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Joining the Innovation Game: The Changed Nature of Private Label

By: Sara Mason
Posted: May 4, 2011, from the May 2011 issue of GCI Magazine.

page 4 of 6

Stronger retailer-manufacturer partnerships and greater investments in new product development and innovation are essential if store brands want to keep the big market share gains they achieved during the recession and lay the foundation for even more growth as the economy returns to normal, according to the PLMA Store Brands 2010: Post-Recession Strategies for Private Label report. “Store brand marketers will need to double down on product development and innovation,” the report advises.

In order for store brands to get to shelf with innovations faster, better and more cost-effectively, they are faced with the challenge to think differently, more unconventionally and from a new perspective. At the same time, name brands also must avoid stock solutions, driving innovation across the industry. “Private label products that can be stronger, creating strong co-brandings, proposing unique universes and having very complex packaging and formulations,” explained Maesa’s Thiolas. “As private label ranges are going out of their initial distribution channel, they oblige national brands to constantly innovate to keep their position.” The goal for each should be to seek opportunities to differentiate from one another, speak to their unique positioning and brand character, and improve the consumer experience.

As such, a new generation of private label manufacturer is forming exclusive, strategic alliances with several technology centers to bring a think tank approach to personal care formula and delivery system innovation, toward the goal of creating truly differentiated products. Leading Edge Innovation believes this formula/delivery system innovation and trend-driven product positioning, coupled with a strategy to provide full production capability, will offer unprecedented speed to market and competitive cost of goods.

The company presents differentiated, trend-driven, personal care products to the decision-makers at finished goods marketers, using a turnkey order fulfillment process. With help from The Young Group, which evaluates what is driving consumers through trend analysis, Leading Edge Innovation evaluates where the market is going and anticipates the impact of consumer trends on the beauty market. The opportunity is for marketers to take unique products into the market, to supplement their lines and keep business relevant. “We are always looking to bring different ideas and approaches to the market,” said James Wilmott, chief scientific officer, Leading Edge Innovations. “If you are looking for the same thing that is already on the shelf and duplicate it, you can go to any contract manufacturer with a large library of standard products.” Wilmott calls it aesthetic mediocrity. But in today’s marketplace, it’s necessary to differentiate, to distinguish your product and establish brand loyalty.

The Young Group produces a report that provides marketers with off-center indicators and approaches for predicting what’s influencing consumers, from a variety of industries. “We study consumers from a wide view, without preconceived notions,” Young explained. “If you are not looking at where consumers are spending their money in general, how can you draw conclusions about what they are doing in beauty?”