More than 80% of respondents to a recent FMI survey of industry executives for its report, The Power of Private Brands 2023: Innovation that Drives Winning Private Brands, said they plan to increase private brand investments moderately or significantly in the next two years, which helps set the stage for more innovation opportunities.
The analysis suggests that only 10% of the executives responding said their organizations are “very far along” with innovation, indicating opportunities for progress, even after considerable successes, the FMI – Food Industry Association reported in a press release.
“After temporary pauses to some innovation efforts because of pandemic supply disruptions and ongoing consolidation, many food retailers are ready to jumpstart innovation in collaboration with their supplier partners,” FMI Vice President, Industry Relations, Doug Baker, said.
“Respondents said that while new products are always an important part of innovation, the efforts need to go well beyond new item introductions, including focusing on branding, purchasing, logistics, inventory management, marketing, and more,” Baker added.
Baker continued, “We also know that consumer demand for information about the products they use and consume has remained at an all-time high. For instance, many consumers now engage in a hybrid approach to shopping, using in-store and digital touchpoints to seek package claims.”
The report outlines how grocers say they are capitalizing on shopper behaviors to market private-brand products in multiple ways:
- Using labels to provide transparency and talk about the value beyond cost savings, including how and where ingredients are sourced.
- Switching from a brand they usually buy to a different one that provides more in-depth product information beyond the physical label which creates an opportunity for more innovation in supermarkets to use SmartLabel and other digital tools.
- Focusing on sustainable packaging and using labels to relay stories about food producers and recycling information.
- Building consistent brand experiences across digital channels and using social media and e-commerce platforms to promote store brands.
- Incentivizing repeat customers with loyalty programs like discounts and points systems.
Baker noted, “Inflation-driven price increases throughout the store have also spiked significant consumer interest in private brands as shoppers look for ways to stretch their grocery dollar farther, with nearly 77% of customers who are already purchasing private brands say they expect to buy even more in the future.”