I've been following the recent Heinz-Kraft merger with interest. It has again highlighted the pressure big brands are facing, with many articles citing the market share gains of smaller brands and store brands.
Yet I was disturbed by how often store brands were still being referred to as private label, as if they are in some way not worthy of the term brand.
Of course, it's a reflection of the past, when private label usually meant lower priced and lower quality. But today, store brands are so important to the future of the supermarket industry that the term needs to be dropped.
Private labels are brands in the eyes of customers. I've never heard a customer refer to Kirkland or Simple Truth as "private label." They normally refer to the "store brand" or the store’s "own brand." Private label is just an industry term, and in a world where we all need to be customer-centric, surely we should talk as customers talk.
Store brands need to be managed as brands. As Disney is fond of saying: "Everything speaks," and store brands say much about the overall retail brand. The playfulness of Trader Joe's brand names, for example, contributes to the personality of the store, while a poorly managed and executed private label undermines a store's reputation.
The entire business needs to be proud of its own brands. Since they are only available from that retailer, they can provide strong reasons for customers to come back again and again, helping to build loyalty. But if the employees aren't proud and just see them as labels, why should customers care?
Store brands have a bright future. With customers increasingly distrustful of the giant national brands of the past and with access to groceries proliferating, the importance of store brands in differentiating and building loyalty is only going to increase. So let's consign the term "private label" to the history books, and get on with building brands to celebrate.