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Article | February 18, 2010
Your national brand's biggest survival threat? It could be your retailer
Retailers, looking to boost sales in hard economic times, are squeezing national brands and giving their own products more shelf play, often at lower prices.
“Show me the value” is a well-established shopper demand as they decide which products will go into their cart. Add retailers to that demand. According to retailers quoted in an article by CNNMoney.com, some retailers are banishing national brands from their shelves that clearly don’t earn their keep.
National brands that merely add clutter and confusion to a product category are being axed, and retailers are filling in the vacant space with more of their own private-label products. Why? In these difficult economic times, retailers are coming to the conclusion that shoppers want less variety and instead prefer bargains. The theory goes that less variety pushes shopper focus more on retailers’ own brands and can drive consumer loyalty toward them.
At stores from Walmart to CVS/Pharmacy to Kroger, national brands appear to be particularly vulnerable in everyday household products.
With these developments, it is more imperative than ever for national brands to maximize the impact of package design to communicate a value proposition that, in the consumer’s mind, justifies the price premium over many private-label products and engages them on a deeper level than products that compete primarily on price.
Retailers’ latest moves bring another thought to mind: Brand extensions are proliferating across categories, increasing the risk of adding to the “noise” at shelf. Such extensions need to prove their worth on all accounts. Field-testing is essential to validating that any brand extension makes sense to consumers and answers their unmet needs.
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