The Unexpected Success of Private Label Brands

Growing consumer confidence in store brands is adding fuel to private label manufacturers of building products. But the true test is how well the products stand up to more well-known brands in terms of reliability, while also fitting in with the current trends.

A consumer survey by consulting powerhouse Deloitte during the Great Recession revealed national brands were getting a run for their money by private labels. That wasn’t overly surprising, since store brands have benefitted during lean times because of the lower prices. When times get better, consumers tend to shift back to the national labels.

But what stood out is that Deloitte’s study of more than 2,000 U.S. consumers showed that 9 out of 10 said they permanently changed their buying behavior. Many who were loyal to national brands “have opened their eyes, minds and wallets to private label products and found little or no difference between the two.”

Two years ago, the private label food industry posted record sales by supermarkets, drug retailers and mass merchandisers like Wal-Mart and dollar stores that pushed annual revenue to an estimated $120 billion, according to the Private Label Manufacturers’ Association (PLMA).

Private label companies strive to change perceptions

Changing consumer attitudes toward private labels 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.”

“There are a lot of options,” says Brian Wenzel, Corporate Manager of Marketing Communications and Branding for Interline Brands, Inc., a leading exclusive brands or private label marketer and distributor. “You’re really not sacrificing on style or quality or performance by going to an exclusive brand or private label.”

The renaissance of private brands, some say, is that the gap between national brands in terms of quality, customer support and warranty is shrinking.

Wenzel said private label companies are focused on marketing better products and changing perceptions to encourage the purchasing of private brands. Interline Brands, Inc. – which encompasses a variety of broad-line maintenance, repair and operations products that include appliances and fixtures for the multifamily housing industry – is doing just that, experiencing significant growth in the last two years with its Exclusive Brands line.

“I think people have responded because the quality standards have improved,” he said. “One thing especially is the presence of the post-sale technical support and warranty coverage and repair parts. For whatever reason, there has been a perception out there that customers don’t get support when buying a (private label) faucet. That’s not the case. We have dedicated technical support people and quality assurance.”

Quality of exclusive brand products ‘improving’

The basic attraction to private brands traditionally has been that they come with lower prices. Wenzel said that store brands typically are 10-20 percent less than their national counterparts. Some items run up to 40 percent less.

Interline Brands, Wenzel said, has focused efforts to meet demand for greener products and the latest styles, which has helped boost sales of faucets in the multifamily arena. In 2012, the company rolled out a new line of faucets that meet lead-free standards, and sales have reached triple-digit growth.

“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 and we have better quality and more alternatives. We’re keeping with the style and designs of today.”