In this edition of Retail Academy, I want to reinforce the important role that private labels play in the image, results, and overall vision of supermarket chains and dispel any doubts that those who still haven’t committed to private brands may have.
In times like the ones we live in, with total uncertainty about import product tariffs and national economic challenges, our differentiation from the competition has become a key factor for the survival and growth of independent supermarket chains.
Considering all these development points, private labels will represent a vital strategy for competing successfully, building customer loyalty, and obviously increasing profitability.
Considering that, I define private label, or in English, private label, as those product references that bear the name we have exclusively registered for our chain of stores.
We will be the authentic “owners” of that brand’s strategy, which will offer us advantages over national brands found in all businesses.
Among the most essential benefits of having a private label are:
- Exclusive control over costs and commercial margins, allowing us to adjust prices according to demand and constantly monitor competitor brands.
- Differentiation and a call to loyalty for our customers and communities; a successful private label product results in exclusive loyalty since that product is only in our stores.
- Flexibility in the face of the changing tariff landscape and import costs, negotiating directly with manufacturers, and continuing to speak “face to face” with our traditional competition.
The base of our customers in Latin supermarket chains is made up of communities and families with particular preferences for traditional products and flavors.
It will be a great challenge to develop a private label line that reflects these preferences, and it will depend on many factors.
I recommend that businesses starting to develop their private label focus on two completely different pillars. The first is on the highest-turnover products, such as tortillas and traditional breads, oils and condiments, grains (rice, cereals, beans, etc.), and canned goods.
The second pillar is to focus not on massiveness but on exclusivity, on offering something different and exclusive (artisanal yogurts, homemade ice cream), and on creating a few references that motivate customers to visit our stores exclusively.
On the other hand, the current tariff uncertainty and economic volatility represent a significant challenge for supermarkets.
Private labels will offer us practical and direct solutions to mitigate these challenges, allowing us to reduce costs in the face of import fluctuations.
Let’s also study and not stop calling our local manufacturers again; these are times of opportunity.
With our private labels, we will offer more excellent stability in the supply chain through direct agreements with manufacturers and not depend so much on national commercial brands or third-party agents that do not guarantee their service 100%.
The challenge is enormous, but if there is anything that characterizes independent supermarkets and family chains, it is the ability to overcome and improve in times of crisis.