threshold provides consumers with quality and design at an affordable price. Something you don’t have to go far to read about on the blogosphere.

Want to replicate Target’s success? Here are four key insights you can derive from Target’s multi-tiered branding and product strategy:

Don’t be a Me-Too: Unless you want to be perceived as a “generic” brand appealing to the frugal shopper, create an appealing brand strategy and develop quality products. Start with a strategic plan anchored by consumer insights, market research and identification of strategic partnerships. This will help you identify unmet consumer needs so that you can provide real value and and create an appealing brand that people want to buy.

Tap into Unmet Consumer Needs: Look for what is missing in the marketplace. Is there a product category where there’s a real opening for a private-label brand? Kroger took advantage of the rise in popularity of organic and natural products with their brand – Simple Truth. They met a need for lower cost organic products and created a $1 billion brand at the same time. It also keeps their consumers in their stores so they don’t have to make another stop at Whole Foods for their organic product needs.

Act like a brand: Unless you license a brand that is well-known, you will need to create a strategic marketing strategy to establish your private-label in the minds of consumers. With aesthetically pleasing packaging designs and style guides you can help your brand stand out on shelves and look like a premium product. And by utilizing a variety of marketing strategies that include digital media and influencer marketing to spread the word and launch your private-label as a force in the marketplace.

Good, Better, Best: Consumers are unique and your private labels should be too. The stereotype is that store brands are “generic” and low cost. By understanding the competitive set and consider your consumers you can identify areas to position several private-label brands including Good, Better, Best and Male vs. Female.

For example, Target has three brands related to home products: Room Essentials, Threshold, and Nate Berkus; each brand serving consumers different needs. Room Essentials is geared towards budget conscious consumers who desire casual and contemporary designs at an affordable price; Threshold is a quality home décor products that premiered in 2012 with a focus on classic and contemporary style at a higher price-point than Room Essentials, but still affordable. Nate Berkus is one of the many brands that have come from Target’s collaborative spirit and is geared towards consumers looking for a designer look at an affordable price.

Target’s brand strategy has played a key role in building loyalty with their customers. Through strategic partnerships with manufacturers, designers, and other partners, Target has brought differentiated products and brands into their stores. By avoiding the use of their banner brand, they have set themselves apart from their competition and created an image (and reality) that their products are not just on par with national brands, but are premium and provide real value.

If you have a desire to make your store a designation and capture a bigger share of consumers’ wallets, the next step to driving success is to start with a strategic plan. Are you ready?