The Consumer Shift to Private Label Products
Private label products are gaining ground over national labels, having eclipsed sales in recent years. Will these brands continue to prove themselves and keep customers returning? How will this behavior affect the apartment industry?
Catchy slogans and unforgettable jingles have lured America to name-brand products that have become household names for generations. Characters and role models have become synonymous with peas, tissues and tires while creating corporate giants.
Usually, next to that name-brand can of mushrooms on the shelf, is a less expensive, private label product. The item sells for less, often tastes just as good, and may even be manufactured in the same plant as the name brand.
Yet, traditionally, consumers have opted to pay a few cents more for that name brand. Until now.
Private label products are taking more and more of the market share in everything from packaged meals to water heaters. A renaissance is under way, some say, as products that seemingly are marketed in the shadows are gaining consumer confidence.
For the apartment industry, that may mean an opportunity for saving some valuable coin and providing a quality product, backed by warranties and guarantees that rival name-brand products.
“There are a lot of options,” says Brian Wenzel, Corporate Manager of Marketing Communications and Branding for Interline Brands, Inc. “You’re really not sacrificing on style or quality by going to an exclusive brand or private label.”
Private label products gaining consumer confidence over national brands
In 2012, the private label food industry experienced a boom in sales at supermarkets, drug retailers and mass merchandisers. Places like Wal-Mart and dollar stores pushed annual revenue to an estimated $120 billion, according to the Private Label Manufacturers’ Association (PLMA).
Changing consumer attitudes toward private label products is believed to be contributing to the growth. PLMA says that brand loyalty continues to erode and that market research has proved that most consumers are “brand agnostic.”
Wenzel said companies are focused on changing [consumer] perceptions by marketing exclusive brand products more effectively. Interline Brands, Inc. is doing just that and is experiencing significant growth in the last two years with its exclusive brand lines. Interline’s Wilmar division encompasses a variety of broad-line maintenance, repair and operations products that include appliances and fixtures for the multifamily industry.
The company’s private label products have experienced double-digit growth over the last year, including a collection of water faucets that has since “exploded”.
Keeping pace with national labels a must in order to compete
Wenzel said one reason for the growth is improved product performance, appearance and warranties that rival national brands.
“I think people have responded because quality standards have improved,” he said. “For whatever reason, there has been a perception out there that customers don’t get the support when buying a (private label) faucet. That’s not the case. We have dedicated technical support people and quality assurance.”
The company has focused efforts recently on its faucet line to provide more eco-friendly, contemporary water fixtures that are easy to install. WaterSense-labeled faucets and those with brushed nickel finishes have been big sellers in the multifamily arena, as well as the company’s line of Premier hybrid faucets that comply with the Safe Drinking Water Act.
Interline has since developed a faucet with a brass look that also adheres to the new lead-free standards that went into effect earlier this year. All other Premier faucets use lead-free brass or copper waterways.
Wenzel said the Premier hybrid line competes head to head with national brands and has more than held its ground. The collection, which rolled out in 2012, has generated triple-digit growth over last year.
Meanwhile, keeping pace with stiffening competition is a priority for the industry, as well as overcoming consumer fears that private label products won’t hold up.
“The quality of exclusive brand products, and not just ours, keeps improving,” he said. “Our features are identical to other name brands. We’re keeping up with the green movement, we have better quality and more alternatives. We’re keeping with the style and designs of today.”
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