Private Versus National Brands: Grocers’ Big Balancing Act

Tim Denman
March 2, 2023
Private Versus National Brands: Grocers’ Big Balancing Act

At A Glance

  • Grocers are increasing their private brand offerings and digital marketing efforts.
  • Private brands present an overwhelming opportunity for grocers to increase overall profitability.
  • Just 38% of grocers are satisfied with their private brand performance.
  • 91% of grocers have clearly defined private brand strategy and roadmap.

Grocers are increasing their private brand offerings to meet consumer needs and position themselves for long-term growth.

According to Grocery Doppio’s newly released “State of Digital Grocery Marketing: Unlocking Private Brand Growth” report, 10% of grocers plan to increase their private brand SKU count this year. In addition, 77% will increase the number of private brand SKUs they offer online in 2023.

With SKU counts rising overall and the number of products being offered digitally increasing significantly, grocers are investing in their private brand digital marketing efforts to increase consumer awareness. Grocery Doppio’s benchmark report examines the current state of grocers’ private brand digital marketing efforts and explores where savvy grocers are making big bets to ensure their products are top of mind.

Private brand digital marketing is still in relative infancy compared to the established approach taken with national brands. Only 38% of grocers report they are satisfied with their private brand performance and are taking steps to improve product awareness and sales.

“Private label investment is critical to engaging, attracting, and retaining customers and is becoming increasingly important in today’s market,” said Barry Clogen, chief evangelist, Wynshop. “It goes beyond clean stores and friendly staff, customers are looking for inspiration, and retailers need to bring this to life through their own brands rather than through ubiquitous and widely available offerings.”

When asked for the most important factors to successful private brand digital marketing, most grocers pointed to digital asset quality and quantity, further highlighting the need for investment and maturity in the space. Nearly 7 in 10 grocers (69%) report that the number of assets is important to digital marketing success, but just 32% are currently satisfied with their number of digital assets. In addition, 78% said the quality of digital assets is vital, but only 46% are satisfied with the quality of their digital assets.

To help increase the success of their digital assets, grocers are leveraging many of the same digital marketing strategies they deploy for their national brand offerings, albeit at vastly different levels. For example, 97% of grocers report leveraging marketing emails to promote national brands, but just 32% do the same for their private brands.

Much of this disparity between marketing efforts for national and private brands is because grocers have marketing obligations to their CPG partners, and the promotional efforts are part of their partners’ trade spend.

These national brand marketing obligations can lessen grocers’ ability to market their private brand products effectively, but they should not be allowed to stand in the way of growth. A successful private brand program is vital to grocers’ long-term outlook as it allows the grocer to greater connect with shoppers while simultaneously enjoying increased margins.

“While shoppers are looking for the best value and trying to manage their food dollars, retailers can best serve their shoppers’ needs by giving them opportunities to see and compare all the options available,” said Steve Markenson, vice president, research & insights, FMI. “The shopper then can make the best decision for themselves.”

The “State of Digital Grocery Marketing: Unlocking Private Brand Growth” report explores grocers’ digital marketing efforts, challenges, opportunities, and execution. Download the free report here and benchmark your private brand marketing prowess against your peers.