Private brands, which are owned by and typically exclusive to retailers, are more popular than ever. Amazon is launching private brands by the dozen, running the gamut from medications to diapers to fashion and home furnishings.
Walmart is revamping its apparel brands in response to Amazon’s fashion inroads. Target’s portfolio of owned brands has just added Opalhouse, a boho-chic globally-inspired collection (at top) for home decor buffs that appeals to the Anthropologie shopper, and the Universal Thread collection of denim designed to suit everybody—and every body.
When it comes to private brands, Christopher Durham is anything but private on the topic. He’s the author of six books on the subject, starting with Fifty2: The My Private Brand Project in 2014, in which he examined what constitutes the best, in his view, in private brands.
The book stands as a manifesto of sorts, presenting a compelling case for retailers to own brands that matter. Durham highlights private brands that bring their positioning and business objectives to life through great design, purpose, lifestyle and innovation, and looks at what makes these brands resonate with customers.
His latest book, Vanguard: Vintage Originals, is a photographic journey through the history of iconic private brands and how they influence brand design today.
In addition to being an author, Durham (above) is President of My Private Brand, founder of the Velocity Conference and co-founder of the Vertex Awards, which has been recognizing international private brands since 2013. He is also a practitioner, having helped launch private brands for Food Lion and Lowe’s Home Improvement, among others.
He recently spoke with Debbie Arnold, Senior Director of Business Development for Interbrand’s Consumer Branding team, based in Cincinnati, and brandchannel editor Shirley Brady.
Chris, how did you come to be so passionate about private brands?
By accident, quite honestly. It’s not even so much a passion for private brands as it is a passion for brand. I went to work for a retailer in early 2000 who, at the time, didn’t understand the value of what they owned. I recognized the potential and also recognized that consumers didn’t know the difference between private brands and national brands. The opportunity to truly engage and use private brands to increase loyalty was huge.
Some people say Owned Brands, Private Label Brands, Store Brands, Private Brands—why do you prefer the latter?
It’s a bit of inside baseball that nobody outside the business actually cares about. A “private brand”—my preferred term—is any brand that’s owned or controlled by a retailer. Typically the phrase “private label” isn’t used by modern retailers. If it is used, it’s often a bit of a derogatory term because in the ’70s, ’80s and early ’90s some retailers were basically buying products and slapping a label on them. There was no Brand Management, positioning, design or any of that.
Other terms that have sprung up over the past few years include exclusive brands and owned brands. They are interesting but a bit confusing. ‘Owned brands’ is typically used by Target and Kroger, but it’s an association for an internal audience to take ownership of the brand.
How can retailers leverage private brands, and defend themselves against Amazon?
Between Amazon and Lidl and all the other others, there’s a lot going on. This is the most exciting time for private brands in the last few years. It’s really the first time that the growth of private brands wasn’t generated by the economy. In 2008 and 2009, the growth of private brands was based on retailers responding to people just not having any money.
Today, however, it’s driven by retailers that understand that to survive they have to use every tool at their disposal. To do that, they have to grow private brands because, at the end of the day, anybody can buy any national brand—Tide, Coke, Breyer’s ice cream, you name it—on sale and delivered to their house any day of the week. This means that those brands no longer give a retailer an advantage where they can say ‘We have the cheapest or the most’ of a particular brand.
However, if retailers build brands and the products within brands are differentiated, that actually speak to a consumer’s needs—a different flavor, a different convenience, etc.—that’s something that is ownable, unique and that you can’t get anywhere else.
Target is really hot on developing and launching private brands. What’s your view on how they’re doing?
I think Target is exciting, and Brian Cornell knows he either has to fix it or he’s not going to have a job. He’s making some smart moves. On one side, they are doing a lot of fascinating things. Their private brands are all very customer-focused and trend-forward, in home goods, in fashion. They even started getting their sizing right in men’s and women’s brands, they are sized for Americans and not for Europeans, which helps a great deal.
No matter how much you like the style, if it doesn’t fit, you’re not going to buy it. That being said, they need to apply that same mentality to grocery.
When it comes to private brands in grocery, Target’s are still very much a knock-off of a traditional grocery store. Their designs are a little better, but they could be picked up and put in a Kroger or Safeway.
For Target, it’s all about ‘How do we express ourselves on the grocery side and have a fashion mentality that “fashion for less” can come to life in the grocery store?’ That is what could differentiate them, not just another copy of Cheerios.
How are national brands reacting to this increasing threat?
Well, some of them are dying. Some categories and brands are just not going to make it through the next ten years because, honestly, they’re just not going to be relevant. My 12-year old doesn’t care about canned soup or dry cereal; there’s a whole slew of categories and products that they just don’t care about.
The brands that are adapting and growing, very often through acquisition, are the ones who are going to make it. Now, does that mean that the products that are important to my grandmother and my mother are going to be relevant to my children? Maybe not. There’s a reason why Brylcreem isn’t around today.
There are national (CPG) brands out there that are shaking it up and really open to a brand positioning that is relevant to customers. It’s how branding evolves. Branding, as it came out of P&G in the ’40 through the ’60s was a function of a product. It was a “We make Tide” or “We make detergent,” so let’s figure out how to position detergent such that it can be different.
The consumer has almost flipped that model upside down. It’s no longer about the brand, it’s about the consumer. It’s now ‘I’m the consumer, I have the power, I can search for everything so how are you going to help me make my life better?’
Amazon is investing heavily in private brands and people don’t even know half of what they’ve got. Do you think they’re doing it well? Should it be keeping retailers and brands up at night?
They understand, better than any other retailer in the world, that private brands can play a lot of different roles. The traditional grocery role of private brand has always been “Here’s a box of Cheerios for 30% less.” It’s a margin play. What Amazon understands is that P&G, Unilever, Nestle, etc., own a very robust portfolio of brands and those brands all speak to different customers, have different business goals and accomplish different things. They are, obviously, managing Kindle and Fire in a completely different way than they are managing Amazon Basics.
As they add fashion brands, food brands, etc., the conversation isn’t around “Is this a private label?” Customers don’t know and they don’t care who owns brands. At the end of the day Wall Street is going to require retailers to become brand owners because brands build assets. Interbrand’s annual reports demonstrate how valuable branded assets are, and we are going to see that happen more and more with retailers’ private brands. Whether it’s Amazon; Jet is doing some amazing things with their private brands; Boxed.com — online (retailers) are only going to accelerate private brands.
One of the exceptions to the rule of private brands staying exclusive is how Loblaws, back in the days of Dave Nichols, launched the President’s Choice line of foods and also sold it via other grocers in Canada and the U.S. Later, like Tesco in the UK, Loblaws created an in-store and online fashion brand in Joe Fresh, which showed at Toronto’s Fashion Week and expanded in the U.S., only to later retreat back across the border. Any comment on what they’ve done for private brands?
Loblaw’s actually has had a lot more private brands than just those two and they end up being a lot of sub-brands. Loblaw does a great job. A large grocer in the U.S. or Canada often owns between 12 and 20 brands. If they understand that each of those brands can play different roles, so you can have a brand that is a value play that’s about the pack, you might have a premium brand, you might have a niche international foods brand, but each of these brands can be positioned slightly differently.
They might spend packaging dollars, marketing dollars, etc. in completely different ways, just like, going back to Amazon, they spend a great deal of money on Fire, but they spend nothing on Amazon Basics. You don’t need to tell a story around Amazon Basics. You do need to tell a story around Fire.
So the question for grocers, in particular, is where are the brands that we can build relationships for our customers and tell stories around and then where are the ones that are honestly still just a price play? Because those are always going to exist, and that is well. Understanding the roles those brands play is critical because then you can invest appropriately, you can hire appropriately, you can market appropriately because you have to have that percentage of things that will make you different.
Dave Nichols at Loblaws was the king (of private brands). He turned the humble chocolate chip cookie into “The Decadent Chocolate Chip Cookie.” He beat that drum, and everyone knew that chocolate chip cookie. So if you look at a grocer like Loblaws or Kroger, they don’t need truly differentiate on more than 5 or 6% of the product, but when they differentiate, they need to tell people about it.
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