Pushing high Quality Private label and Avoiding Common Mistakes

Private label products are clearly an important though not the only solution to improve profitability for retailers. Yet they represent an important tool to improve long term customer retention and value. Given this context, it is not a surprise to see this as having been a focus area for numerous retailers over the last couple of years… and yet, poor quality and sometimes poorly packaged products abound.

To ensure consistency and high quality results, it is imperative to avoid common pitfalls and mistakes during product development, while the products are in store and in their day to day management.

During development

·       

      Treat the PL brand as an independent entity not just an easy to sell rip off of a national brand.  Develop it with the same rigour and concern for consumer acceptance in every possible way including product testing. Also as a brand ensure that it has distinct USPs like every good brand must have.

·         Understand competition – in terms of competing brands, claims, perceived quality levels, product features, packaging aesthetics, pricing, et al. Some retailers do a packaging rip off of national brands. While it can help their consumers understand what the product stands for, it in no way elevates the product stand out on its own as a high quality product. The only reason why customers may prefer such a product would be a lower price tag and not product superiority.

·         Proportion of product name vs brand name – Given that PL brands – in general do not tend to be as well known as national brands, it makes sense to keep the proportion of the product category name bigger than or atleast equal to the brand name. This ensures that in no case the product is missed on the shelf by prospective customers. Only in a situation where the retail chain operates on predominantly PL brands and does not stock national brands, can the risk of the brand name being bigger -be taken.

                                             

Leading National Brand                                                 Private label brand

(More weightage to brand name)                                            (More weightage to product category)

·         Invest in good packaging – go looking for design / packaging agencies that can can truly add value. Don’t blindly ape national brands nor compromise on packaging quality. Aim to identify genuine need gaps in terms of product taste, form or packaging.

·         Never trade quality with price – Negotiate with your manufacturers with eyes and ears wide open. Ensure that product specifications are recorded and understood and not touched when pricing negotiations are underway. A lower negotiated price should not be at the expense of a lower product spec. While a national brand can, a PL brand that trades quality for a lower price is unlikely to succeed.

       In store

·         Superior Merchandising on the shelf is as key as the development of a high quality product. Placement of PL brands must be comparable or better than the leading brands from a visibility and easy to reach or pick perspective. Placement of PL products on the bottom 2 shelves completely defeats the objective. Similarly on online sites – PL brands must be upfronted better than national brands. 

National brands are usually well merchandised. PL products too could follow the same colour blocking approach.

·         Align with staff – For PL products to be upfronted effectively in stores, it is critical to ensure their consistent availability, superior merchandising and point of sales support at all times – actions that cannot happen without staff understanding, involvement and support. This requires ongoing engagement, dialogue and product understanding (between the PL or category teams at HO and the store teams) and Linkage of private label sales with the overall incentive programs as well.

      Ongoing

·         Collaborate with PL contract manufacturers and make them partners in your success. This clearly means understanding their strengths, constraints and motivations as much as you do your own organisatons’.  Streamlining of basic processes and Preferential treatment for PL partners will help elicit their support on a day to day basis and ensure faster growth for the ranges.

·         Invest in checking Quality  – all national brands have teams that ensure consistent quality output for consumers. PL brands that take this area lightly could suffer in terms of being taken for granted by suppliers. Results could range from differing appearance of the end product to poor quality of the end product or even external inclusions like hair, wires or sometimes even mosquitoes and flies contamination in the product. Having your own team to monitor production, packaging and checking quality at inward, in-process and outward level will help drive the desired focus on quality and process compliance.

·         Maintain samples of approved packaging and details of product quality in as much granular a manner as possible – or have it monitored by an external agency. Too often, in the absence of a quality team, these simple aspects tend to get ignored or overlooked and the PL products that hit the shelves month after month don’t necessarily bear a resemblance to when they were originally developed.

@Mohit Khattar