A closer look at the newest trends in today's packaging.

What is the role of product packaging, given the fast-changing face of retailing and consumer demand now?

If you're a brand manager or package designer, you can play an important role in creating packaging that achieves branding objectives and also uses less packaging materials or incorporates reusable or recyclable materials. So says Amy Zettlemoyer-Lazar, Sam's Club Director of Packaging.

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.”

Retailer brands continue to post solid dollar-volume increases in a number of categories across all distribution channels. The growth is due in part to retailers’ added emphasis on branding, in which packaging is playing a stronger role than ever in differentiating retailers and creating value.

It ’ s no secret that private-label brands have been gaining market share steadily at the expense of regional and national brands. But what ’ s striking about the latest independent study of store brands is that the growth is trickling down from food and beverage to non-grocery categories.

Anyone who creates packaging should take note of two significant trends occurring in the battleground that is the store shelf. First, the steady growth of retailer-brand products in food and beverage has begun to create a “ halo ” effect over non-grocery categories. Second, mega- retailers and specialty chains are stealing market share from traditional supermarkets, strengthened with shelves displaying an abundance of brands exclusive to their stores.

If you make health foods fun through creative marketing, will kids swallow it?

The Private Label Manufacturers Association’s 2005 PLMA roundtable report, “From Merchant to Marketer: Exploring the Evolution of Modern Retailing”, originates from a panel of experts working in a cross-section of industries, from product manufacturing to market research to consultants, trade journalists, and financial analysts. Among its conclusions, here is what the roundtable’s 20-page report says about the evolution of modern retailing and private-label branding as a component in the mix:

1. The transformation of retailers is continuing. U.S. retailers have evolved profoundly over the past decade, in the process placing more power in the hands of retail chains in terms of how they operate their stores. Store brands have benefited significantly from this trend.

2. The longtime model of trade classes is no longer relevant. Instead of the three traditional classes of trade—supermarkets, drug stores and mass merchandisers—a more accurate representation recognizes contemporary environmental influences in which retailers understand that the consumer, rather than the store or the manufacturer, inspires the brand.

Retailers are increasing the sophistication and flexibility of their own brands—in part through strikingly upgraded packaging. Growth continues so strongly that private-label brands are challenging the marketing axiom that the only way to build brand equity with consumers is through widespread, national production distribution.

This observation comes from the Private Label Manufacturers Association’s 2005 roundtable report, and the numbers from both the association’s own studies, other reports, and from individual retailers support the roundtable’s findings.

• Store brands account for 19.6% of units purchased across all product lines and distribution channels, according to the PLMA. The figures exclude Wal-Mart, which no longer participates in retail data-reporting programs.

• Retail industry analysts interviewed for the 2005 Packaging Strategies report “Contract Packaging: Strategic Opportunities and Profit Potential,” estimated that in 2004 private-label brands accounted for about 40% of Wal-Mart’s sales.

Private-label brands pose a “good alternative” to national brands and an “extremely good value for the money.” They also offer quality that’s “at least as good as that of the usual big brands.”

Those insights come from ACNielsen’s recent online global survey of consumers. The study polled consumers in 38 markets and found that Americans, in particular, have embraced private-label products.

Consumer perceptions that private-label brands are a good alternative to other brands were most prevalent in regions where private-label product and packaging strategies are highly developed. The leaders were Europe (78%), the Pacific (78%), North America (77%), Latin America (64%), and Asia (51%).

Countries in which consumers rated private label brands the highest were the Netherlands (91%), Portugal (89%), and Germany (88%).

At the other end of the scale, Malaysia (36%) and Japan (35%) were least likely to agree that private-label brands provide a good alternative to national brands.

Store brands are going ‘uptown’ and reaching the store perimeter. Research identifies paperboard as one desirable material for packages to help in this push.

Private-label products are fast shedding their reputation as coming from “the other side of the tracks.” And according to new consumer and retailer research, marketers should know that paperboard is one packaging material that may be particularly well suited to serving the evolution of private-label brands. Here are two reasons why:

At BJ’s Wholesale Club, sales of existing products increased 30% in the first year after the packaging was redesigned under the umbrella of BJ’s own private-label consumer brand, Berkley & Jensen. Private-label products now account for 6.5% of the company’s total sales.

BJ’s success, one result of its evolving positioning strategy, demonstrates that sales increases are possible—including for private-label brands—when strategic package design reflects the corporate marketing objective.

Operating on the East Coast and in the Southeast, BJ’s markets products to both consumers and business customers. But its core focus is on consumer offerings and its Berkley & Jensen line. This positioning differentiates BJ’s in the highly competitive warehouse club industry.

Point-of-purchase displays for premium brands require a different thought process than creating displays for “everyday” products. Foremost, make the product the hero, explains Mark Polson, Executive Director, GlobalMerchandising Development for Estèe Lauder.

Traditionally, private-label brands have presented either a “value” or a “standard” proposition to consumers. But the Private Label Manufacturers Association says a third proposition—“premium”—is helping to drive private-label growth.

This tactic goes beyond private-label brands merely creating “me too” packages that closely resemble national competitors. PLMA’s research indicates that individual retailers have begun copying the packaging ranges—standard, value, premium—of each other’s store-brand offerings. Activity is especially hot at the premium end.