Be Careful with Low-Price Private Label Products

May 2, 2008

While some would expect the economic downturn to benefit low-price private label products, any benefit may be short-lived if food processors and retailers are not careful, the chairman of the Private Label Manufacturers Assn. (PLMA) warned in March.

Bill Bond, chairman of PLMA and sales vice president of Willert Home Products, a private label manufacturer, warned that a preoccupation with low-price store brand strategies could backfire. He spoke at PLMA’s Annual Meeting & Leadership Conference.

“Returning to their familiar playbook from the early nineties, the [national] brands will no doubt rush to reassure Wall Street that private label’s success is merely the result of a down economy, and as soon as things improve, consumers will flock back and again be happy to pay a premium price for the national brands they love,” Bond said.

He urged retailers to “set limits on the influence of national brands” and use their private label programs to build their own brands.

The Leadership Conference’s theme was “Best Practices: A Rising Tide Lifts All Ships,” but one of the most popular sessions was a panel discussion on “Worst Practices: What Not to Do and Why We Do It Anyway.” The panel’s worst practices included: An over-reliance on price, a focus on “national brand equivalency” that leads to “me-too” private label products, and a subordination of private label to the promotional strategies of the national brands.

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