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Packaging helps power store brands

Rx-to-OTC switches, and a shift of top execs from CPGs to retailers, increase the emphasis on package design to help store brands gain greater market share.

Pw 2371 Grocery Aisle

Using low cost as their marketing hammer, makers of yesteryear’s generic products used no-frill package graphics, printing product name and ingredients information in one or two colors. Today, however, retailers are relying more on packaging to market their store brands/private-label offerings as an alternative to national brands. And due to a combination of economics, package shelf appeal, and other factors, store brand awareness and sales are growing.

Last Spring, Group 360 Worldwide, a design and strategic marketing communications firm, sponsored a first-ever Store Brands Decisions Packaging Design Retailer Benchmarking Survey, conducted by Store Brands Decisions, a media provider of information for store brands executives.

Conducted last April and May, the survey aimed to help retailers benchmark their practices and plans against the broader store brands retailing market. The survey sought to provide recommendations to retailers, manufacturers, and design agencies within the consumer packaged goods (CPG) segment. Survey respondents included 36 companies operating more than 58,000 stores that generate more than $900 billion in annual retail sales, and included retailers from the U.S., Canada, and Korea.

Mark Rutter is president and CEO, Group 360 Worldwide, which helps its clients’ companies deliver their brands to market through a single, strategically focused point of contact, including strategy, content, packaging, marketing, and related functions. He notes, “Our business is to help grow both CPG and store-brand clients. I refer to them as store brands rather than ‘private label,’ a term that could be interpreted like a private club. There are so many retail stores that have their own line of products. Nowadays, it’s not good enough, let’s say in the salty snack category, to have just Frito-Lay products,” says Rutter. “You also need to have all the other brands out there, including store brands, which now are very popular because of their improved reputation. Store brands are an increasingly powerful category. Long gone are the generic products that people used to think about, mostly due to the power of the design and the promise and characteristics of store brands.”

Costs have been a significant factor in store-brand growth. Says Rutter, “Economic downturns make lesser-priced products more attractive to people making less money. So retailers need to grow their own brands as well as national brands.”

Asked if retailers make a different profit on their own brands versus national brands, Rutter says several factors must be weighed. “My guess is they probably do because they control their own supply chain more than they do with national brands. But they sell for a lesser price, so their margins could be very similar,” he says. Another dimension here is that consumers may shop for a national brand in one product category, but a store brand in another segment.

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