What’s in a name: Private-label demand continues to grow
Private label is hoping to hit the next level.
Based on the level of innovation seen in private-label health and beauty care and general merchandise, it is clear that retailers and suppliers are not just striving to meet consumer expectations, but are looking to surpass them. Now, recognizing the value private label adds to their mix, retailers are devoting more money to research and development, launching innovative products, and developing sophisticated marketing programs — all of which are causing consumers to take notice.
The result, many said, is a continued acceptance of private-label products as a legitimate and often less costly alternative to national brands. And, that means that sales of store brand products are growing at solid rates in many categories.
That is not to say that consumers blindly believe in the benefits of private label. Perceptions of efficacy, safety and overall quality remain inherent vulnerabilities in the category.
Matt Wolf, CEO of Contract Pharmacal, based in Hauppauge, N.Y., said private-label suppliers and retailers are addressing these vulnerabilities in several ways. First, he said that establishing trusted reputations in the marketplace is vital. Second, innovation is vital as is demonstrating transparency with online reviews, clearly stating testing and safety measures on packaging, and educating consumers on such issues that matter to them as the company’s sustainability practices.
Research from Daymon supports this. Bob DiNunzio, director of category strategy at the Stamford, Conn.-based company, said that efficacy, not brand, is typically the top driver when making an HBC purchase. He said that while shoppers are looking for effective products that are of value to them, it is important to understand that value is no longer just about price.
“Shoppers are willing to pay more for products that deliver what they perceive to be a premium benefit,” DiNunzio said. “Customers are finding that private-label products meet these needs and can deliver much more than just a low-cost alternative to a national brand.”
Beyond efficacy, Daymon research found that across health, beauty and personal care categories, shoppers are looking for “clean label” products with ingredients that are natural, safe and easily recognizable. Given that each consumer has a unique definition of clean label products, DiNunzio said this provides retailers and their own brands with an edge.
“We see this trending on shelf with vitamins, minerals and supplements as well,” he said, noting that many private brands have shifted to plant-based, vegan and natural formulas. He added that retailers are calling out the attributes on the label and incorporating these messages in store and online, a trend also seen in body and skin care. “Retailers are creating a free-from list of ingredients that are guaranteed to not be included in any of their personal care products. This makes shopping simpler and more convenient, eliminating the need for customers to research and scrutinize labels,” DiNunzio said.
Layered on top of this, Daymon researchers found that consumers are gravitating to brands that support their lifestyle and beliefs. For example, vitamins that support a specific diet plan, hair care products that are designed for one’s natural hair texture, or ingredients that are sustainably harvested are extremely appealing to HBC consumers.
Private-label innovation does not stop at what is inside the package. Retailers are extending this to delivery options as well. Officials at Unipharma, for example, have been studying consumers for some time and have found that compliance issues often stem from consumers’ inability to swallow OTC and prescription tablets and capsules. Edgar Arrieta, business development manager, said the Tamarac, Fla.-based company has come up with a solution — the unidose, a liquid dosing format that can be used with OTCs, prescriptions and supplements.
Arrieta said that single dosing offers ease and convenience with taking a premeasured amount, but said the absorption rate of taking a liquid is greater.
“People are looking for alternatives to traditional medicine to live healthier lives, but, at the same time, they also want it to be convenient and easy to take,” he said. “The average baby boomer might take 10 to15 different pills a day between dietary supplements and prescriptions. When people have problems swallowing pills, they do not take them as often as they need to.”
Unipharma’s product format appeals to baby boomers, as well as millennials who are looking to incorporate more naturally oriented products in their lives, but want products they also can take on the go. Parents appreciate the single-dose format because they do not have to worry about overdosing or underdosing their children. “With our Dr. Kids line, parents also do not have to carry around large bottles and a spoon or syringe to dose their children,” Arrieta said, noting that its kids line is sugar-, alcohol- and paraben-free.
Private-label packaging is being updated as well. The traditional copycat packaging approach is being replaced with a more evolved appearance. As a recent Daymon report on design trends pointed out, to stand apart from conventional products and be more approachable, more companies are looking to express the unique personality of their brand.
CPC has been studying how consumer attitudes and purchasing behaviors are evolving and using that information to develop its packaging. From there, the company develops new private-label categories, distinctive ingredients, forms and formulations, unique fragrances, flavors and educational and relevant packaging that meet consumers’ needs.
“Pill pouching is a great example of how innovative packaging can disrupt a conventional category,” Wolf said, explaining that CPC’s Pill Pouch solution combines daily doses of medicines and nutritionals. “We drew our inspiration from consumers’ on-the-go lifestyle and desire for simplicity,” he said.
At Ontario, Calif.-based Calico Brands, innovation around packaging is key. For consumers to consider private-label versions of their favorite HBC and general merchandise brands, product packaging must be well designed and deliver on performance.
“Bringing innovation and new products is what Calico Brands is all about,” said one marketing department official. “Our new product development team continues to cultivate new items and new features to drive sales in the multipurpose and pocket lighter categories.”