National brands will have to continually innovate to survive.

I’ve heard that observation often in recent months, and it was repeated recently at HBA Global Expo in New York. The context for this statement is that private-label products are selling better than ever, now comprising 20% of grocery store sales in the U.S.

Jonathan Asher, Vice President at Perception Research Services, cites his company’s recent research that 40% of U.S. consumers increased their intake of private-label products during the past three months. The gains span all age, economic, and education groups.

Not only is share of market rising for private-label products, but the gains just might hold. At least one recent study says consumers who’ve made the shift to retailers’ brands won’t be reverting back when the economy improves. Their reasoning is an increasing perception that private-label products are "as good as" the national brands.

Increasingly, they're also different. Target’s Archer Farms brand supports the retailer's reputation as the embodiment of pop art by delivering design to the masses. And now, Target’s Up & Up brand is getting in on the act in categories such as baby care and first aid products, and household cleaners.

Examine the Up & Up packaging in your hands. It just feels like Target.

Does this development doom national brands to a future of steady market share decline? Hardly, Asher believes—if product and packaging development teams make a commitment to improving their products and then touting those upgrades on-pack within the context of the brand. Presenting at the HBA show, Asher told his audience to consider Kimberly-Clark as a model to emulate.

"Viva towels has grown from No. 4 to No. 2 in the category over the last three years by being committed to product innovation," Asher noted about Viva's "soft and strong like cloth" paper towels. Packaging artwork whimsically markets the brand with an illustration welcoming consumers to "soak up life."

For national brands that want other examples, observe what retailers in your area are bringing to the shelf. The best of them no longer are content with "me-too" packaging. They are maturing beyond commodities in their own right.