How private labels can bring benefits to your business

In the 70s, the concept of own brands emerged, here in Brazil, as a reference to generic products. Without even taking the name of the manufacturer and with little perceived quality, low prices were the main – if not the only – differential of the goods. Since then, this market has developed following the changes

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In the 70s, the concept of own brands emerged, here in Brazil, as a reference to generic products. Without even taking the name of the manufacturer and with little perceived quality, low prices were the main – if not the only – differential of the goods. Since then, this market has developed following the changes in consumption habits and has invested in quality, packaging, price and added value.

Now, private labels assume a leading role. They share shelf space with products from leading industries and evolve in their relationship with consumers, communicating increasingly attractive attributes and positions. But, after all, what is the current scenario and expectations about this market? And what is the role of design in this story? Find out in this article!

Exclusivity brings benefits to retailers

In theory, private labels refer to any product (or service) manufactured and sold exclusively by a company. You certainly know what we are talking about: the rice that bears the supermarket seal, the line of items for the home of a fast fashion brand or the personal hygiene items that are only found in a specific pharmacy chain.

But in practice, it goes much further. Exclusive products are an opportunity for retail in many ways: to have greater market share, increase profits, reduce dependence on the industry and gain total control over the production chain.

Private brands generate loyalty opportunities

In direct and constant contact with consumers, retailers have valuable data on purchasing behaviors in their favor. Thus, they can create customized solutions to meet specific audiences. And that means, in the medium and long term, loyalty.

After all, when a product pleases and meets a person’s expectations, the tendency is for them to buy again. According to the Brazilian Association of Private Brands and Outsourcing (Abmapro), the 20% of consumers who most buy private labels in Brazil, are responsible for 77% of the total revenue of the segment.

Added value in times of crisis

On the one hand, consumers are increasingly demanding and empowered in relation to the brands they consume – especially millennials and the generation Z, who were born between the 80s and 2010. On the other hand, the coronavirus crisis – which brings several uncertainties, including economic ones – has been directly influencing consumption habits.

Among them are own brands: an alternative that gains strength by offering this audience value and quality at affordable prices. After all, in recent years, concepts such as innovation, sustainability and customers’ well-being have been increasingly adopted by the segment in order to meet the expectations of these consumers.

Expanding market

It is not by chance that the private label market promises to advance significantly in Brazil. In 2019, the expectation was for a 10.5% growth in the sector’s profitability, according to Abmapro. For 2020, the expected increase is even greater: 12.5%.

In recent years, even, new segments have expanded the offer and sales of these products in Brazil. Pharmacies, for example, occupy a prominent position. The study “Panorama of Private Brands of Retail”, by Nielsen, pointed out that the sales of drugstores with their own brands increased 7.7 times between 2010 and 2018. And only between 2017 and 2018, the growth reached almost 20%.

Packaging design as a strategic tool

In an increasingly competitive market, the development of private labels becomes strategic for retailers. And design takes on fundamental roles in this scenario. After all, packaging is the point of immediate contact between brands and consumers. This means that, in addition to differentiating the product through a unique identity, design has the responsibility to communicate positions and attributes of the private labels.

The Terroirs Du Monde case 

The supermarket chain Carrefour found in the packaging of its Terroirs Du Monde wine line a solution to communicate the innovative character of the product and increase its added value to the public.

Going in the other direction that the industries of the category has been doing, which usually prioritize typography instead of the images on their labels, the Carrefour line highlights in the gondolas with illustrations that simulate postcards representing the countries of origin of the wines. This design, in addition to differentiating the products, was strategic to solve the difficulty of the lay public (without references about the drink) faces when choosing what label to take home.

The Terroirs Du Monde case represents well the potential of the private label market. In this case are data, strategies and opportunities that can be applied to build solutions and relationships that bring long-term benefits to retailers and their audiences. Did you like the article and want to discover even more about this universe? We have produced a free infographic with several relevant content about own brands to inspire you!