Popular and Increasingly Premium: Store Brands Go Upscale
No doubt inspired by the big uptick in the popularity of store brands that bloomed during the pandemic, The Wall Street Journal reports on how a range of retailers across channels—including grocery, mass, natural, and drug—are revamping private label brands to adapt to consumer preferences and leverage younger consumers’ more brand-agnostic affinity for quality attributes.
Per the article, new store brands and products are debuting fresh visual identities and emphasizing more transparent, thoughtful approaches to ingredients and sourcing—from “slower food” cues on Target’s Good & Gather frozen pizza to greater disclosure of product impacts and provenance in the CVS Live Better line. As noted in the piece:
Ask most consumers about retailers’ store brands, and no doubt a handful of similar adjectives come to mind. Plain. Boring. Mediocre. Inexpensive. Now, many of the nation’s biggest retailers—including Target, CVS, Whole Foods and ShopRite—are out to change that image. They are seeking to accomplish a delicate balancing act, projecting upscale charm and a healthier lifestyle, while keeping the budget-friendly prices. Sometimes it’s a question of the name. Sometimes it’s the packaging. Sometimes it’s the quality of the product. Sometimes it’s a combination of all three. For these retailers, the goal is to create a product line that looks, feels, tastes and smells premium, while undercutting on price because they aren’t stuck with the fat advertising costs of the major labels.
Increased quality in private label has been a rising influence in the success of store brands that we’ve been tracking at The Hartman Group for years: Our Food Sourcing in America report notes that when private label lines or products—such as those found at Lidl, Trader Joe’s, H-E-B, and Costco—take on their own unique brand identity, they can drive trust, loyalty, and dedication to a retailer, with consumers often going out of their way to visit a store that sells their favorite store brand items. Often this behavior results when store brands excel at integrating premium attributes, such as authentic global flavors or sustainable distinctions, including organic, plant-based, and other agricultural certifications.
Private label has been attracting significant attention for many years, but the particular circumstances of the pandemic have provided retailers with additional opportunities to convert customers to their own brands. Currently, the ongoing innovation and premiumization in private label constitute an even more potent threat to national brands, with the impacts of the COVID-19 pandemic leaving consumers more attentive to both cost and health.
Our forthcoming study Brand Ambition: Private Brands and Beyond is expected to highlight the notion that consumers do expect store brands to be lower in price, but some private brands are increasingly bucking expectations that lower price points necessitate quality trade-offs by demonstrating commitment to better formulation, production, and sourcing. Going forward, this may portend an evolution of consumer expectations around how quality is connected to price within private label.