There are many good reasons why you should stock a house brand in your store. Advantages include improved quality and competitive pricing amongst others. In fact, you shouldn’t carry only one. There is a strong argument to sell two, three or more house brands per category.
By doing that, you stand a better chance of increasing profitability. More than that, you can build your reputation as a retailer who considers their customer’s pockets.
What is a House Brand?
Also referred to as a Store Brand, Private Label Brand, Home Brand and even an Own Brand, a House Brand is a product owned by the retailer rather than the manufacturer or supplier. It’s also packaged and managed under a retailer’s name. That means it usually doesn’t require any additional marketing investment.
Think Pick n Pay’s no-name brand, Checkers House Brand and even Woolies’ Studio W as three such examples.
As for its importance, it's clear: by stocking and selling a store brand; you can show your customers that you offer them value for their money. That’s because your store brand is usually offered at a price lower than the named brand products that you stock.
That said, while it may cost less, shopper spend over the past few years has shown that it’s no longer the poor cousin to retail. The 2017 State of Private Labels in South Africa report confirms that. In 2017, these products accounted for R43-billion of consumer spend, and it’s expected to continue through 2018.
What is even more interesting is the report found that your higher LSM 7 - 10 markets accounted for 50% of private label spend. That speaks to the truth that consumer perception of store brands has improved and the reputation of house brands continues to grow.
1. Highlight its exclusivity
The way you’d highlight the exclusivity of your house brand is the same way in which you would accentuate any other product in your store.
You’d begin by aligning your category role with your retail strategy. For example, Woolworths’ Private Label Brands focus on quality and offer customers a lot of choices. They would thus focus on a strategy that would play to that strength. Meanwhile, Checkers’ House Brand and Pick n Pay’s no-name brand both focus on the low economy.
As for how to focus on the exclusivity of the brand, it’s a tricky one to answer. That’s because it depends on the category role, what you want to focus on as well as your overall category strategy. That means there is no single answer to this question.
Let’s look at Woolworths and their pasta category as an example. It’s a broad category when you look at the offering. There is whole wheat, organic, gluten-free and so on. They would position the exclusivity with the focus that you can’t find it anywhere else. Of course, that is one of the main points of a house brand - exclusivity.
On the other hand, since Pick n Pay’s House Brand is about saving your money, it would focus on slashing prices when compared to the brand leader. Their exclusivity is all about promotion price - you won’t find the product at the same price anywhere else.
2. Get the pricing right
Choosing the right price for your products is always a challenging strategy to master. Too high and it encourages your customer to shop at a competitor. Too low and you give away valuable margins. More than that, the price you do choose also creates perceptions around your products and stores.
While the above refers to all of the products in your store, it’s that much more crucial to get the pricing for your house brands just right. That’s because the point of stocking a store brand is to compete with the brand leader. You thus want to do everything you can to ensure it is competitive.
So what should the pricing look like for a typical private brand label?
Since it’s stocked to compete with the brand leader, you should price it lower than the leader and any secondary brands within the category. Considering your customers may want to pay less than the category leader but seek the same quality, the house brand offers the perfect solution.
By perceiving that it is value for money and still a quality product, you stand a good chance at encouraging your customers to switch brands, thus increasing your profitability. Most importantly, you’ll strengthen the reputation of your store brand, which will lead to growth and more sales for that brand.
3. Position them on the shelf correctly
Customers shop branded items first. You’d thus focus on employing strong brand strategies that encourage your customers to buy your store brands first. For this reason, there is a specific position reserved on the shelf for your House Brand.
Regardless of the category, you position it between the brand leader as well as the secondary brand leader. There is a perfectly good reason for it.
In placing it there, you’re putting the thought in your customer's mind that the product is of the same quality as your brand leader and is thus worth purchasing.
Ideally, you’d want to employ a vertical merchandising strategy so your customers can notice the price difference. If vertical merchandising is not an option because of space restrictions, then it’s worth merchandising horizontally with the brand leader at eye level.
Just to note, the above isn’t a hard or fast rule. It’s dependent on your retail strategy. For example, as a low economy-level brand, you'd instead want to place it after the secondary leader.
Also, should you have more than one Store Brand in a category, you wouldn’t place both next to each other. For example, if you have a premium and an economy product, you’d merchandise each next to their respected leader. Premium goes next to premium while economy goes beside economy.
4. Consider its packaging
As we mentioned in a previous piece around creating high visual impact displays, your customers shop with their eyes first.
That’s why the packaging of your store brand is so critical to its success. You want to appeal to your customer’s senses enough to entice them to pick your brand over another. Of course, that leads to a question that is tricky to answer: what is the appeal?
There isn’t a straightforward answer. What is appealing to one customer is unappealing to another.
That said, your target market plays a massive role here. For example, while a Woolworths store brand's packaging is plain, it doesn’t come across as cheap. That’s because they're targeting a specific market. On the other hand, Pick n Pay’s no-name brand is also plainly packaged and yet it’s not on the same level. Again, it comes down to the target market. Whoever buys it knows they are paying for an economical item.
Then again, this is not just about pretty visuals. When considering the packaging of your store brand, you also need to think about its functionality.
For your example, if your brand were liquid dish soap, you wouldn’t want to package it so that it breaks easily or has a nozzle that doesn’t close properly and leaks. Besides your customers not wishing to purchase it, you could find yourself having to recall the product. That becomes particularly troublesome if you’re a larger retailer with many stores.
5. Look to promote your House Brands
By their very nature, house brands are products that provide value for money. However, that doesn’t mean you shouldn’t advertise or promote this fact. After all, your customer’s will only know that you have a store brand and that it’s on special if you display it.
That said, while there aren’t any rules for how often you should promote them, a best practice is to consider the role they play in the category. For example, you can advertise store brands within the Routine category every month if you wish.
On the other hand, if your private label brand is within a category that takes on a Convenience Role, you’d be better off promoting it seasonally. You can read up on the different category roles in category management here.
When it comes to deciding how to display them, there are many ways to do that. Bulk displays, dump bins and gondola ends are just a few examples. That said, you should ensure that the displays and shelving you do eventually choose works for your products rather than against them.
You can also consider creating window displays to entice customers into your stores.