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<h2>Consumers are definitely giving retailers permission to grow their private brands.  The real question is will retailers grow private brand value or simply grow more private labels?  In the age of mega-private brands, this trend is giving national CPG brand managers some added anxiety these days.  It also presents some relationship challenges for retailers to grow the value trusted CPG brands bring to their customers.</h2>
According to a report published this past year by consulting firm <a href="http://www.deloitte.com/view/en_US/us/index.htm" target="_blank"><em>Deloitte</em></a>, consumer’s perceptions and attitudes toward private brands are changing significantly; and offers insight into the notion that spending less for private brands doesn’t mean consumers are settling for less from private brands. According to the report, only one-third of the respondents endorsed the statement “ I often feel that I am sacrificing when I purchase a store brand instead of a national brand”. This is no surprise when one stops to think that many consumers today believe that store brands and national brand are essentially made of the same stuff. According to the report, 80 percent believe the statement “most store brands are manufactured by the national brands”.

The report further suggests that the current economic climate has made consumers more discerning about the brands they prefer. 75 percent of respondents agreed “ these economic times have made me more aware of which brands I care about and which ones are less important to me”.

<strong>Who’s winning?</strong>
Seemingly one could easily conclude that private brands are beginning to win the battle of the brands through market share gains over the national brands. What’s accelerating this trend is private store brands are beginning to employ more strategic product innovation and the brand management discipline commonly employed by big national CPG brands. Consumers now believe there is little difference in quality or value between the two alternatives. Worse, many consumers believe they’re paying for the “advertising” of the higher priced national brands. Here are some more interesting highlights from the report:

<strong> <em>Between 2006 and 2009, private brand market share rose across 74 percent of products in the personal care, household goods and food and beverage categories in the United States. </em></strong>

<strong> <em>In 2009, store brands represented nearly 18 percent of CPG spending and over 23 percent of CPG products sold.</em></strong>

<strong><em>Private labels represent 20 percent of grocery store and 18 percent of supercenter sales. </em></strong>

<strong><em>Store brand products were 31 percent cheaper across product categories than their national brand counterparts.</em></strong>

<strong><em>Store brands are not just a recession related phenomenon – U.S. store brand sales continue to grow over the long run despite improving economic conditions.</em></strong>

<strong>Retailers are now taking product and brand building innovation to heart.</strong>
What’s driving innovation within private brand-driven retailers is fairly simple–they can be far more nimble than national CPG brands. Developing a private brand can be far more efficient and at a much faster pace.  Private brands don’t have to make the long-term capital investments in product development, manufacturing and rigorous BASES testing and other quantitative research methods to gain the assurance that their value proposition is relevant and the long-term investment warranted. Private brands have the real-time retail environment to test brand concepts with far less risk, and they receive immediate feedback because their customer’s are voting with their dollars right in the store!

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Walmart’s <a href="http://walmartstores.com/pressroom/news/9028.aspx" target="_blank"><em>Great Value</em></a> brand is a case in point on being nimble and innovative in near real-time. Covering well over 100 product categories, and launched in 2009, the Great Value brand continues to adapt and transform itself much faster than CPG brands of similar scale.  The Great Value private brand was so expansive and compelling at shelf, customers began to believe they were being driven to favor the value brand over national brand alternatives. At the risk of alienating customers and CPG suppliers, Walmart correctly and quickly balanced their “brand block” private brand presentation in a fashion that did not  obscure the shelf presence of national brands–thus the power of a <a href="http://www.storebrandsdecisions.com/news/2010/09/21/walmart-shifts-private-label-strategy-" target="_blank">mega-private brand</a>.

<strong>Private brands will lead the way.</strong>
It’s probably safe to conclude the next generation of super successful brands will not come from the name brands, but from more private brand-focused retailers. Consumers seeking to save some money in tough times may be fueling the current growth in private brands, however the cat is out of the bag, and progressive retailers will continue to innovate and leverage to the fullest advantage their immediate access to their customers.<em> </em>

<span style="color: #808080;"><em>Editors Note: I gathered much of the research for this post from the blog: <a href="http://mypbrand.com/" target="_blank">My Private Brand</a>. I encourage you check the site out and subscribe to the feed. It offers useful insights into the emerging trends surrounding the global growth and advancement of Private Brands.</em></span>