The most important question private labels don’t ask themselves

Meanwhile, other retailers use a differentiated branding system to indicate quality levels for private label products. For example, cheaper products at opening prices use muted branding, as they do not want customers to overestimate their quality – they exist solely for the price, and they do not guess it. The next level, which is the national brand equivalent, uses a more elevated, eye-catching visual and verbal look to take on leading brands. Finally, the premium tier tends to be black and gold, using terms like “select” and “signature.” There is no right or wrong way for a private label manufacturer to brand their products – they just need to understand their customers and develop meaningful products that meet their needs.

(RELATED: 5 takeaways from PLMA’s private label fair)

Emphasize innovation to create differentiation and loyalty

Brands like ALDI and Trader Joe’s have already shown how private labels can not only become mainstream, but even replace national brands entirely. These successful companies are constantly innovating, creating new products and refining existing ones to meet changing customer expectations and attract customers, just like national brands – in fact, in some cases better than national brands do. This focus on meeting or exceeding expectations creates emotional bonds with the audience, increasing not only private label loyalty, but store-wide loyalty as well. Most consumers don’t even consider Trader Joe’s products “private label”—they’re just items they love.

ALDI is like Trader Joe’s 80% private label and consistently develop products that rival national brands in quality, but in a more mainstream way. By investing in product development, ALDI has managed to steal considerable US market share and reduce private label stigma, despite offering a limited range and poor in-store service. Brands with deep enough pockets could go a step further and invest in innovative private label products that become leaders in their own right, such as Trader Joe’s Everything But the Bagel Seasoning.

Remember: To beat the name tags, you have to act like one

This is especially true now because the retail landscape is more fragmented than ever. Pharmacies are now trying to become convenience stores, while club stores, such as Sam’s Club, BJ’s and Costco, are investing in prepared foods, and c-stores are investing heavily in fresh foods. Channels are blurring and online shopping and delivery services are reducing visits to brick-and-mortar stores.

Ultimately, there is no single, correct way to position a private label. You simply need to set strong processes in motion for brand building, product development, innovation, team structure and marketing. The central theme of all successful private label strategies is that they use brands that suit their audience’s needs – how you formulate yours will depend on how you want to go to market.

All this effort may feel unnecessary if your private labels are currently enjoying growth; But the hard truth is that this growth is partly driven by other forces. The can be your total control, but if you change the mindset of consumers from buying your private label because they have to, to buy it because they are lack to.

The future of private label success lies in changing the mindset of the customer by competing with national brands on innovation, branding and emotional engagement. In a world where retail is constantly evolving, those companies that treat private labels as marketing tools for growth, rather than cost-cutting opportunities, will come out on top.