Private Labels in Pet Care Marketplaces

The Pet Care Marketplaces in India needs to plan better and look at private labels strategically rather than tactically

Observe how other private labels have developed around the globe. Global retail leaders have demonstrated that a strong private-label product line can be a key component of a store’s value proposition.

Private-label products are at different stages of maturity. In most cases, store brands are developed to increase the margins of a retailer. Because they rely on store traffic and shelf position to generate sales, they require less marketing and related overheads. It’s more common for the products to be cheaper than national brands (with a certain quality or feature compromises), or similar versions of popular national brands at lower prices.

People on a tight budget looking for basic options, as well as sophisticated buyers who enjoy the concept of purchasing national-brand equivalents at a lower price, are the primary target groups. Retailer margins and overall pricing perception are aided by private label products in these areas, but customer loyalty isn’t enhanced, especially if the quality is subpar compared to that of the national brand.

Many retailers have become adept private-label owners, managing their private labels like consumer-packaged goods (CPG) manufacturers do—with strong discipline around the distinctive value proposition of their brands and rules which govern these brands. Rather than a price play, private labels routinely launch innovative items or offer better quality and features than national brands. Because of this, private brands have grown to be a significant factor in customer retention/loyalty

Pet Care Retail

In the Pet Care Market in India, as the market grows in leaps and bounds, there is a dearth of information and good quality products in certain categories –. For example – there are imported treats that pass of as high quality when the actual ingredients like salt and sugar apart from the chemicals are present. These are given to unsuspecting pet parents. The branded marketplaces can manufacture higher-quality treats. For example, dehydrated Sara’s Treats from Heads Up for Tails are the best treats and are priced higher than the imported ones.

Customers are expecting the marketplaces to launch/ suggest higher quality products that are good for the pets and not necessarily cheaper. The signs of a knowledge-based private label situation.

Winning Customer Loyalty With Private Labels

Pet Care Retailers can seize this moment to orient their private-label strategies to enable long-term customer loyalty.

However, few retailers have considered the significance of private labels in their companies. A vendor may offer to create a product at a lower cost and better profit margin than the national brand, which has led to the creation of private-label brands and products. The store acknowledges this but fails to describe the value proposition of the new product or its place in the range. Glenands have launched private labels in biscuits and other categories which are priced cheaper than the other branded offerings, which is the typical route

In some cases, private label launches have been more planned: retailers have set margin and penetration targets, adjusted those targets as necessary and even made organisational changes to focus more on private brands. Their goals are aligned, but they haven’t worked out an effective approach for these companies. I suspect some of the other premium online and offline marketplaces to be in this category.

Refine/ Define Private Label Ambitions and Test…Now!

Now is an opportune time for a Pet care retailer to define—or redefine—its aspirations for its store brands, based in part on the maturity stage of private labels in the markets in which it operates.

In light of the maturity (or lack of it) of private labels in the areas in which it operates, now is an ideal time for pet care retailers to redefine their ambitions for their store brands. It’s time for an in-depth analysis of the current situation to identify the gaps between what the company is currently doing and what it wants to be.

Conduct a detailed diagnosis and gap assessment

Once a retailer has done a high-level assessment, it can then take a deeper look at areas like — namely, branding, variety, pricing, communication, packaging, product design and sourcing, and organization and operating model—and develop an action plan in each.

Branding – In ‘human’ products, for private-label items, customers see them as less expensive, but they don’t see them as delivering on quality or innovation. Furthermore, the image of a private label can vary greatly among categories and departments. A retailer’s own merchandising and brand teams have been shown to have a poor understanding of each brand’s value proposition and to apply it inconsistently,

I fear that this is also happening with some private labels in the Pet Care sector.

A specific customer requirement should be explicitly defined for each brand (and sub-brand) by the retailers to provide a clear customer value proposition. This step may appear basic and apparent, but it is frequently skipped.

The creation of clear norms and standards is just as vital. The retailer’s brand and category teams will be able to consistently deliver the value proposition to customers if the retailer communicates and reinforces these standards.

As retailers build and refine their private-label initiatives, the following questions can be helpful for branding:

  • Target audience, their behaviour and needs & wants
  • Value proposition and difference with the competition
  • The standards set for the brand in terms of branding, quality, price, scope etc.
  • Overall brand architecture and fitment of multiple brands/ products

In India, Heads Up for Tails had probably tried to take baby steps in the right direction, But they seem confused. On one hand, they have launched a range of treats under Sara’s and Yummy and My Tummy but on the other hand, they have launched shampoos, hemp oil, balms, creams, perfumes and digestive drops (?!) are the HUFT brand with similar-looking packaging. No prizes for guessing which product is doing badly – the digestive drops (unfortunately, it is probably the best digestive across all brands for pets)

There is no proper brand architecture. Most of the HUFT products are under the HUFT brand and they are stretching the brand too thin. In the examples above, they are losing a great opportunity in digestives.

I encountered the same problem in Coffee Day when we had the same problem. Customers told us that even in a closed environment like a café, they did expect us to give products as we had stretched the brand from coffee to cookies, to corn puffs and why even to crockery. I dare say HUFT is going through the same process

Pricing and variety. –Pet Care retailers (except perhaps Heads Up) haven’t done a good job of promoting their private labels. Because of their appearance on store shelves, customers’ impressions of many private labels tend to be shaped by what they see. National-brand SKUs proliferate together with the development of secondary and tertiary brands to cover empty spaces, reducing private labels’ distinction and making the assortment architecture meaningless. When a store doesn’t have a systematic method for refining the assortment architecture, opportunities in pack sizes, flavours, and other subsegments pile up.

The importance of price-gaping strategies for private labels cannot be overstated. Ideally, private-label SKUs would be compared to competition benchmarks regularly by merchants. There is also a lack of compliance with established standards, which weakens the private-label value play, along with national promotions which are likely the most egregious.

Retailers can begin by focusing on the most popular products, then move on to a longer-term effort to re-evaluate the entire range. The following aspects should be addressed:

  • The process for rationalizing SKUs, without overlapping value propositions.
  • Identifying and addressing gaps/ opportunities (such as flavours and pack sizes) within the category
  • Reference products for each in terms of quality, price etc
  • Pricing strategies including promotion pricing

Communication – Even though private labels have traditionally been sold based solely on price and shelf placement, leading Pet Care retailers have recently begun using cost-effective channels to communicate the story behind their store brands—for example, how they source ingredients or where the products are made, for example. HUFT does so with its treats and grooming products. Additionally, they also use social media and content to promote their private labels. As a result of these, private brands can close the quality perception gap with larger brands

Aspects to be considered

  • Brand / Product awareness highlighting key benefits
  • Medium of communication through the store or out of store media like social media etc
  • Key customer purchase behaviours and drivers

Packaging – Is becoming increasingly crucial in articulating the value proposition of private labels. In the past, private-label packaging tended to look and feel like national-brand equivalents in the general “human” industry. Shoppers were drawn to a product’s packaging if the brand language expresses its functional benefits as well as its attractiveness. Similar opportunities exist for Pet Care retailers. As part of Sara’s Treats’ new private label, HUFT proudly displays the words organic, antibiotic-free etc on the package, setting it apart from other national bargain brands.

Notable points to be considered

  • Quality of design, packaging material etc
  • Differentiation from national level brands

Design – Pet Care retailers would be advised to adopt a combination of standards for product design from the top-down, determined by brand value propositions, and priority for specific categories from the bottom up, identified by people who are typically closest to customer demands 

Sourcing is an area where retailers can seek ways to innovate and differentiate themselves. Merchants will be able to aggressively develop new items with superior features and benefits as consumers get more comfortable with private labels. Some private labels can even lead whole product lines. Customers’ behaviours and preferences may be hidden from individual manufacturers because merchants have access to a variety of consumer knowledge across a wide range of brands. Private-label products can help retailers establish strong consumer loyalty by becoming trendsetters.

Last but not least and most importantly, most pet care retailers are taking the omnichannel route and are available across different environments/ marketplaces. For example, Glenands and Heads Up For Tails products are available on Amazon. In such a scenario, these private label brands are competing with national-level players and it becomes more than necessary to have a better, cohesive & differentiated private label strategy  

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