Branding has always played a pivotal role in shaping consumer behavior, retailer marketing strategies and product trends—no matter the industry. Today, among the various strategic branding approaches found within the home improvement channels, private branding has emerged as a powerful force, influencing DIYers, Pros and the companies that service them.
Understanding Private Branding
Private branding, also known as private labeling or store branding, refers to the practice of retailers creating and marketing their own branded products. While national brands are produced by third-party manufacturers, private brands are exclusive to a specific retailer and sometimes use part or all of the retailer’s name in their packaging. For example, if you visit Home Depot looking for trash bags, you’ll find that the retailer carries both national brands, like Hefty, and private label brands, like HDX. So, how is private branding impacting the home improvement industry as a whole? Let’s examine the approach from both the retailer’s perspective and that of the home improvement shopper.
The Retailer's Perspective
The truth is that retailers have a number of reasons to sell private brands over national ones—some related to pricing and others to the competitive nature of the industry. Developing their own branded products means retailers can achieve higher profit margins while also offering value pricing to their customers. Additionally, private branding provides retailers with greater control over product development and marketing strategies, allowing them to stand out from competitors and create opportunities for loyalty to evolve.
However, private branding does still come with its own set of challenges. Building brand equity and trust takes no small amount of time and effort, both of which can be challenging considering the price points they are trying to achieve. Retailers must also ensure a careful balance between their private and national brand offerings to meet the needs of every type of end user, from hobbyists and DIYers to industry professionals.
The Shopper's Perspective
From the shopper’s standpoint, private brands offer some obvious benefits over national brands, specifically when it comes to pricing. With the rising cost of goods, Americans have become increasingly price-conscious, and private brands often provide greater cost savings than their national counterparts. In fact, nearly 3 in 4 people (70%) recognize that they have discovered good alternative brands when their brand of choice was too costly. Plus, private brands also have the ability to offer a more diverse range of products tailored to meet specific shoppers’ needs and can often be found in more aisles across the store, leading to increased brand recognition and positive associations with the retailer.
In our recent survey, only 6% of respondents disagreed with the concept that private label brands are a good value. So, while some shoppers have expressed a preference for a trusted national home improvement brand, the door is open for the shopper looking to try something new if it means they’ll save money—especially when they’re offered similar features with comparable quality.
The Bigger Picture
On the other hand, some Pros and DIYers are still consistently choosing national brands over private label brands, and this happens for many reasons—some rational and some not. While one shopper may decide on their home improvement products logically based on features and benefits, another may purchase a more premium offering simply because the placebo effect would have them believe that a higher price means better quality. Some may also purchase national brands that make them feel more professional, while others choose one based on packaging or remembering the name from a childhood memory. No matter the reason, the biggest takeaway is that national brands possess unique advantages that can help them earn not just preference but loyalty. The crux of this strategy is their ability to connect emotionally with their target audiences through a differentiated value proposition that speaks to both their head and their heart. By investing in their brand identity, brand messaging, brand experience and brand positioning, they can forge a more meaningful relationship with their target audiences, leading to purchase behavior that goes well beyond a single transaction.
Making Moves
For national brands faced with the challenge of competing in a market environment with such price pressures, success lies not only in offering superior products with well-defined value, but also in cultivating stronger bonds with their target audience. Whether that’s through traditional marketing tactics, social media campaigns or unique brand experiences, national brands have the opportunity to become an integral part of their end users’ lives. By studying and understanding their core audience’s values, aspirations and pain points, they can tailor their messaging and offerings to resonate on a much more personal level, fostering brand loyalty and influencing purchasing decisions well into the future.
Why It Matters
Private branding has emerged as a strong contender in the home improvement industry, reshaping the way Pros and DIYers shop for and interact with products and brands. By understanding the roles that both private and national brands play, manufacturers can begin to leverage this knowledge to enhance their competitive advantage and meet the ever-evolving needs of the end user. Similarly, shoppers can stand to benefit from the value, quality and innovation offered by every party, making more informed choices that align with their preferences and budgets.
As the home improvement industry continues to evolve, the branding battle will remain a catalyst for both innovation and access, helping shape the future of every aisle retailers stock and shoppers walk.
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