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Keen for Innovation: Standing Apart in Private Label

By: Lisa Doyle
Posted: April 26, 2013, from the May 2013 issue of GCI Magazine.

It’s a common sight on the packaging of the typical private label lotion or serum in the supermarket or the drugstore aisles: Under the product’s name, one often finds in small print, “Compare to [national brand].” Is this really a fair comparison, though? And are consumers buying into it?

The answer isn’t a simple one. Often, private label skin care items are quite comparable to the big-name brands, both in terms of ingredients and efficacy. However, consumers around the world appear to have mixed feelings on the matter. A recent report from consumer market research company Canadean indicated that, while 44% of U.K. shoppers believed private label and store brands are produced in the same factories, they’re less inclined to believe this when it comes to personal care and hair care. The findings were similar in the U.S.

According to a 2012 study by The Integer Group, 65% of respondents stated that they prefer a brand name to a private label product in the health and beauty category. Says Craig Elston, senior vice president of Integer, “Categories that offer shoppers frequent innovations such as performance and variety, and categories where personal stakes are higher, are more difficult areas for private label products to compete.”

Elston is right—personal stakes are incredibly high to a consumer when it comes to skin care and beauty. However, many private label companies are rising to the challenge of offering high-performing and unique products—all at an affordable price point—and as a result, they’re staying competitive and luring in consumers.

Just As Good … Or Better?

The success of a private label beauty product doesn’t necessarily hinge on its ability to market itself as “just as good” as the national brand. Rather, it’s likely to perform if it’s exceptional in its own right.

In January 2013, a three-way partnership between Walmart, actress Drew Barrymore and private label beauty manufacturer Maesa was announced; together, they launched Flower, a line of exclusive, custom-formulated cosmetics. The portfolio includes 181 eye, lip, face and nail products, and has an average price of about $6.98 per SKU. Because Barrymore is an owner and the face of the brand, the budget that a traditional brand would spend on advertising went instead into the formulation of the products, giving them an edge over a typical mass market line. “Drew has brought her passion and knowledge of premium cosmetics to Flower,” says Petra Tucker-Moss, senior director of product development and marketing at Maesa. “Her firsthand knowledge of luxury cosmetics allowed us to collaborate and develop a makeup line that delivers on its promise of bringing premium quality makeup to mass.”

Likewise, Your Name Professional Products hasn’t earned its stellar reputation by copying its competitors—the company is a standout in its field because it focuses on high-quality formulations and keeping up with industry trends. Examples include the recently launched Skin Transforming Serum and Skin Transforming Foundation with SPF, available in 12 shades. “These hybrid formulas are a new synergistic approach, which allows integrating active skin care ingredients into skin care formulas that are efficaciously absorbed by the skin,” explains Brenda Gallagher, Your Name’s director of sales. “The synergy is that the serum compounds the skin care effects and benefits of how the foundation works on the skin. They are the dynamic duo. With these products, we are feeding the skin and making sure the cosmetics are as skin like as possible.”

Offering a wide variety of formulations to meet the ever-growing range of needs for customers is also key to a private label manufacturer’s success. “A private label lab like ours designs over 100 formulas per month, whereas the standard brand owner will launch only a handful of new formulas a year,” says Sundeep Gill, vice president of research and development for Sun Deep Cosmetics. “The private label manufacturer’s focus on innovation has to be very keen to feed the immense need for new product development.”

It’s Only Natural

For some private label lines, it’s their commitment to chemical-free formulations and the health of the consumer that makes them stand out among the competition. In late fall 2012, Walgreens launched Ology, its proprietary line of personal care and household goods, specifically made both affordable and free from harsh chemicals. Among the Ology offerings are paper products, a laundry detergent, adult shampoo and conditioner, and a lotion and two-in-one body wash for babies.