Private Labels and Cannibalism
It wouldn’t surprise me one bit if private label brands (like Target’s “Up & Up” or Safeway’s “Select”) are doing well in this economy. When things tighten enough, consumers look for cheaper alternatives or nix the ancillary items that aren’t as important.
But what does surprise me is the quality of the private labels. A perfect example is Target’s Up & Up diapers versus Pampers Baby Dry and Huggies. We were regular users of Pampers for my son, but after they disintegrated one too many times, we tried Huggies and Up & Up. The best of the bunch? Up & Up. We get the coveted double wammy…a superior product for HALF of the price…now that’s VALUE!!!
But I guess this really shouldn’t surprise me. Some of the private label brands are actually manufactured by brand name companies or other reputable manufacturers. But I believe the main impetus is that the stores that sell private labels have increased their focus on quality. It’s the power of branding…they realize that poor quality will reflect badly on their brand.
There was a time when generic brands were in stores. These weren’t store branded products. They usually came in these hideous packages in only black and white. In fact, the quality of the generics were generally only good enough for state maximum security prisons. The private labels that we see now are much, much different.
Which brings about an interesting issue, cannibalism. If brand manufacturers make private label brands, then they might be cannibalizing their own brand name sales.
Sure.
But I only have to look at Amazon’s Market Place store (or even Starbucks on every corner philosophy) to prove this issue not applicable. There is a certain segment that will buy private labels. But there is also a segment that would rather buy a cheaper alternative, may not buy the brand name anyway, and may even buy more of the private label brand. This is the market that Market Place hits. It may seem counter-intuitive, but it’s really not. It’s offering a service to a segmented market.
