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A private label is not the same as a commodity product. A recent trend report from Deloitte highlights a trend that focuses on the tension between commoditization and premiumization. Deloitte explains, “In order to stay competitive, many retailers have offered private label…. While discount products (raw materials) still make up the largest part of private label sales, the share of premium private labels continues to rise. ”

Most retailers who sell private label see their own brands as brands rather than commodity products. Even if a retailer has a range of premium and non-premium private label offerings, they are still brands.

Goods are goods that can be exchanged for other products. That is, commodity products are equivalent or almost equivalent to other products without the customer being interested in who is the source of trust.

Private label products are different. The exclusive brand is the source of a trustworthy promise.

Trader Joe’s sells private label. Publix supermarkets sell an organic private label, Greenwise. Whole Foods sells its 365 brand. 90% of Aldi products are private labels: liveGfree, SimplyNature, Specially selected, Fit & Active, Little Journey, Mama Cozzi, Parkview, Seekönigin, Little Salas Bar, Baker’s Corner, Friendly Farms, Steinmühle, Winking Owl, Millville and Clancy’s. Big box stores like Target, Costco, and Wal-Mart also have private label rosters. These products are affordable, but they are not commodities: these brands have relevant and differentiated brand promises to their owners.

Private label example: Albertsons

Albertsons, the second largest supermarket chain in the United States, sells a great example of private label products, each with relevant differentiators. Albertsons believes that its own brands are an integral part of continued profitable growth and treat all private label products as brands that are not considered to be merchandise.

Albertsons began in Boise, Idaho in 1939, founded by Joe Albertson. The brand partnered with Skaggs Drug Centers in 1969, creating the first combined grocery and drug stores. During the 1980s and 1990s, Albertsons bought many different food and drug dealers and expanded its presence in western states and some eastern states, including Pennsylvania, Delaware, Maryland, and New Jersey. In the first half of the 2000s, a new CEO restructured and sold many underperforming businesses and closed some of the Albertsons regional counties.

By 2006, it became clear that Albertsons’ acquisition strategy had caused more problems than profits. A consortium, which also included the private equity firm Cerberus, bought the chain. The Albertsons portfolio has been split among the members of the consortium. Cerberus owned a company called Albertsons LLC, which owned several grocery brands, including Albertsons in nine US states. These new Albertsons implemented an acquisition strategy and in January 2015 Albertsons LLC merged with Safeway.

The integration of Safeway could have hurt Albertsons. But Albertsons became a more efficient, modern company. The chain focuses on its strengths, including the portfolio of high performing private labels. Supermarket News has named Albertsons Retailer of the Year 2020.

When Albertsons went public, its CEO, Vivek Sankaran, emphasized Albertsons’ strength in private label in his prospectus. Sankaran wrote, “We continue to innovate with our own brands purchased by 9 out of 10 Albertson customers to drive customer loyalty and retention and increase profitability. We plan to launch around 800 new private label products annually over the next few years and are proud to have built one of the largest USDA certified organic brands, O Organics, one of our four private label brands with annual sales of over Reach $ 1 billion. ”

The Albertons Own Brands list includes private labels including:

• Select Signature: Main Line of Food Products
• Signature Farms: Produce the Department brand of fresh fruits and vegetables. From produce to meat, great quality at an affordable price
• Signature Care: Household and Wellness Products; effective, affordable products to help you live a healthy life
• Signature Select: High quality products at an affordable price. Share all the moments in life!
• Signature Café: Brand of items sold over the deli counter, soups and chilled foods made by the deli and sold in the deli department. Dinner is ready! Take ready-to-serve appetizers, side dishes, soups and more with you
• Signature Reserve: A curated selection of pasta and pasta sauce products from around the world, whole bean coffee from a single source, loose leaf tea, confectionery and cake filling. Premium alternative to products from the Signature Select line. For the special moments in life. High quality, inspiring, delicious discovery with flavors and ingredients from expert sources
• Bio: organic products; purely delicious selection, certified according to the highest organic standards
• Open nature: 100% natural products; All-round goodness and 110 food ingredient free; BPA-free, tree-free and plastic-free cutlery, straws, cups, possibly including bamboo handkerchiefs and washable rayon towels (as a substitute for paper towels). Includes frozen desserts made with oat milk.
• Lucerne Dairy: main dairy brand for ice cream, cheese, yoghurt and milk; fresh dairy, straight from the farm. A family tradition for over 100 years.
• Waterfront Bistro: Easy-to-prepare, restaurant-quality seafood at home.
• Primo Taglio: deli brand for meat and cheese; The highest quality meat and cheese made from the best ingredients
• Debi Lilly Design: flower and home accessories; Bouquets of flowers, home decor and gifts inspired by celebrity event planner Debi Lilly
• Value Corner: A wide range of simple, everyday products at unbeatable prices. A cheaper alternative to products from the Signature Select / Lucerne line

No goods here

These Albertsons Own Brands are not commodities. Yes, there is a spectrum of offerings from simple, light to high-end, premium and a range of prices. However, as Deloitte notes, it is not a spectrum from commercialization to premiumization. Albertsons’ own brands that are not marked as “Premium” do not mean that they are merchandise products. Everyone makes a relevant, differentiated promise to their customers that is not just about affordability, but also about quality.

Chad Coester, Senior Vice President of Own Brands, told Supermarket News in July 2020: “We are passionate about innovations based on customer needs, wants and the latest consumer trends. With these new items we have delivered something that will surprise and delight every customer. Our new ice creams and frozen desserts add a spoonful of satisfaction and excitement with every bite. And we can all use some fun. “

Chief Retailer Geoff White said, “When customers get used to our brands and trust our brands, you can innovate in current categories and move into new ones. We have an incredibly strong team focused on innovation, category management and product quality. “

Supermarket News wrote that the Albertsons Own Brands portfolio is “a pillar of Albertsons’ overall growth strategy. Own Brands has around 12,000 products.

In Albertson’s latest quarterly earnings report, the chain stated that Own Brands had sales of $ 12.5 billion. According to Albertsons, this is “… seven times larger than the next largest CPG company selling through its branches.”

Private labels in the lower price ranges are still brands with relevant, differentiated experiences. The attention to detail in creating the Albertsons own brand portfolio, which gives each private label brand its own branding claims and character, shows that a private label brand is a brand and not a commodity regardless of price.

Contribution to Branding Strategy Insider by: Larry Light, CEO of Arcature

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