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Private Label Groomed to Take on Personal Care Brands

By: Mark Whalley
Posted: May 4, 2011, from the May 2011 issue of GCI Magazine.

page 4 of 5

To counter the quality perception gap, some retailers are beginning to co-brand their products or secure celebrity endorsements as a way of enhancing private label ranges. Beauty retailer Sephora notes its LVMH connection in releasing an exclusive range called Sephora Favorites, a collection that includes a number of upmarket samplers—including the Give Me Some Lip Valentines Day Gift Set and the LashStash Mascara Deluxe Sample.

The younger consumer segment is another important element in the battle between private label and national brands. The 20-something crowd exhibits a slightly stronger willingness to experiment with private labels, and these younger consumers are less likely to have experienced the prosaic private label offerings of the 1990s and early 2000s—which were characterized by limited range, low quality and bland packaging. Private labels today are far more sophisticated and appealing.

The flip side of this argument, however, is that consumers of this age are also highly brand-sensitive and could migrate back to national brands once economic conditions improve, if brand owners give them a clear reason to do so.

Finally, some brand owners may be faced with a difficult decision over whether to enter the private label space themselves. Private labels actually represent a business opportunity for brand owners that make products on behalf of retailers. For those that do not, private labels are simply indicative of a more competitive environment.

Brand owners, therefore, need to work out how best to counter private labels. After all, brand managers would have a tough job competing against private labels that are cheaper yet also more upscale, merchandized in a more sophisticated manner, are better trusted and are easier to market.