Embracing Private Label To Drive Own Brand Growth

Embracing Private Label To Drive Own Brand Growth

Embracing Private Label To Drive Own Brand Growth

Embracing Private Label To Drive Own Brand Growth


As private label investment and share climbs, manufacturer brands will need to adapt new strategies for success and challenge the conventional approach of fighting against private label. Yesterday’s toolbox of managing price gaps and pursuing assortment and shelving optimization is no longer

the playbook for success. Manufacturers that are able to embrace private label’s role in the category, while clearly defining the incremental value that their brands bring to the category, will position themselves for true success in a growing private label world.

From Search

Private Label is an attainable, proven, profitable growth strategy across all retail channels. In an environment that is increasingly difficult to take price and grow share, retailers have chosen to aggressively pursue profit and sales growth through more sophisticated store brand strategies.

They are turning to private label to capture 25-30% higher margins, meet their consumers’ needs and provide unique offers that can create a compelling differentiation to drive traffic and loyalty.

Store Brands Have Momentum

Retailers have made significant strides in the effectiveness of their store brand portfolios, contemporizing the branding, innovating the assortment, and offering more services.

No longer is private label known as a generic or the ‘off brand.’ Today, retailers are fast to innovate and exploit new trends, in many cases leading innovation in categories.

Private Label is capturing share across channels, from Grocery and Natural channels to E-Commerce to Mass Merchandisers. Momentum continues to build.

The Case for Private Label Focus:

Retailers Face Declining Profits: 
In an environment that is difficult to take price, retailers must take margin.

Economy Remains Unfavorable:
Aproximately 1 in 7 people in the US received SNAP (Supplemental Nutrition Assistance Program) benefits1.

More Consumers are Open to Store Brand:
Millennials are more likely to purchase private label as they grew up with store brands being more than cheap alternatives.

Aging generations, triggered by a poor economy, have tested and enjoyed private label. They have lived through National Brand Equivalents and Generics and are now at a point in time that they cite the highest propensity to buy private label products.

Select Examples of Private Label Momentum:

Whole Foods:
Creating a new store format focused on value, and own brands to lower the cost of natural living

Meijer :
Meijer launching ‘True Goodness’ brand which offers products that are free from artificial flavors, colors and preservatives at an affordable price

Developed 3 new private labels to better meet a broader range of shopper needs: ‘p$$t’, ‘Heritage Farm’ and ‘Check This Out…’ – Simple Truth reached $1.2B in sales during 20142

Partnered with Ree Drummond – blogger, cookbook author and host of her own Food Network TV show – to create ‘The Pioneer Woman Collection,’ a line of modern country housewares exclusively sold at Walmart

Today’s Principles to Successfully Win Alongside Private Label

The following five principles represent the new ways to manage your branded business with the growing momentum of private brands in your categories.

They require Manufacturers to think differently to better partner with retailers through their private label, and to drive sustainable growth for the category and your brand.

Every retailer wants to know where the category is heading. Having a vision on where the category is going, the incremental value available, and the roadmap to get there, enables manufacturers to provide significant value beyond the category manager’s capability.

Communicating a clear understanding of the category dynamics and a vision for where it is going tomorrow is critical to lead planning and guide the role of private and leading Manufacturer brands.

Become the go-to partner for identifying whitespaces and innovation pipelines, educating shoppers, improving the in-store experience, and curating targeted messages that help your brands, private label, and the category grow.

While retailers are refining their ability to market to consumers outside of the store, the strength of national brands is their marketing capability. Bring demand beyond what a retailer can create.

Staying top of mind and relevant with today’s consumers is critical. Authentically reach out to your retail partners’ marketplace to develop a strong personal connection that continually motivates purchase.

Create Category Demand In-Store with Disruptive Merchandising beyond PL Capabilities:

In-store remains a critical battleground for your products. Although shoppers are rushing around on their usual route through the store, shopper’s are continually interrupted by new items, displays, sales, education at shelf, etc.

Seize the opportunity by grabbing the shoppers attention. Create demand for the category through various in-store levers beyond a retailer’s programs.

One in five shoppers say they impulsively buy categories that they had no intention of purchasing prior to entering the store, while 28% claimed to make their brand decision in-store.

Use Retailer Momentum to Optimize Brands as Part of the Category Strategy:

Be the Partner that helps retailers build private label share and capture more of the market. As private label reaches more shoppers, leverage its success to rationalize competitive brands, and focus on efficient assortment strategies (i.e. 2 or 3 brand strategies).

Working together, private label can capture ‘quality at a value,’ and the leading national player can provide incremental sales through ‘value added’ items.

Build a Price Value Benefit to Help Retailers Capture Lower Tier Shoppers:

How value is defined varies from shopper to shopper, and willingness to pay rapidly changes as new benefits are introduced to the market.

For manufacturers, it’s not about low cost, but meeting a need at a lower price point. While private label can stand for ‘quality at a value,’ national brands need to embrace the value tier by having a competitive offer that is appropriately supported – driving branded sales, but also helping retailers gain a bigger share of the growing value segment.


The above five principles require a holistic approach to the category, your consumer, and your customer. To play better alongside private label, national brands must have a view on where the category is going, provide incremental value both out of store and in store, and embrace the value tier to win share for themselves and the retailer. The retail landscape has changed, and to be successful national brands need to re-establish their position, including how to best fit with the retailer’s assortment and their consumers’ needs, while continuing to leverage their greatest asset – flexing their marketing muscles to generate demand for the category.

Bridging the Omnichannel Divide

Bridging the Omnichannel Divide

Bridging the Omnichannel Divide

Bridging the Omnichannel Divide

While ecommerce is recognized as one of the most exciting opportunities in the Consumer Packaged Goods industry, poised to make up 5% of industry sales by 2018,1 it is also a source of enormous anxiety for both manufacturers and retailers. Most industry players know that they need to establish a brand presence online quickly or be left behind by savvier digital competitors. Nevertheless, a lack of understanding of how to best appeal to shoppers online has stalled the development of ecommerce strategies.
Fewer than half of CPG executives feel they have a clear ecommerce strategy,2 which should come as no surprise. With only a third of ecommerce research to date addressing CPG, retailers and manufacturers are still woefully uneducated and unprepared to develop a path forward. The few players who have devoted significant resources to defining their ecommerce strategy still lack a way to think about omnichannel cohesively.
The time has come for CPG companies to get omnichannel strategy right. The time for a debate about whether ecommerce will compete with brick & mortar stores for everyday purchases has passed.

Today, the question at hand is how big online retail will become and how to best leverage its growth.

Instead of spending time speculating, manufacturers and retailers must focus not just on ecommerce, but also more broadly on providing shoppers with better omnichannel offers.

Thanks to technology, new retailer and fulfillment models are emerging every day. The winners in the industry will be those who can look ahead, place smart bets, and proactively lead with omnichannel solutions.

For these reasons, we set out to address the knowledge gap around CPG ecommerce as well as to understand how ecommerce compares to brick & mortar in the eyes of CPG shoppers. We took as our goal unlocking new learning around shifting shopping behaviors, decision drivers, and key influencers along the CPG omnichannel path to purchase.
Through multiple phases of research, our team developed a comprehensive understanding of the CPG omnichannel landscape. Our work also uncovered three omnichannel decision drivers among CPG shoppers which inform their choice of brick & mortar versus ecommerce retail. These three omnichannel decision drivers determine the winner, be it brick & mortar or online, for shoppers’ trips, wallets, and loyalty.
The key to success within this landscape is to develop a cohesive, shopper-first solution to bridge the omnichannel divide. We will explore the omnichannel landscape, focusing on each omnichannel decision driver, and share best practices that today’s CPG manufacturers can adopt to help brick & mortar and ecommerce retailer partners alike win with today’s shoppers.
The Omnichannel Divide
Fresh seafood, local microgreens, ice cream, and beer are just a few of the items previously exclusive to brick & mortar that today’s CPG shoppers can buy online. Today’s ecommerce shelf, amazingly, has evolved to offer nearly the same range of products and categories as its brick & mortar counterpart. Perishable items and temperature states no longer present a challenge for ecommerce players. Online automation and subscription service make it easy to make routine replenishment trips online, and newer retail models such as Good Eggs, make even previously niche products, like farmers’ market goods, easily accessible without shoppers leaving their couch.
While brick & mortar and ecommerce shelves now offer many of the same products, the shopping experience they offer and shopper needs to which they cater are very different. The ecommerce world remains incredibly fragmented and constantly evolving, in terms of retailer models. Ecommerce players are better able to meet shoppers’ needs across some—but not all—omnichannel decision drivers. At the same time, brick & mortar players are winning against different needs along the path to purchase. We explore the omnichannel decision drivers below.
Trip Mission
The first omnichannel decision driver concerns trip mission—for example, the extent to which shoppers are searching for new products versus replenishing products they’ve bought before. Interestingly, ecommerce wins at both ends of the spectrum.
Both shoppers who are trying something new—building their consideration set—as well as those making a routine replenishment purchase are more likely to choose an online retailer. Brick & mortar, conversely, best satisfies shoppers who are choosing from an existing consideration set.
On the left in the figure below, we see that three in ten online CPG buyers are driven by the desire to try something new — twice as many as shoppers in brick & mortar. The ecommerce shelf better meets the need for education through the broader range of information, inspiration, and reviews it can provide compared to a brick & mortar retail set.
As a result, shoppers who are trying something new spend three minutes longer on ecommerce sites, likely engaging with product information and reviews. These novelty-seekers choose a website based on its ability to inspire confidence around a new item. They are more likely to seek ratings and reviews, guidance on product use including live chat, and inspiration such as recipes or before-and-after features. Sephora.com, for example, features robust product details and images, advice and inspiration around how to use each item, brand background for each product, ratings, reviews, and the opportunity to post questions and receive answers in the reviews section. Sephora sets the bar for online personal care by being exceedingly easy to shop and confidence-inspiring.
At the same time, the rise of auto-replenishment models, such as Amazon’s Subscribe & Save, has led shoppers on routine replenishment missions to choose ecommerce as well. Knowing exactly what they want, these shoppers would rather order in advance versus take the time to make a trip to a nearby store. Two of the most important attributes in selecting a website to these shoppers are that, firstly, the site that saves personal information from prior purchases and, secondly, that the site saves prior orders. Over half of these shoppers spend fewer than five minutes making a purchase online, keeping with their desire for time-saving ecommerce automation.
While online wins at both ends of the spectrum above, brick & mortar retailers have an edge in browsing within a shopper’s pre-defined consideration set. Not only is the experience of in-store browsing enjoyable, but it also gives shoppers the opportunity to compare items package-to-package and peruse all options up close. In addition, less than a quarter of brick & mortar CPG buyers are seeking a specific flavor or variety. As a result, these buyers value the opportunity to choose the specific items to purchase from their consideration during their shopping trip.

“I do enjoy grocery shopping. I just like the selections of all the different foods you can buy and all the produce you can find. I like being able to pick up fun things off the shelf and try new types of items.”

– Shopper

“Offline, I get to browse a physical store; online is quick and specific.”

– Shopper

On the left in the figure below, we see that three in ten online CPG buyers are driven by the desire to try something new — twice as many as shoppers in brick & mortar. The ecommerce shelf better meets the need for education through the broader range of information, inspiration, and reviews it can provide compared to a brick & mortar retail set.
Our study found that four in ten brick & mortar CPG shoppers purchased their desired item within an hour of recognizing they needed it, seeing brick & mortar as “instant gratification” for their spending. On the other hand, over half of online CPG purchasers waited a day or more to pick up or receive the item they had ordered via ecommerce. Shoppers generally see online purchases as most appropriate for items they don’t need right away.

“I use online shopping for items I know very well and can wait for, offline for everything else.”of items.”

– Shopper

Given the rapid acceleration in fulfillment times, this omnichannel decision driver will no doubt continue to shift.
Same-day ecommerce fulfillment services, such as Google Express, are putting pressure on traditional ecommerce and brick & mortar players alike by offering delivery within an hour. So far, however, penetration for these quick fulfillment services is relatively low. Time has yet to tell whether buyers will stop going to physical stores to get the items they need immediately.
Product Selection
The last major omnichannel decision driver informing the choice between brick & mortar from ecommerce CPG purchases is the divide between shoppers who want to evaluate products themselves and those who trust others to select them. Nearly six in ten shoppers value the ability to pick out an item in person in order to have more control over the purchase and to verify its quality.
This preference is especially commonplace when shoppers are buying goods such as produce, fresh meat or seafood, which they need to experience in person to see, touch, or smell. Conversely, shoppers are much more likely to forego evaluation and opt for ecommerce when buying more standardized packaged items, such as HBA, household goods, pet products, or even highly commoditized packaged perishables such as dairy.

“With online shopping you have to trust the quality of the goods you’re buying based on the merchants’ reviews versus offline shopping where you can actually see the quality of the goods you’re buying.”

– Shopper

“Going to a physical store lets me choose the items I want myself.”

– Shopper

Strategies to Succeed
Understanding the decision drivers that determine the choice between brick & mortar or ecommerce retail channels is crucial to developing an omnichannel strategy. It is clear that the way to win in today’s CPG industry is by meeting shoppers’ needs across all three: Urgency, Product Exploration, and Product Selection.
In order to arm manufacturers to better lead their retailer partners to mutual growth, we have identified three strategies to win with CPG shoppers at both the brick & mortar and ecommerce shelf:
Identify what matters to your brands’ buyers & your key retailers’ shoppers
In order to succeed in the future omnichannel landscape, manufacturers must invest in shopper and consumer insight now. The gaps in learning today are vast and slowing CPG players’ progress.
Brands need to quickly identify what is unique about their buyers, how they select channel and retailer, most important attributes, and trade-offs made at shelf. Manufacturers who can invest in uncovering these insights today have an opportunity to outpace their competition.
Define ecommerce and brick & mortar strategies and integrate to build omni-channel
Omnichannel cannot be simply an extension of the brick & mortar shelf. Rather, strategies for ecommerce and brick & mortar retail, as well as for the channels within, must be shopper-led and distinct, based on the unique experiences they offer. Manufacturers must then coordinate and integrate all strategies to create a cohesive omnichannel approach. At the moment ecommerce strategy and experience is less developed than its brick & mortar counterpart. As such, manufacturers have an opportunity to update their current offer to better meet the needs of the ecommerce shopper.
Brand landing pages, organization by segment or type, as well as customized product-finding tools are key. Manufacturers can also better satisfy their ecommerce buyers by creating a ‘browsing’ feel on their pages. Optimize site content via product images, helpful descriptions, and videos to allow shoppers to feel like they can touch and feel products through the screen. Finally, make sure products offered are the sizes (bulk or sample) and varieties that shoppers are buying online versus in-store, knowing that purchases are likely to be driven by new item discovery or quick replenishment.
Choose The Right Omnichannel Partners & Structure To Collaborate
Depending on a brand’s buyers, certain retailers will be able to fulfill needs and satisfy preferences better than others. Amazon, for example, will deliver a drastically different purchase experience than Google Express or a trip to a brick & mortar Walmart, even if a shopper is buying the same item from each retailer. Brands need to determine how retailers can win with their brand buyers, choose partners who can deliver, and guide these partners via insight-fueled thought leadership.
Furthermore, brands should structure their omnichannel team to be able to most efficiently collaborate with retailer partners. Too often, ecommerce or digital teams are disconnected from brick & mortar managers despite the fact that few shoppers buy a brand only online or only offline. Manufacturers should ensure organizational structure facilitates collaboration internally and with customers, so the right people are in the right rooms connecting.
CPG firms need to develop a successful omnichannel strategy today. In the coming years, ecommerce, which has already developed a unique positioning versus brick & mortar, will capture a significant share of industry sales.

The omnichannel landscape will continue to evolve as brick & mortar and ecommerce retailers adjust their strategies to best meet shoppers’ needs for urgency, product exploration, and product selection.

The winning players will be those nimble enough to adapt quickly and meet shoppers’ preferences for purchasing their category. It is our hope that these learnings will offer today’s CPG manufacturers valuable insight and that the strategies suggested here will arm them to best guide their retailer partners to incremental growth and shopper satisfaction.
Study Methodology

Our work consisted of two phases of in-depth research:

We conducted fieldwork interviews to develop a basic understanding of the shopper mindset as well as top questions and hypotheses among CPG players. • Manufacturer Interviews addressed existing knowledge around ecommerce, strategies to date, and knowledge gaps.
• Retailers Interviews helped us to identify omnichannel path-to-purchase hypotheses, challenges around ecommerce, and best in class ecommerce manufacturers to date. • Consumer Interviews allowed us to evaluate differences in brick & mortar versus ecommerce purchases, strengths and weaknesses of each channel, and unmet needs.
We fielded an online study among 1,000 shoppers who had made an online CPG purchase in the prior month to develop a quantitative knowledge base and to reveal
differences across several key spectrums (e.g., online versus brick & mortar, across different categories, across different trip missions).
Amazon Whole  Foods Acquisition

Amazon Whole Foods Acquisition

Amazon Whole Foods Acquisition

Amazon Whole Foods Acquisition

In Whole Foods Acquisition, Amazon is Accelerating the Future of Fresh Online

Fresh has a massive untapped upside online, but Amazon’s “be everywhere, sell everything” model is misaligned with shoppers’ distinct needs for an inspiration-driven online grocery experience in this space.

Amazon will need to re-orient their search-driven strategy to exploit the online fresh opportunity. The Whole Foods acquisition enables this re-orientation around a curated browse, helping consumers discover products similar to the in-store experience.

From Search …

Fresh has a massive untapped upside online, but Amazon’s “be everywhere, sell everything” model is misaligned with shoppers’ distinct needs for an inspiration-driven online grocery experience in this space.

… To Curated Browse

Fresh has a massive untapped upside online, but Amazon’s “be everywhere, sell everything” model is misaligned with shoppers’ distinct needs for an inspiration-driven online grocery experience in this space.

Amazon Fresh

Featuring* yesterday’s products to fulfill today’s needs *Featured products, AmazonFresh 6/16/17 2

Amazon Fresh

Featuring* yesterday’s products to fulfill today’s needs

From Channel-led to Consumer-driven Strategy

Amazon was beginning with their superior online supply chain and platform, going broad to attract today’s AmazonFresh consumer.

Acquisition of Whole Foods provides an opportunity to flip the AmazonFresh pyramid. Whole Foods gives access to a wealth of consumer insights and data that has been kept secretive and reveals forward-looking CPG trends.

From Channel-led to Consumer-driven Strategy


If Amazon replicates what Whole Foods has done best in store for online grocery, manufacturers should anticipate the following changes:

Trusted in fresh foods, Whole Foods 365 brand has the opportunity to transform fresh categories online in the same way that Amazon did for batteries, accelerating Private Label trend.

Shift in focus towards navigation and solution centers versus search, optimized for the Consumer Decision Tree of Digital Natives.

Curation of brands offered online, with a focus on fresh, local and experiential Challenger Brands with clean, healthy credentials.

Expansion of grocery and non-grocery Amazon delivery capabilities through Whole Foods real estate footprint.

Batteries eCommerce Brand Share ($)
485 “distribution centers” in locations targeting core consumer

2018 Top Ten Revenue Growth Ideas

2018 Top Ten Revenue Growth Ideas

2018 Top Ten Revenue Growth Ideas

2018 Top Ten Revenue Growth Ideas

Ideas to spur growth through new strategies in 2018

Revenue Growth

The most valuable commodity in our industry today, revenue growth generates cash flow, builds an infectious feeling of success, enables career growth opportunities and creates new jobs. Investors like revenue growth: the biggest gains in valuation often come at the pivot points in revenue momentum. In short, revenue growth creates value and is the most important, yet challenging, performance metric in our industry today.

Revenue Growth

At the Seurat Group, we believe revenue growth is a lagging indicator predicated on leading indicators such as a company’s willingness to embrace and execute new ideas that often go against the grain. Last year’s Top Ten list focused on new revenue pools. This year, our list focuses on new capabilities to help our partners achieve revenue growth goals in 2018 and beyond.

Most insights and their resulting actions are still derived from rear-view mirror sources like syndicated, tracking, behavioral, attitudinal and competitive benchmarking. This type of historical analysis at best leads to incremental change but is often misaligned with consumer trends. Predictive insight, borne from understanding leading-edge consumers and trends, enables a step-change by identifying the triggers to design against for future growth.

Online algorithmic price matching ensures that e-tailers always offer the lowest marketplace price and produces the best value for their shoppers, increasing the risk of an automated “race to the bottom” for unsuspecting brands. While many manufacturers still feel insulated from the impact of ecommerce given a small share of sales online, the share of price influence and perception driven by online platforms far exceeds today’s dollar share. Radical price transparency is the new normal and threatens commoditization in many categories. To avoid significant price and revenue erosion, manufacturers must adjust trade and pricing strategy to outcome-based performance, limit deal price visibility and develop bullet-proof omnichannel price architecture.

Until big CPG places incubator channels on equal strategic footing as FDMC, Challenger brands will continue to emerge and disrupt categories. These brands that seem to come out of nowhere develop in incubator channels where 1-to-1 consumer relationships and immediate consumption exists; places like airports, bodegas, c-stores, foodservice, online and online direct-to-consumer. To achieve revenue goals, it is critical to break out of the traditional channel strategy mold and embrace the marketing mediums, growth, and planning leverage that influencer channels afford.

Native advertising is becoming the dominant way consumers engage with brands online as banner ads are increasingly ignored or blocked, and influencer #ad content accepted. Brands are increasingly shoppable directly from social media and blogs with widespread adoption of services like Instagram’s Product Tagging, LiketoKNOW.it, and Amazon affiliate links, merging the point of influence with the point of purchase.

Influencing greater brand execution at retail now requires more than category management and shopper marketing by brands. With retailers uncertain of the future for many categories undergoing rapid change or years of stagnation, manufacturers have an opportunity to help retail partners understand how to compete for an evolving share of consumption occasions, and against an increasingly competitive retail landscape. Leaders are reimagining the future of purchase and retail to create new collaboration planning playbooks.

As social and digital marketing become increasingly fragmented, personalization is the ante. 1-to-1 relationships and micro-community building create a level of loyalty that translates into differential revenue growth. A deeper understanding of key micro-segments and their needs over time or even over life stages are necessary to establish the guard rails for personalized offers and experiences. Top manufacturers are harnessing the technology to activate against each person at a particular time, place and need state.

An underutilized vehicle in today’s demand landscape, the right partnerships can help brands leverage each other’s strengths. Emerging brands can access the reach and distribution of established brands, and established brands can tap into the credibility and authenticity of emerging brands. Like-minded brands can facilitate inexpensive customer acquisition through audience-sharing and cross-promotion, but need to be guided by a strong shared sense of purpose and recognition of respective contributions.

DTC is an important consideration for new revenue generation capabilities, particularly in building brand equity, more impactful consumer education, and proprietary insights. Although type of product line and fulfillment are critical considerations, DTC is much more than a channel strategy. It is a way for brands to elevate from selling commoditized products to selling experiences. It enables brands to better convert shoppers with customized education and recommendations. DTC is also critical for developing differential consumer insights for an integrated marketing strategy online as well as in-store, serving as a continuous test and learn incubation channel to seed and support innovation launches in retail.

High growth Challenger brands successfully identify the plans that drive consumer influence and demand at each retailer, while large manufacturers have burdensome controls in place that limit customer planning. The tactics that work best at each retailer are still very different. Executional advantage and revenue growth lie in being flexible to leverage each retailer’s go-to-market strengths, align with their strategy and adapt plans to it. Challenger brands are customer-driven and couple a highly flexible approach with a total channel demand landscape view. By having the right level of controls in place to make smart decisions (e.g., using a total customer P&L), Challenger brands place decision making and flexibility closer to the customer rather than being control-driven at headquarters.

Segmentation strategy must be executed at every level of the demand landscape. Categories and brands must take into consideration not just who and why, but also where. Differential strategy execution is achieved by uniquely investing with retail customers that can over-deliver against each shopper group and need state.

Our industry is going through immense change. Tomorrow’s leaders will be the brands that are the agilest, with a strong bias for action and a willingness to challenge convention to unlock new sources of revenue growth. The Seurat Group prides itself on being a partner that can generate big ideas, and arm our clients to overcome internal and external hurdles to their execution. To find out how the Seurat Group can help your organization adapt and change to realize real revenue growth, please visit our website at www.seuratgroup.com or contact us directly at info@seuratgroup.com with any comments or questions. We welcome your input.