Hidden Treasures for Private Brands
By Steve Rubow*

The reason a retailer can sell their Private Brands at a value price to their customers is that their product costs are so much less than the competing National Brand. To be successful, all the same functions must be performed by a Private Brand retailer as are performed by a National Brand manufacturer. But, in many cases, retailers will try to get away without spending anything other than for distributing, displaying and pricing their products. On the one hand, this would certainly be very short-sighted. On the other, this would provide a wonderful opportunity for Private Brand growth.

Let’s discuss the major functions needed to successfully bring a product to market. The first area of responsibility is New Product Ideation. After laying out the retailer’s overall strategic plan for Private Brands, this is where it all begins. A retailer could rely solely on the manufacturing community to bring ideas to them, and many do just that. While this works in many cases, it would not be the most resourceful. Instead, the retailer should accept the greater share of the responsibility to create ideas for their new Private Brand products.

Hidden Treasures for Ideation

Where can a retailer turn to effectively ideate, if not the manufacturer, without spending at the level a National Brand manufacturer must spend? If they mimic the route a manufacturer takes, a good part of the cost spread between the National Brand and Private Brand versions of a product will be eroded. Fortunately, a retailer has a few ready-made resources to tap into-”hidden treasures” of information–and thereby come very close to the success rate of a National Brand product. If retailers effectively tap into these hidden resources, they can actually be more effective than a National Brand might be.

1. The Manufacturer. Manufacturers can be a very effective resource for developing new Private Brand product ideas. They should certainly not be overlooked, nor should they be automatically expected to come to you with fresh ideas.. A manufacturer generally has a breadth of geographic experience as well as a depth of specific product or category experience. Retailers should challenge them to keep them informed of new ideas. Interaction with them to create new ideas, new concepts, new products can pay off handsomely. The retailer should assume some of the lead.
   
   
2. Customer Complaints and Inquiries. Most retailers keep information on customer complaints and inquiries concerning product performance. Usually the objectives of these data bases is to measure customer satisfaction and to gain reimbursement from manufacturers, compensating the retailer for product performance shortfalls. In addition to these objectives, these data bases could be sifted for new product ideas, looking for ways either to improve existing products or to develop brand new ones. Both National Brand and Private Brand files should be considered for fulfilling this objective.
   
   
3. Attend Industry Shows. Attend domestic and international food shows with the stated objective of searching for new product ideas. Attending the more obscure ones will generally be more productive than the larger, more well-attended ones, where the emphasis is usually on new products already in existence. International shows will show the retailer ideas for products that may soon “jump the pond.” This was certainly true for aseptic packaging and for vegetable-based juices.
   
   
4. Employees. A retailer’s own employees are consumers as well and are likely to have a greater interest in their employer’s success than the average consumer. Retailers should capitalize on this by regularly asking them for their ideas. A formal approach to “listening” to ones’ own employees will pay great dividends. Their input is invaluable because of their daily interface with the customers.
   
   When retailers want to demonstrate to their customers that they are “on their side,” these resources will go a long way in developing the unique Private Brand products that will demonstrate a listening ear and a willingness to be their representative in the marketplace.

*Steve Rubow has over 40 years experience in retailing and private branding and was President/CEO of Topco Associates for 8 of those years. He is currently associated with Leo J. Shapiro Associates, a Chicago-based market research firm (website: ljs.com) and is on the faculty at The University of Chicago. Steve can be reached at steve.rubow@ljs.com.