Brand and category managers who want to grow market share should be paying close attention to two trends occurring in stores today. The first trend is an increase in more sophisticated store brands stressing value. The second one is the revival of the “center store.”

A new report called Competing in the New World of Brands: The Next Wave of Private Label, by McKinsey & Co., estimates that as much as $55 billion in annual product sales could be at stake through 2017 if retailers emulate en masse the successful store-brand strategies of several leading-edge U.S. chains, and if national brands continue the status quo. The report cites Safeway, Wegmans, and Kroger among top-tier retailers driving the highest levels of private-label dollar share—22% of their total sales, on average. That compares with 15.6% for the bulk of the other retailers and about 10% for stores that focus mostly on national brands.
Safeway is becoming adept at riding store brands to build loyalty among shoppers. It is focusing on 10 core brands that fill unmet consumer needs around its stores by making them meaningful and relevant to Safeway shoppers. One of them is a line of good-tasting, “better for you” products marketed under the Eating Right brand. Packaging communicates both the enjoyment factor and the benefits, and Safeway is reporting success with its value-driven approach.
If other retailers follow suit with their store brands, McKinsey may be right on target with its estimate that private-label share in the United States could soar to 24% during the next 10 years—at the expense of national brands.
On the second front, retailers are realizing that a robust center store is effective in complementing the focus they’ve placed on fresh foods to distinguish their product assortment. What areas should be grabbing your attention? If you’re a national brand, a recent study from Information Resources Inc. recommends tailoring new product offerings with a health and wellness positioning, and taking a harder look at the relevancy of your brands to your consumers.
Both of these trends offer savvy brand stewards opportunities for new sales. If innovation has not been a guiding principle in your creative process, could your brand benefit by redirecting your thinking?