COVID-19 – What’s next for Private Brands?

The New Normal

Nobody knows the long-term impact Covid-19 will have, but there is general consensus that when things return to ‘normal’, there will almost certainly be a new ‘norm’ in many different ways. There seems little doubt work habits and increased use of technology will survive beyond the immediate crisis for example, but what is Covid-19 likely to mean for private brands?

If there is anything good to come from Covid-19 (beyond the fact many of us have been saved our daily commute) then I predict a boost for private brands. 

Consumers Top Concern

The news headlines are about scarcity but that is not the priority for most people. Yes, clearly there are health concerns but there are more people worried about what this means for the economy and the long-term. 

Based on Kantar data the greatest area of concern is the economic outlook (47%) compared to health (39%) and the scarcity (20%). Therefore, as we saw in 2007/2008, there will be more focus on prices and value. This means more consumers are likely to turn to private brands. But only if they can deliver consistency and quality and as such become a suitable national brand alternative.

Beyond Premium Tier

In recent years we have seen the increase in premium own brands as the point of difference. Those retailers with a tiered own brand strategy focus on the Better and Best products in their range. That is likely to change. 

If retailers learn from the success of Aldi and Lidl in the last decade, they want quality products at a good value. Therefore, the focus will move from ‘innovation’ to value. 

Ranges are likely to reduce as retailers and their private brand suppliers work together to focus on the products that can be delivered at speed and volume in the short term – to address scarcity/availability – and value in the medium term. 

If retailers can deliver this with their own brand range and ensure products remain relevant to consumers, this is an opportunity to for retailers to see growth. 

Brand Loyalty Lost

In the more immediate term, scarcity also means consumers are having to forgo brand loyalty. 

In what will forever be known as the great toilet paper famine of 2020 consumers will have to forfeit their Cottonelle Ultra Comfort or favourite Charmin if it isn’t on the shelf. But rest assured they will also not go home empty handed.

Therefore, by necessity consumers will try new brands that they have previously shunned. And this will be more relevant in some categories than others. Toilet paper and household cleaning products is a good example where retailers across the globe have seen increased demand.

Shelf-savvy Retail

Some retailers are focus on how to re-stock the shelves. Normal rules on ranging and category management out of the window as they try to meet demand. It appears that the smarter retailers are seizing the opportunity to (where possible) ensure those gaps on the shelf are filled with private brand products.

This is an opportunity for consumers to engage with new private brand products at unprecedented scale. It must not be at the cost of quality. In this sense I don’t mean quality as ‘must be the best’ but quality must be good enough. It must be consistent. And it must match the brand promise. 

It could be seen as opportunistic but those that do it well – engage with consumers, engage with suppliers and address the issue of value at the same time – will see a positive long-term impact for their private brands.

Your Burning Platform

It is also the opportunity to drive change. The impacts of Covid-19 will be with us for months at least. Therefore, retailers and suppliers can collaborate on packaging and formats to drive cost and efficiency. 

This is also therefore the opportunity to enable change, such as packaging reduction. For example, in some markets refill packs for household detergents have been very successful. In others, consumers have resisted and stuck to what they know. They buy a nice fresh new bottle of detergent each time. If those same consumers are ever likely to change their habits and try refills it is now; it depends what is on the shelf.

Covid-19 has had a positive an unexpected impact on the environment. Industry has slowed. Travel has reduced. As a result, air pollution is down. The rivers of Venice are clear for the first time in decades and the fish are returning. Sadly, these impacts are likely to be short-lived. But there is an opportunity to influence longer-lasting impact such as packaging changes, packaging reduction. Step changes toward already published commitments. Changes which can be led by retail private brands. 

This is an opportunity for private brand growth and to deliver real benefits and long-lasting value to consumers.

Tags: COVID-19

James Butcher

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