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Private Label: What Retailers Need to Know When Launching a House Brand

Glenn Polyn//October 1, 2023//

Private Label: What Retailers Need to Know When Launching a House Brand

Glenn Polyn //October 1, 2023//

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Once seen as cheap and generic imitators of more traditional brands, private label products are now viewed completely differently by consumers. This new perspective has resulted in private label manufacturing becoming a very lucrative business, especially for retailers. In short, private labeling is one of the hottest parts of the pet product industry.  

What are the advantages of pet retailers offering their own “house brand” to customers? For one, the lower costs due to fewer intermediaries and commissions result in potentially higher margins. In addition, a retailer can promote the brand as being more sustainable and trusted, as it offers a product with direct contact with manufacturers and suppliers, thereby improving transparency and traceability. 

Also, possessing a “house brand” can enhance the relevance, value and reputation of the retailer, as it can transform the pet store into being more relevant and engaging, especially if the brand’s product line connects with the needs and preferences of local consumers.  

With a little nurturing, retailers are finding private labels to be more profitable and value-creating, thereby representing significant volume for retailers and those producers and processors who supply the products. For some retailers, these “house brands” can represent up to 50 percent of their sales. 

When the Private Label Manufacturing Association (PLMA) released its 2023 Private Label Report, which gives in-depth coverage of store brand sales in 2023, it found that they totaled $228.6 billion, a $23 billion increase over the private year. In fact, for the 52 weeks ending January 1, 2023, store brand sales increased by 11.3 percent, nearly twice the growth of national brands, which were up 6.1 percent. 

How does this impact the pet industry? A recent report of nationwide data provided exclusively to PLMA by Circana (formerly IRI and NPD) revealed that store brand pet product dollar sales in all U.S. outlets surpassed $4.8 billion for the 52 weeks ending May 2023. Pet food sales were $1.5 billion, a 27.7 percent increase from the prior year; litter, $381 million, up 22 percent; pet treats, $635 million, a 21 percent gain; and pet supplies, $2.3 billion, a 7.3 percent uptick.  

According to the PLMA, retailers are adding private labels in such categories as pet food, treats, toys and outdoor gear like leashes and collars, and these store brand pet products are providing a noticeable boost to their sales. And these private label lines are not generic, low-quality products; instead, today’s private label products are high-end, with premium ingredients that match the demands of today’s health-conscious pet parents. 

Pet products will be highlighted at the PLMA’s 2023 Annual Private Label Trade Show, which will take place November 12 to 14 at the Donald E. Stephens Convention Center in Chicago, Illinois. Featuring more than 2,500 exhibit booths and an expected 5,000 attendees, the show is considered the largest event for private label products in North America. 

Pet parents are not completely avoiding national brands, as any good consumer will load up on a mixed bag of private and national brands. However, the most powerful benefit of a successful private label program is consumers can only get the products at their stores. As a result, savvy retailers are incorporating their house brands into specifically tailored programs and services for budget shoppers who, in turn, are increasing loyalty to stores that enable them to save at checkout.  

Contract manufacturers are paying close attention to consumer buying trends, especially in the pet food and treat sectors. Carnivore Meat Company, which has been made a name for itself as a private label producer, has been recognized for its growth accomplishments and manufacturing excellence with several awards in recent years, including the Wisconsin Manufacturer of the Year Award and Inc 5000 Fastest Growing Private Companies. 

“Carnivore Meat Company has been in the business of private brands and private label products since our inception,” said Nick Ebert, chief commercial officer at Vital Essentials. “We are constantly working to innovate new products, techniques and technology to support our commitment to excellence in the raw pet food industry. Through custom sourcing programs, in-house product development teams, and the largest production capacity of any freeze-dried manufacturer in North America, we have made it our business to help others achieve their vision.” 

Developing a successful “house brand” needs to be taken seriously, with retailers paying attention to detail, to create the best chance for sustained success. Retailers must invest a great deal of time and thought in planning to determine the products they want to make up their “house brand.” It’s not as simple as finding the cheapest contract manufacturer and slapping a catchy label on the products.  

Selecting the wrong contract manufacturer to partner with could have terrible repercussions for a pet retailer. Therefore, a retailer would be wise to ask contract manufacturers about their ingredient sourcing and production standards. Ebert has some additional advice for anyone considering a private label brand for their store. 

“Consider your story and how you want to represent your brand to your consumers,” he noted. “Once you have the baseline of who you want to be, Carnivore has the ability to bring that dream to life. Consumers are looking for a brand that elicits a feeling of security, nutrition, sometimes fun and, most importantly, a product they can trust. 

“Your story will help to speak to those feelings listed above, and your product will ultimately deliver on that narrative,” he added. “Before you begin formulating or determining the quantities of your first purchase order, craft your brand’s story, which will help lead to a fantastic product for you to share with the world.” 

Although inflation has started to slow, the current state of the economy and the accompanying pressures are still influencing consumer spending. Today’s consumers are more price-aware and, as a result, private label brands have caught their attention. It would come as no surprise to see private labels continue to grab a sizable share of business in coming years. As consumers try to squeeze every last penny out of their hard-earned dollars, private label brands can expect to fly off the shelves. To promote in-store sales of house brands, retailers could up their game by creating endcaps and eye-level displays, as well as cross merchandising and product sampling. 

Private label brands have come to be expected at major retail operations across the country, including at pet specialty chains. However, it’s important to note that loyalty is a two-way street when it comes to offering private label products at the expense of national brands. The support of brands loyal to independent retailers has been vital in keeping the pet specialty channel a thriving marketplace.  

In today’s ultra-competitive pet product community, where e-commerce and big box stores are flirting with national brands that are trying to remain dedicated to independent pet retailers, it is tempting for pet stores to develop merchandising strategies that add private label products in a variety of categories to help them stand out from their competitors. However, while it would be wise for retailers to develop a private label strategy that incorporates their own “house brands,” it should not be done at the expense of their traffic-building national brands, especially those that remain loyal to the independent pet stores.  

Developing and implementing a successful private label program takes an enormous amount of time and effort to ensure it is done right. From designing a plan, finding and partnering with a trustworthy contract manufacturer and implementing a strategy that allows the product to connect with customers, the “house brand” can be a boon for a retailer if done right. On the other hand, if it’s a failure, the private label program meant to build up the retailer’s brand could actually hurt business in the long term.