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Dave Byman

By: Dave Byman on June 7th, 2016

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How SmartLabel Gives Retailer Owned Brands Brands a Competitive Advantage



Owned brand. Store brand. Private label. Brand X. Typically thought of as generic products of questionable quality, no-frills packaging and basic typefaces, intended only for those on a strict budget. We were loyal to the big, national brands we trusted. Sure, when money was tight, we might have overlooked the stigma of owned brands because of the lower price, but when times got better, we’d return to our favorite national labels. And as the health and wellness trend grew with an ever-increasing focus on natural and organic foods, we willingly paid the price for what we perceived to be superior products and superior brands.

The Blurred Line Between Traditional and Organic

But times have changed. Brand loyalty has eroded to make way for brand agnosticism. Consumers don't want to have to pay a premium for natural and organic anymore. We expect exceptional everyday products at a reasonable price, not sold in the domain of trendy, expensive specialty shops and farmers’ markets, but available at conventional food stores and supermarkets. Organics and naturals once out of reach for many consumers are now more affordable, and the line between traditional and organic have blurred with the introduction of more and more health-focused varieties.   

This Shift Has Been Propelled Largely by Owned Brands

Retailers are stepping up their game and delivering new products that fulfill evolving shopper needs. They’re transforming categories with owned labels that have become power brands. National brands’ positional power is weakening as those of us once loyal to stalwarts are opening our eyes (and wallets) to owned label as it's becoming harder and harder to distinguish the difference between the two. In fact, store brand sales reached $118.4 billion in 2015, an all-time record and an increase of $2.2 billion over the previous year.

Owned labels like Kroger’s Simple Truth, Target’s Archer Farms, and Costco’s Kirkland Signature have begun to offer products that rival their branded counterparts in flavor, nutritional value and attributes related to health and wellness, in addition to affordability and quality. They’re innovating relentlessly to create compelling and inspiring brands that compete head-on with the long established, national brands. They’re leveraging sophisticated brand strategies, merchandising expertise, manufacturing bases and buying power to make increasingly better products with features identical to other name brands that fulfill consumer needs at a lower price point. Recently, rumors surfaced that Amazon is developing a line of private label food products. Equipped with a uniquely rich data set on the categories and products that sell best, one would expect this latest owned brand to offer better-than-usual value. Consumers today are less brand conscious and seek quality and value, and owned brands deliver on both of these attributes.

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Consumers are Taking a Closer Look at Labels

With consumers’ interest in giving food labels much closer scrutiny than in years past, SmartLabel™ is the newest game-changer for owned label. SmartLabel is an industry initiative creating a new standard by which consumers access information about the products they use and consume. It’s modernizing how brands are able to communicate and engage in dialogue with their consumers about the nutritive, additive, allergen, health, and lifestyle-related properties of their products, through a digital extension of the physical label.

"71% of consumers consider whether they have access to the full list of ingredient information for a product when making food purchase decisions." (Food Revolution, 2016)

And as owned label continues to appeal to consumers’ values through healthier, more sustainable and socially responsible products, SmartLabel will enable them to tell that story. healthyoverbrand.jpgSmartLabel is about standardization, but it also gives brands a mechanism to differentiate. Freed from the limited real estate of the physical label, brands can offer heightened transparency to its consumers. On a pack, all ingredients look the same. On SmartLabel™, consumers can see where those ingredients came from, how they were grown, and what their function and plain language definition is. SmartLabel empowers brands to share additional off-package claims, benefits, and features that describe how the product can be used and what makes it special.

Download the Entire Food Revolution Study Now

As it becomes harder and harder to discern the difference between owned and national brands at the shelf, there’s huge opportunity for owned label to differentiate through SmartLabel. Consumers are no longer focused on brand. What matters to us is what’s in the product we’re buying: where it was sourced, how it was grown, how the animals and workers and environments were treated that brought it to our plate. Our value equation has fundamentally changed.  Price has made way for transparency. And as consumers continue to realize that private label’s appeal goes well beyond price, the brands that will win will be those offering superior products, and superior transparency.

Read more in our post Convenience Store News: Consumers Seek Food Product Transparency

Are you an owned brand ready to win with SmartLabel?

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About Dave Byman

Dave Byman is VP of Sales at Label Insight. Dave has previously held leadership positions at Nielsen and Affinnova, and has spent his career consulting CPGs and retailers on strategies for innovation, marketing, and operations.