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Private Label Takes on Skin Care

By: Jeff Falk
Posted: January 10, 2006, from the January 2006 issue of GCI Magazine.

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Private label has to compete with brand loyalty, and loyalty for a “bargain” doesn’t last if the quality doesn’t match or exceed the name brand. In short, lower prices may win a one-time customer, but quality wins lifetime customers. High-quality store brand products benefit retailers by building both customer loyalty and higher margins.

“For the consumer, we have provided the confidence in store brand items, as they have evolved to be the same quality as their name brand counterpart at a fraction of the cost,” says Breitlander, who also says there is no hard and fast rule for how private label can strike a balance between the price, quality and the uniqueness of a product to position itself beyond price benefits. “It is helpful to consider the entire mix and range of products involved in order to capitalize on the overall program and maximize benefits for the specific retailer,” he says.

“We tend to focus on department store formula matches rather than the common retail name brand equivalents,” says Mordeson. “For a new skin care program, we looked at Lancôme, Elizabeth Arden, Clinique and Estée Lauder products to come up with the best possible formulas for our line. It’s much easier to match a (department store or salon brand) product and stay 65–70% below the national brand. Consumers want to buy the luxury formulas and they’re seeing a huge savings from the national brand.”

Private label also has been able to take advantage of the loss of brand identity as line extensions distort the original brand. “Private label has taken advantage by raising the quality bar and grown to include sub-branding,” states Mordeson. “Walgreens’ brand works great for selling private label ibuprofen. However, it would fall flat for a color cosmetic line. Sub-branded lines are performing and taking private label to a new level in the United States. Consumers no longer realize that it’s a store brand. Walgreens is even advertising the brand’s exclusivity in full page ads in top fashion magazines.”

Meeting Trends Head On

The short and simple answer to what’s driving the trends in skin care is that consumers want more. Expectations have been set for what store-bought products can accomplish­—from antiaging benefits to the glow of spa treatments—and those expectations have to be met, if not surpassed, for private label to succeed in skin care. The first step in providing a successful product is paying attention to what demographic categories want.