With the rise of private label within the retail market we explore what it means for your brand…
You might have heard the term ‘Private Label’ or even ‘Phantom Label’ being banded around.
But what does it mean? And what does it mean for your brand? As the growth of the Private Label grown accelerates within the retail market, it’s high time you get up to speed.
What is Private Label?
A Private Label is essentially a brand created by retailers and sold in their stores. They go toe-to-toe with the big hitters in their category. And right now, they seem to be competing well.
Private Label might sound like another word for own-brand, which we’re all well acquainted with. But there’s an important difference.
Own-brands are clearly marked as a creation of the retailer – such as John Lewis’ own range. Private Labels, on the other hand, often have different or more sophisticated branding. So it’s not always obvious that they’re affiliated with the retailer who owns them – hence the word ‘phantom’.
By doing this, Private Labels appear to have been consciously chosen – without bias – by the retailer as a good brand for their store.
A familiar example here in the UK is the No.7 makeup brand. Though it’s been created by and sold exclusively in pharmaceutical giant Boots, its branding is distinct and it has forged its own reputation.
Why are they a success?
In recent years we have seen a rapid rise of discount retailers. In this environment, the competitive pricing of Private Labels has been a big hit with customers.
Further, Private Label seems to be a space for product innovation – to experiment with products that might not fit with the parent retailer’s identity. Finally, Private Labels are a way to help distance products from the reputation of the parent brand – such as low value or old-fashioned.
Tesco saw the benefits of Private Labels when they totally overhauled the branding of their ubiquitous Tesco Value line in 2016. Dissociating with the Tesco brand altogether, they created seven farms to brand their produce with. Shifting from own-brand to Phantom Brand, Tesco cleverly dodged the negative associations that Tesco Value had.
What does it mean for brands?
One major benefit of creating a Private Label is that the parent retailer can leverage their authority over space.
Big, centre-stage displays will help the product be seen, shine, and give off the impression of popularity.
This leaves regular brands with less space – and could put your brand on the back foot. And in terms of quality, the gap is closing. That means the brand you’ve spent years and years building, could be threatened by relative newbies.
How should brands react?
According IGD’s retail analysis report, brands must invest in new product development and take risks, as Private Label brands are doing, in order to keep up.
In reaction to less promotional space in store, brands should take a fresh look at their offers, pack design and the value they’re offering. In this way, they can compete with the Private Label’s domination of space.
If you’d like to know more about how to fight the phantom, get in touch today.