Chandi Gmuer, Vice President of Consumer Research and Product Testing at
Consumer Science, discusses National Brand Equivalents and if they are still a useful measure in the current private brand retail landscape.
For the U.S. private brand industry, National Brand Equivalency (NBE) has long been the Holy Grail. That focus has moved the industry from the generic products of the ‘70s and ‘80s to the trusted private brands we have today. However, with the retail landscape undergoing seismic changes, is National Brand Equivalency still a useful measure?
Private brands continue to grow market share and are at the cornerstone of many a retailer’s strategy. A typical element of that strategy is increasing shelf space for private brands and delisting national brand and regional brand competitors. Given that fast growing chains like Trader Joe’s, Aldi and Lidl are predominantly private brand, the number one brand for such retailers in most categories belongs to the retailers. This means other private brands should be considered as benchmarks, as they are now key contributors to a consumer’s perception of quality and value.
As a retailer matures in its private brand strategy, it will move from being a fast follower of national brands, to being an innovator in its own right. When developing unique products or even flavors/variants of an existing product, classic NBE thinking can no longer be used.
Benchmarks can still be useful approximations of quality, but they are no longer the rigid yardsticks they previously were. These considerations are heightened when coupled with another shift in retailers’ thinking: fresh. Value-added fresh offerings typically have much shorter lifecycles, and need to stay relevant with seasonal offerings and on-trend restaurant-style menus.
These considerations have seen mature private brand markets such as the U.K., emphasizing benchmarking and ranking of their offerings against their private brand competitors over anything else.
In the U.S., a number of lifestyle private brands have already outstripped national brands. For example, retailers now have significant ranges of organic, gluten free and clean label offerings unmatched by any strong national brand. For these lifestyle offerings and also for value-tier ranges, private brands are the de facto standard and go-to benchmarks; it is no longer about NBE.
However, national brands should not be discounted. They often are at the
forefront of innovation and quality improvements. Still, they should only be
considered as one of the possible benchmarks available. A category-by-category and even item-by-item competitive analysis for a retailer’s specific marketplace will yield the most meaningful information. Evaluating a basket of key competitors – both private brand and national brand – provides true perspective on quality and value.
Such an assessment does not need to be limited to how well a product tastes or performs. Consumers consider a multitude of factors, both pre- and post-purchase, in building up their perception of a product. A comprehensive assessment should mirror these factors, including price, packaging function, artwork design, claims/call-outs and nutrient value. Often competing brands will each have their own particular strengths and weaknesses. Opportunities for improvements can be cherry picked
from different factors across the competitive set. This approach is particularly important in conscious product positioning – for example premium vs value. It also lends itself to a gap- or white-space analysis to develop differentiated offerings for consumers.
So, although NBE may not be completely dead, it can no longer be relied on as the monolithic quality measure for a retailer’s brand!