The effects of the last recession and the recovery are making life tough for the major brands these days. The forces are part social, part technological and part business. They’re struggling to keep the brand equity they worked so hard to create. There’s not much brand value in a product that isn’t in the store.
Consumers are dropping their favourite brand name products for cheaper house brands. And retailers want to push big brands off the shelf and promote their own house brands. To make it worse, retailers are cutting their inventory so the number of products is more limited. Big brands are dying the death of a thousand cuts.
So what will the major brands do stop the bleeding?
House Brand Quality Continues to Rise
8 years ago, the quality of house brands was not comparable to major brands. But the number of house brand products grew and more emphasis was put on product improvement. Now the quality is reaching parity and a growing variety of house brands are pushing the big brands off retail shelves.
Consumer Reports conducted a quality test two years ago and rated the house brands highly.
Loblaw’s President’s Choice line of products has expanded a great deal and the quality of their PC products is very good (e.g., PC Organics brand) On the other hand, some lines such as the Blue Menu line aren’t quite as good although the prices may make Blue Menu items acceptable. Even when house are poor quality, they add pressure to the competition.
Figure 1 Screenshot Courtesy of www.presidentschoice.ca
Younger shoppers in particular, seem to be more brand agnostic — a philosophical pattern reinforced by the Internet. Consumers have more information available about brand availability, features, reviews, pricing, performance and alternatives. The social web is making them more aware of options and that they can choose how to spend their money.
In a crowded brand space, it’s easy to see how national or international brands would lose sales. Marketing, Internet advertising, and packaging design are where they should look next to re-distinguish their brands.
Brands are Scrambling to Stop the Erosion
Giant retailers too are involved in manufacturing and promoting their own lines. I’ve noticed a number of major brands being squeezed off their shelves. Although a consumer like myself may want the branded product, it’s carried only in very limited supply or has been dropped completely.
In the UK, private house brands have 50.5%of all grocery sales by value (an increase of 0.5% over the last year) and 57.3% of all grocery sales by unit (an increase of 0.3% over the last year) Manufacturers are responding to the continued growth of PL with clever promotion and pricing strategies, the re-engineering of some lines and the launch of new variants, says SymphonyIRI Group.
A number of brands from house paint, to health supplements, to smartphones have all built their own physical retail outlets. Apple and Benjamin Moore are two notables.
If a major brand, or your as yet unknown brand is still carried by the retailer, it will have to compete harder. Major brands try to avoid price drops and instead revert to coupons, multipacks, and big promotional blitzes.
How Major Brands can Fortify their Retail Presence
Given the financial might of the major brands, a better approach is with multi-channel, integrated marketing. A sophisticated campaign of snazzy POP temporary displays that utilize instant discounts, QR codes, RFC tags, and sweepstakes can work well –the goal is to lift the brand above the poorly promoted house brands.
Sweepstakes in particular when conducted on a national, Canada-wide basis can be very effective. A huge consumer base, low costs for prizes and display design and distribution, and modern interactive tie-ins with social media and a website provide powerful engagement with consumers.
Here’s our top tips for keeping your national brand on retail shelves:
- Redesign your primary product packaging – the change keeps it fresh – Is it memorable?
- Make your packaging more innovative, useful and easy to carry
- Make the paper or plastic more tactily pleasing
- Use interactive marketing tie-ins to social media sites such as Facebook and Twitter – easy ways to get consumers to promote your brand and engage with online later when they’re at home. Include something such as an NFC chip which continues to interact with their smartphone when they’re at home.
- Use the best creative POP displays you can develop – these disrupt consumers and ensure your product gets seen.
- Use eco-friendly labeling – being eco-conscious gives them one less reason to choose the house brand
- Develop some very creative packaging
- Offer multi-purchase discounts
- Differentiate: Point out the one feature/ingredient that makes your product better than the house brands
- Improve your copy on your packaging; make it more enticing
If you’re the brand manager or packaging designer for a major national brand, you’ve got your work cut out for you in keeping your product on the shelves. Perhaps it’s inevitable the retailers will build their private house brands (Such as Loblaw’s with President’s Choice) and position them as the premier brands. Your packaging improvements may be just delaying the inevitable, but that could be life saving for your business.
Fight the fight and give yourself more time to adapt and evolve.