New York, NY — Global professional services firm Alvarez & Marsal’s Consumer and Retail Group (A&M CRG) has released its latest report, Accelerate your Private Brand journey to win with customers and shareholders, which looks at how the Private Label market is accelerating even amid slower total grocery market growth, and what retailers need to do to gain and maintain success with their private brands.
The report lays out the case for private label traction as a strategic imperative for grocers and provides examples of the ways in which prominent Private Brand retailers have built stronger loyalty and advocacy with their customers while delivering superior returns for their shareholders.
“There’s a strong correlation between the most successful private brand grocers and their market share and financial performance,” noted Marco Valentini, Managing Director at Alvarez & Marsal’s Consumer and Retail Group. “The best players act differently from the rest of the pack. Their C-level executives are committed to growing their own brands and driving differentiation through them. Chief Merchants treat their Private Brands with the same priority and attention as they do National Brands. Marketing and branding efforts are aimed at elevating and differentiating products and increasing overall customer awareness and advocacy of their brands. Finally, product innovation cycles need to reflect the yearly cadence of line reviews and retailers must be able to constantly innovate and update their ‘Own Brand’ products. ”
The report lays out key enablers to winning with private brands, and the benefits of having a Private Brand strategy, including:
• Value perception: Private Brand products should be 30 to 50% less expensive than National Brands and provide same or better quality. The majority of consumers cite value as a key driver of purchase.
• Product innovation/differentiation: Private Brand products can be tailored to align with customer demographics and preferences. The second most important attribute that drives purchase of private brands is quality/taste.
• Margin management: Private Brand margins typically surpass those of National Brands and the individual product should provide the same or better unit economics (“penny profit”) than their National Brand equivalents. Private Brands are a very effective way to drive value for customers in addition to price and promotion investment, which often dilute margins.
• Brand development: More than 8 in 10 shoppers make decisions based on brand trust, so developing private label brands that resonate with consumers and provide strong advocacy is critical. Successful Private Brands can drive positive impact to retailers’ overall banner brand perception.
• Sustainable sourcing: Direct control over product development, packaging, sourcing and supply chain can support specific sustainability goals. This is an important factor, especially for Gen Z and Millennial shoppers.
“For many grocery retailers today, the lack of a comprehensive Private Brand strategy means that they’ll get left behind,” said John Clear, Senior Director in Alvarez & Marsal’s Consumer and Retail Group. “To unlock the value of private label, grocers need to have a clear plan in place: a differentiated brand architecture and consistent positioning across categories; scalable processes and innovation capabilities that will ensure their success is repeatable.”
To download a pdf of Accelerate your Private Brand journey to win with customers and shareholders, please visit: https://alvarezandmarsal-crg.com
About Alvarez & Marsal Consumer Retail Group
The Alvarez and Marsal Consumer and Retail Group (CRG) is a management consulting firm that tackles the most complex challenges and advances its clients, people, and communities toward their maximum potential. CRG combines the best of A&M’s broader firm bias toward action and practicality with deep consumer and retail industry experience. CRG partners with businesses across a wide range of categories including Grocery, Mass, Convenience, Discount/Dollar, Wholesale/Distribution, Food & Beverage, Beauty & Personal Care, and Apparel & Footwear to drive significant performance improvement.
