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Ideas. Insights. Inspiration.

Private Label is the Hurdle

Kirkland Signature. President's Choice. Selection. Compliments. Great Value.

As a consumer, there's a good chance you purchase at least one private label brand on a regular basis. And who could blame you?

The days when "private label" meant "poor quality" are long gone; today you can get some exceptional store-brand products at lower prices than their name-brand equivalents.

In fact, for some product categories, the products offered can arguably be superior to name-brand items. When I want potato chips or ice cream, I make it a point to visit my local Zehrs or Shopper's Drug Mart to pick up the President's Choice brand of treats: for both treat categories, President's Choice is my preferred brand. By a lot.

If you happen to work at a company that manufacturers potato chips or ice cream, that's probably not something you want to read. But that doesn't make it any less true.

Private label brands are no longer cheap knock-offs of the "real thing": they're brands in their own right, and they can represent a significant threat to a national brand's equity and profit.

Plus, in addition to offering better prices, private label brands often get favourable treatment in-store, over-indexing on shelf-space and display activity relative to what they actually deserve from a fair-share-of-sales perspective. That means it's easy for consumers to find private-label alternatives, and even easier for them to realize they can save money by forgoing the name brand.

Private label brands represent a threat for national brands, and they have for some time.

But there's another way to think about this.

Private label brands represent the hurdle: the absolute minimum value a national brand needs to exceed in order to earn the consumer's dollars.

Pay attention to the word "exceed" in that previous sentence; if all you can do is "meet" the hurdle, you're not giving your consumer a reason to invest more of their hard-earned dollars in your brand when a less expensive alternative is so readily available.

So the question becomes this: what can your brand deliver that a private label can't?

Format? Flavour? Prestige? Trust? What is it that justifies the premium?

And if you can't surpass that hurdle, if you can't help consumers justify the extra spend to buy what your brand represents over what private label brands can offer...

... then does your brand really represent anything meaningful at all?


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