In case you missed it, the National Association of Convenience Stores (NACS) hosted their annual Convenience Store Trade Show in Chicago, and we had the honor of presenting our strategic thinking with the audience. CBX Partner Todd Maute and VP of Strategy Jaime Klein Daley shared their perspectives on the current state of private label in convenience stores, where it’s been, and where it’s heading—as well as what c-stores can do to stay ahead of the curve.
We can all remember a time when private label was generic in both product offer and brand design. The category was price-led and survived solely based on providing cheaper alternatives to frugal consumers. That day is over, and a lot has changed since then. Private label—in which success was once characterized by following the leader (through creating quality dupes of national brands at a lower price) and following it fast—has transformed into a category of industry-leading brands themselves. These private label brands place design and brand first—with sophisticated packaging and a distinctive understanding of the consumer.
Private label has particularly grown in market share in the recent year and a half of the pandemic, even outpacing that of national brands. And it comes as no surprise—the same thing happened during the 2008 recession. Consumers facing new financial constraints—regardless of whether they were subject to them before—turned then and now to private label brands for their lower price point. However, what happened after is not a trend we want to repeat. As the economy picked back up following the recession, consumers returned to previous shopping patterns and private label sales dropped.
So how can private retailers—particularly convenience stores—flip the narrative and maintain growth following COVID-19? Todd explained that c-stores currently have the unique opportunity and advantage of having a captive audience of shoppers in-store, and it’s time to win their loyalty. He outlines the following three steps:
1. Know your consumer: You can’t build a loyal following without knowing who that following is. Are they brand loyalists? Trying your brand for the first time? What brings them into your store? Are they seeking value and savings? Throughout the pandemic, this is what Nielsen referred to as constrained shopping—price-sensitive shoppers seeking a greater bang for their buck. Or are they looking for discovery and newness? This is referred to as insulated shopping—seeking exploration and entertainment through boredom or limited activity due to COVID-19. Knowing who your consumers are and why they shop will help you segment them and design products with their specific needs in mind.
2. Build a brand: It’s important for stores to not just sell products but build brands. These days, it can be hard to tell the difference between many private label brands versus national. They have beautiful packaging, LTO offers, and loyal fan bases (we’re looking at you, Wawa)—and some even have advertising campaigns airing on major networks. In this brave new world, your private brand has got to be led by design and stand out on shelf against leading competitors.
3. Innovate and promote: It used to be backwards: You’d start with a product, and then you’d build a brand. Today, standout private brands already exist, with distinct personalities and positions in the market—and they can thrive by building and innovating upon their current offerings. You know your consumers—so think about what other products they might need—that either add value to their lives in the form of convenience (they’re already in the store: might they also need xyz?) or that provide new opportunities for discovery and delight. By designing new products that consumers can only find in your store, you’ll keep them coming back again and increase your store resiliency.
Interested in elevating your private brand? Check out our specialized private label offering—Forge—to design own brands at volume without sacrificing creativity.