Velocity Talks: The Future of Private Brands

Hello and welcome to Velocity Talks. I’m Christopher Durham, the president of Velocity Institute. Today, I am thrilled to have Mark Field as our guest. Mark is an expert in Retailer-owned Brands and has extensive experience in the international food manufacturing and retail industry. He founded the Prof Consulting Group, which helps food manufacturers and retailers optimize their private label strategies. With offices in Australia and the UK, Mark brings a global perspective. In this article, we will delve into the key themes discussed in our conversation and explore the implications and potential impact of these themes on the future of private brands.

Building the Foundation: The Evolution of Private Label Brands

Mark highlights the significant progress made by retailers in developing their private label offerings. He notes that retailers are now focusing on building the foundation of their private label ranges, ensuring that they have everyday essentials covered. This includes products like block cheeses, meats, and UHT milk. By providing these fundamental products, retailers can offer value to customers while also driving returns for themselves. However, Mark believes that there are still significant gaps in the market that present opportunities for retailers to expand their private label ranges.

“The real fundamentals are there to give customers value and deliver big returns for the retailers. Before we get into the likes of having platforms around taste, there’s still significant gaps in the store which are opportunities for the retailers to get the low hanging fruit.” – Mark Fields.

The Rise of Authenticity and Taste

One of the exciting developments in the private label space is the increasing focus on authenticity and taste. Mark observes that consumers are now seeking real, authentic food experiences, especially due to limited travel opportunities. Retailers respond to this demand by offering a more comprehensive range of international cuisines and flavors. This shift towards authenticity is evident in the products showcased at the PLMA trade show, where exhibitors emphasize the taste and quality of their private label offerings.

“What is very encouraging this week is people are talking about taste. Even some of the exhibitors are talking about how they’re bringing taste into their products.” – Mark Fields

Retailer-owned Brand as a Destination: A Positive Outlook for Brands

Contrary to popular belief, the rise of Retailer-owned Brands does not necessarily mean a loss of market share for traditional brands. Mark Fields argues that a successful private label strategy can benefit brands by attracting customers to the retailer. Once customers are in the store, they are more likely to purchase private label and branded products. This creates a symbiotic relationship between private label and brands, where each reinforces the other’s presence and value.

“A really successful private label strategy across any retailer is how you get customers into the store. And that way, then you can sell branded products in there because you’ve got a reason for customers to come to you as a destination.” – Mark Fields

The Aldi Effect: Disrupting the Market

Mark Fields highlights the impact of discount retailer Aldi on the grocery market. Drawing from his experience in Australia, where Aldi has gained significant market share, he predicts that Aldi’s entry into the US market will stir up competition and put pressure on other retailers. Aldi’s reputation for offering a tight range, great value, and innovation has attracted a loyal customer base. As Aldi expands, it will challenge traditional retailers and force them to reevaluate their private label strategies.

“I think it’d be interesting how it puts pressure on Trader Joe’s. And I think it will do that as well. I think already coming into this market with a reputation for a very tight range, great value, and innovation will really stir that whole cocktail up.” – Mark Fields.

The Future Outlook: Accelerating the Private Brand Journey

Looking ahead, Mark Fields sees a bright future for private brands. He believes the next five years will be an exciting time for consumers as retailers continue to innovate and expand their private label offerings. However, he also emphasizes the need for retailers to accelerate their private label journey by creating a point of difference and inspiring their team members. By leveraging the success of private label brands, retailers can drive customer loyalty and create a unique shopping experience.

“I think the next five years are very exciting for consumers for private label. But if you look at it slightly from the other side and say if you’re a brand, what does this mean for you? I actually think that’s a positive outlook for brands here as opposed to them seeing a loss of market share because everybody’s going to go private label.” – Mark Fields.

In conclusion, the future of Retailer-owned Brands is promising. Retailers are investing in building the foundation of their private label ranges and are increasingly focusing on authenticity and taste. The rise of discount retailers like Aldi is disrupting the market and putting pressure on traditional retailers to innovate. As the private label journey continues to evolve, retailers and brands must work together to meet consumers’ changing needs and expectations. With the right strategies in place, Retailer-owned Brands have the potential to thrive and reshape retail.