Is trade a competitive field

The new role of the private label in retail

The well-known first own brands have differentiated themselves from the manufacturer's brands as visible non-name brands. Yes !, Good & Cheap or The Whites are primarily packaging whose central promise is to be cheaper than designed brands and yet still achieve a decent level of quality. The target group is addressed as "smart shoppers" - consumers whose shopping experience feels good when they are convinced that they only pay for the content and not for the pretty packaging.

To this day, Nonames play a major role in the sales marketing of FMCG articles in the large drugstore chains and discounters. Noname articles are also interesting again in online sales in order to escape price comparisons. Attempts to advertise a non-name brand other than "good and cheap" lead nowhere.

Private labels as brand imitations follow a similar approach. The beginning of Balea was based on the idea of ​​being as similar as possible to the traditional Nivea brand. In several legal disputes relating to brand imitations, it was not fully clarified whether one would even confuse them or be assigned to the same category. But even if an imitation does not rely on clumsy confusion, it still lives from supporting the product promise of the established brand without having made the brand investment itself.

With the discounters, above all Aldi Nord and Süd, a separate distribution line was created, which has put together almost a complete range of products consisting of noname and lookalike brands. To this day, in addition to the price, they still use the "clever" argument when the original manufacturer leaks out champagne or chocolate. To ensure this, lists circulate with non-name products from brand manufacturers and books such as "Aldi - which brand is behind it?"

In terms of marketing, everything is done with being similar enough to the imitation brand (or letting it leak out who the original manufacturer is) and hoping for their good reputation so that the smart shopper can tap into their shopping luck.

The next evolutionary stage of the private label consists of including the retailer's brand name as the sender - a private label is created. The role of simple "brand imitations" or non-name products is charged in such a way that the retailer recognizes his own brands and thus makes a product promise similar to that of a manufacturer. When, for example, Müller Drogeriemarkt talks about its own quality brands, this promise becomes clear. And Edeka even formulates it directly on its own homepage with the words "before a product is allowed to bear the Edeka brand logo, it is carefully examined."

In recent years, many supermarkets, discounters and drugstores have taken the route of the private label. A few examples: DM has its logo on over 26 products. Edeka has introduced the blue brand "EDEKA" after "Gut & Favorig" and has expanded it to include product segments such as "Edeka - organic and vegan". With the products under the label "Rewe - Feine Welt", Rewe has successfully introduced its own brand that does not claim to be "cheap", but rather classic manufacturer brand attributes such as "high quality", "fine", "delicious" and "special" owns. While Müller is bringing together the more than 30 own brands with the orange blossom under the umbrella brand "Meine Müller Marke".

Amazon is also currently testing its own brands in its range. Since 2015 the internet giant has been selling baby wipes under the label "Elements" (marked with the "a" of the Amazon logo). Elements diapers show the importance of private label quality. After just a month, they were removed from the range because customers had complained about the quality. Damage to the image of the Amazon umbrella brand had to be stopped immediately. Such teething problems don't stop Amazon from announcing other brands like Happy Belly, Wickedly Prime and Mama Bear.

In terms of communication, the private label requires a brand understanding and a way of dealing with the brand that is otherwise common for branded goods manufacturers: Working out a central product promise, charging with origin and quality attributes and positioning in the competitive field are also disciplines for private labels.

With non-name products, branded imitations and private labels, the large retail chains have learned to manage their own brands. They tested product ranges in which consumers are loyal to the brand and identified those for themselves in which enough consumers are willing to change brands if the alternative, be it the price or the promise of quality, is interesting enough.

The next evolutionary stage of the private label is the alternative brand. The dealers take on the character of a manufacturer here. They commission the products according to their own parameters, test innovative ideas and design their own brands, which differ from manufacturer brands only in that they are usually on the market for a shorter period of time and are often still offered at lower prices.

For example, Müller Drogeriemarkt's Pro Life cat food line is higher quality and price than the major manufacturers' brands such as Whiskas or Pedigree. Inspired by the real meat suppliers who otherwise only stock the specialist market, Müller "invents" a private label that represents a high-quality alternative to the products that have been introduced and that appears in packaging and communication with precisely this self-confidence.

Alternative brands are also very important in online retail. Home24, Zalando or Lesara try to avoid price comparability on the Internet with their own brands and to suggest to the customer by means of permanent cross prices that the entire range is particularly cheap, even if this is actually the case, especially with own brands.

With the alternative brands at the latest, retailers have fully arrived at the complex communication mechanisms of brand management. They have to make their own budget available for their own brands in order to position them in a credibly attractive way next to the well-known manufacturer brands. You have to hire design agencies to do the packaging. Above all, however, they have to build a bridge in the range - between branded goods and own brands - without cannibalizing the respective business.