Private Labels: Not so private anymore

Marketers love to pile on Unilever these days. From one of its largest shareholders in UK claiming, “they have lost the plot”, to the more recent and closer to home, mix of celebration and fierce criticisms. Let’s talk about the recent one. Through its Dove brand, Unilever propagated the brand message of ‘Stop the Beauty Test’. They wanted to convery to their consumers, the color of their skin is not under any circumstance a characteristic to be used to look down upon them. An admirable and heartfelt message indeed. Just one problem though.

Unilever also happens to sell multiple products under the moniker of, “Glow (Fair, until recently) and Lovely”. If you are above the age of 25, you would be instantly reminded of those ads on TV showcasing how a ‘dirty, dark-complexioned’ woman became ‘fit’ for an arranged marriage once she applied their fairness cream and turned into an appropriately fair-skinned woman. Shudders.

Now hang on a minute. While there were all kinds of problems with the concept, the product was a proven money-maker, especially in markets other than Tier-1 cities. It is the reason why it still sits on those shelves in shops.

You can see why Unilever is coming from when it creates these films under Dove. They want to be remembered as a brand that champions women, not denigrates them. Unilever’s leadership has been very vocal about purpose being a an important catalyst for growth. The following piece of fact may not set well with them and the similar-minded folks.

According to Kantar,

Private label ranges now account for 51% of the UK market, compared to branded products. Sales of the cheapest private label ranges at supermarkets are up by a third on last year

Well, that’s not happened as per the script. As Ant-Man in Avengers: Endgame comes to a sad conclusion, “Back to the Future is just a bunch of BS”, this is a clear message that purpose will not sell products.

While private label markets are still very nascent in India, its a safe assumption that most of my subscribers have purchased at least one private label product in their lifetime.

Enter any supermarket and you are bound to see them. Cereals, rice, pulses, wheat, dish washing liquid, floor cleaning liquids, detergents, mops, soaps, rice, pulses, spices, juices, to name a few. Depending upon which supermarket brand you enter and where, type of products available under private label varies to a certain extent. This phenomena is not restricted to offline supermarkets though. Open any majory grocery delivery app and you’ll see them listed, mostly at the top. Be it BigBasket, Amazon or Flipkart. Sale of these products have been off the charts. It is why other players in this space have also been building inventory of their own labels.

So what’s going on here? Brands have paid multiple crores to Bollywood A-Listers, ran ads incessantly, conducted performance, shopper, customer, consumer marketing. Why are people even considering the private label products?

An explanation has been put forward. It’s simple, slots very easily like a key into a lock, might make shareholders happy. Many have cited the sudden spike in cost of living in these developed and developing nations as a key reason for the ‘unprecedented switch’ in last 12 weeks. There have been statements that suggest, customers have been increasingly prioritizing value like never before. I am reminded of the similar theories that were put forward during the early weeks of restrictions loosening, when brands saw a dip in revenue. Consumers weren’t changing their shopping habits, they were simply coming back to their Pre-Covid levels, as Mark Ritson put it, the boring line of continuity.

Let me offer an alternate explanation. Consumers have always been on the lookout for value. Their decisions, behavior are molded by what happens at the Category Entry Points than what a brand preaches on YouTube or TV. Ads do not create purchase, they simple sustain mental consideration of the brand.

Now, let’s look at things from private label’s perspective. What have they gotten right?

They have identified the right categories where they can slot their own products seamlessly, especially those, wherein plethora of brands are vying for to be considered, but preference/ justification time is low. I am not going to spend more than a minute to decide which brand of floor cleaner I might get, but I will care if I get a Coke or a Pepsi or a Thums Up. Private labels have been nipping at the heels of brands 10x-100x their size by simply linking a clear, concise brand message in buying situations.

Yes, private label brands have a bit of an advantage. Whether its the supermarket storefront, or one on a digital platform, their products tend to get the choicest shelf space/ listings. But is that also a big enough factor for a customer to select a brand they may have not even heard of? I don’t know.

What is required, it seems to me, is a bit of an introspection and not finding justifications that can stave off the shareholders temporarily. This also serves as a cautionary tale for the Indian brands too. While the size of private label in India may still be miniscule, they have been particularly successful in penetration and growing their those brands. Brands need to look at all parts of the marketing flywheel as well as focus on the Law of Double Jeopardy. Pricing is a very nuanced factor and can flip instantly for either of the two. Brands need to continue being memorable and distinct and most importantly, link their brand message in buying situations, a key aspect that has been exploited very well by Private Label, thus far.