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Marketing Matters: Private Label Grows Up

By Donna C. Barson

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It used to be that, for the consumer, buying a private label brand meant a deal with the economic devil. Private label purchases cost less and saved the consumer money, but a distinct drop-off in quality was often the trade-off from a national label alternative.

But, as Bob Dylan sang, the times they are a-changin’. Today, in every category, retail outlets are aggressively stocking private label products next to national brands, and often using private labels to attract customers into their store. From packaging down to performance, private labels are giving the national brands a run for their money.

What does that mean to the savvy marketer? Simply this: private labels have emerged as a definite threat to sales, shelf positioning and even the decision of what products are carried. Foolish personal care marketers ignore these warning signals at their own peril—and the likely detriment to their products.

Private label development has been the most significant at grocery stores, with a nearly 20% incursion rate. Supercenters are next, with 16%. Both are formidable personal care retail outlets. Even non-traditional personal care markets such as apparel chains—including New York & Co. and Ann Taylor—and accessory chains such as Coach offered personal care products in 2007.

If you need somebody to blame for this private label change from frumpy to fabulous, look no further than Martha Stewart. Stewart’s partnership with K-Mart some years ago suddenly gave private labels polish and pizzazz, and now Macy’s also carries her products. No longer was the private label some anonymous product made by some anonymous manufacturer, but now it carried the distinctive and well-known name of Stewart.

Soon Michael Graves was in Target, drugstores were seeking out their own exclusive brands, and private labels were on a rising sales escalator that hasn’t reached the top yet.

Macy’s, in fact, is becoming a retailer composed of mostly exclusive/private label brands, nudging out national brands that have been with the chain for decades.

In personal care, CVS has exclusively introduced Lumene personal care lines from Finland, and this, along with Essence of Beauty, Dr. Jeffrey Dover and other exclusive private brands, including new free standing skin care centers with private label and exclusive brands, have turned CVS into a beauty destination.

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