Drug Stores to Fulfill Increasing Demand for Private-​Label Products

BY Rachel Cagle
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"Based on the level of innovation seen in private-​label health and beauty care and general merchandise, it is clear that retailers and suppliers are not just striving to meet consumer expectations, but are looking to surpass them, says Drug Store News."

"Now, recognizing the value private label adds to their mix, retailers are devoting more money to research and development, launching innovative products, and developing sophisticated marketing programs — all of which are causing consumers to take notice."

"The result, many said, is a continued acceptance of private-​label products as a legitimate and often less costly alternative to national brands. And, that means that sales of store brand products are growing at solid rates in many categories."

"That is not to say that consumers blindly believe in the benefits of private label. Perceptions of efficacy, safety and overall quality remain inherent vulnerabilities in the category."

"Matt Wolf, CEO of Contract Pharmacal, based in Hauppauge, N.Y., said private-​label suppliers and retailers are addressing these vulnerabilities in several ways. First, he said that establishing trusted reputations in the marketplace is vital. Second, innovation is vital as is demonstrating transparency with online reviews, clearly stating testing and safety measures on packaging, and educating consumers on such issues that matter to them as the company’s sustainability practices."

"Research from Daymon supports this. Bob DiNunzio, director of category strategy at the Stamford, Conn.-based company, said that efficacy, not brand, is typically the top driver when making an HBC purchase. He said that while shoppers are looking for effective products that are of value to them, it is important to understand that value is no longer just about price."

'Shoppers are willing to pay more for products that deliver what they perceive to be a premium benefit,' DiNunzio said. 'Customers are finding that private-​label products meet these needs and can deliver much more than just a low-​cost alternative to a national brand.'”

"Beyond efficacy, Daymon research found that across health, beauty and personal care categories, shoppers are looking for 'clean label' products with ingredients that are natural, safe and easily recognizable. Given that each consumer has a unique definition of clean label products, DiNunzio said this provides retailers and their own brands with an edge."

'We see this trending on shelf with vitamins, minerals and supplements as well,' he said, noting that many private brands have shifted to plant-​based, vegan and natural formulas. He added that retailers are calling out the attributes on the label and incorporating these messages in store and online, a trend also seen in body and skin care. 'Retailers are creating a free-​from list of ingredients that are guaranteed to not be included in any of their personal care products. This makes shopping simpler and more convenient, eliminating the need for customers to research and scrutinize labels,' DiNunzio said."

"Layered on top of this, Daymon researchers found that consumers are gravitating to brands that support their lifestyle and beliefs. For example, vitamins that support a specific diet plan, hair care products that are designed for one’s natural hair texture, or ingredients that are sustainably harvested are extremely appealing to HBC consumers."

Companies should promote the benefits of their private brands to Store Brand Buyers. One such benefit is price. According to AudienceSCAN, Store Brand Buyers prefer to receive emails containing coupons/​discount codes and new product announcements from businesses, with 44.2% having taken action after receiving email ads last year.

AudienceSCAN data is available for your applications and dashboards through the SalesFuel API. In addition, AdMall contains industry profiles on cosmetics/​skin care shops and drugstores/​pharmacies, as well as lead lists at the local level. Media companies, sales reps and agencies can access this data with a subscription to AdMall from SalesFuel.