Private label quality? Check! Taste? Check! Consumer perception? Umm…
If you’ve been ramping up your private label SKU count over the past year, what do your shoppers think about it all?
It’s an important question, but one that many retailers ignore in tough economic times when research budgets are trimmed, says Dan Raftery, president, Raftery Resource Network, Antioch, Ill.
Growing, But…
“Most retailers have been growing their private label, but not all of them know how their shoppers perceive the taste and quality of the products, or how their perceptions of them compare to the national brands or even their competitors’ store brands,” he says.
Research needn’t be rocket science, Raftery points out. It might start with some focus groups to come up with the direction and specific questions you need to run a larger survey — either in-store or even online.
If you’re putting out some new items, you might want to do some live taste testing. But perhaps most important overall, according to Raftery, you should try to find out why people buy your private label — or why they don’t.
“Go after perceptions and barriers. Find out what’s keeping people from trying things. Perception drives consumer behavior more often than facts. If shoppers think your private label is poor quality, it doesn’t really matter whether it is or it isn’t. Perception is reality,” he says.
Beyond keeping up on consumer research, Raftery recommends that retailers focus on tried and true category management principles if they want to stay out of trouble. The ideal degree of private label penetration depends on the category itself and the category’s mission at the specific retailer, he notes.
A Red Flag
One red flag: when private label facings or SKU counts are out of line with category volume. You can’t expect ratios to match up perfectly, but if you go too high or too low one way or the other, you quite likely have a problem, Raftery explains.
Another common problem: measuring these ratios too soon after you’ve changed the mix. For instance, if you just added a dozen new private label items to a category, you have to allow at least a couple months for the newbies to start capturing their share of sales.
Finally, Raftery says, don’t be obsessed with your competition, trying to match their penetration levels or SKU counts. “If a competitor has 100 SKUs in a category and 40 of them are private label, that doesn’t mean you have to have the same percentage,” he notes. “Don’t forget, it’s all about differentiation.”
