Private label promotions: Retail pricing’s next frontier

As inflation and supply chain disruptions continue to plague retail shelves with higher prices and fewer options, consumers are embracing private label alternatives around the globe. Studies show that 70% of US consumers have experimented with private labels, and 50% express their intention to continue to do so in 2024.

In LATAM, Euromonitor reports consistent growth of private label products throughout the region, with some markets reaching as high as 15% of total sales. And in Europe, according to a study by Amcor, 70% of shoppers consistently choose private label products during their grocery trips.

Private label products offer customers a more cost-effective choice while also giving retailers greater control over suppliers and prices. And the days of private label trading exclusively in the low-price segment of categories are over. The quality and marketing of private label products now rival those of their better-known competitors for market share all around the globe.

As product quality and assortment depth continue to expand, the private label market will become increasingly competitive. And promotional prices are rapidly becoming a very important part of every private label strategy. The Amcor study also highlights that 85% of consumers focus on pricing when choosing private-label brands, and private label promotions are crucial for almost half (48%) of consumers.

As such, the time has definitely come for retailers to expand their private label promotion strategies. And promotion optimization technology can help. Recent advancements in data science and artificial intelligence tools make it much easier to plan, execute and optimize private label promotions in order to preserve loyalty and grow market share.

Three strategies for improved private label promotions

1. Utilize advanced analytics

Leveraging advanced analytics is critical for effective private-label promotions. Analytics powered by modern technology can deliver previously unavailable insights into consumer behavior, preferences, and buying patterns across categories, markets and competitors. This data-driven approach makes it possible to tailor private label promotions and pricing, ensuring they reach the right audience with the right message at the right time--at the right price.

Analytics can also help identify the best promotion channels. Optimizing the mix of in-store displays, online marketing and targeted email campaigns can dramatically increase the effectiveness of promotional efforts. These analytics enhance the visibility of private-label products and solidify loyalty by offering shoppers the products they want at prices that remain competitive.

Advanced data analytics is also crucial for evaluating the performance of past private label promotions, providing clear insights into the impact not just on the items or categories in the offer, but across the store. These comprehensive analytics paint a clearer picture for retailers of which private label promotions are worth repeating and which offers need to be revisited.

2. Adjust promotional pricing "in flight"

Even with powerful analytics that are much more capable of optimizing private label promotions, those offers are only as good as the prevailing conditions in each market. And those conditions can, and often do, change multiple times a day.

New "promo aware" technologies make it possible to adapt to shifting conditions even while promotions are in flight. Pricing teams can now monitor the performance of their private label promotions, competitive offers, inventory levels and demand patterns and then adjust their strategies on the fly to adapt to shifting conditions.

In addition, dynamic base pricing capabilities can help ensure that everyday price strategies remain effective against key competitors as well, even as those conditions shift throughout the day.

Norwegian grocer REMA 1000 is a discount retailer in an extremely competitive market where maintaining not just low, but the lowest, prices is critical to preserving market share and price perception. REMA compares competitive prices throughout the day and reacts to those reports with intra-day price and promotion decisions that reach the electronic shelf labels in their stores in as little as 15 minutes.

As private label products become more and more important to more and more shoppers, the ability to react to rapidly shifting market, customer and competitive conditions can help retailers improve market positioning, even in the hyper-competitive world of private label.

3. Strengthen vendor negotiations with strategic analytics

For most retailers, the vast majority of vendor negotiations tend to be one-sided conversations. Vendors come to the bargaining table armed with detailed performance results across retailers and markets, leaving retailers at a data disadvantage. This can be particularly true with private label products. Improving the quantity and quality of the data, as well as the analytics derived from that data, is essential to achieving more balanced negotiations.

Advanced analytics empower retailers to leverage the strength of their private label brand as a counterpoint when negotiating with national brand vendors. New analytics tools can clearly show when and how hard a retailer should push back on national brand offers by demonstrating how they could attain value by promoting their own private label brands instead.

Additionally, modern analytics and predictive planning platforms can make it easier to strategically plan and promote both national brand and private label products to benefit overall category objectives. These new tools help drive better balances between private label and national brand products to ultimately increase the mix of private label products and improve margins as well as price perception.

It's time to elevate your private label promotions

New advancements in technology make it possible to re-evaluate the way private label products are promoted, priced and negotiated. And retailers now have better tools than ever before to fuel business impacts through private label promotional strategies. Now is the time for retailers in every part of the globe to begin evaluating how to take advantage of these technologies in their organizations. 

How Revionics can help

The new Revionics Promotions Planning and Optimization solution provides the technology and expertise you need to skill up your promotions strategy and maximize the impact of every offer.

We've combined the best of modern technology with 25 years of pricing experience to unlock new promotional possibilities and make it easier than ever to handle complex, omnichannel, personalized and inventory-aware promotions for private label products in every category.

Revionics brings a suite of features designed to supercharge private label promotions, setting a new standard in the retail industry. Among its most noteworthy features is the ability to:

• View aggregated metrics for any group of promos
• See filterable, macro-level metrics during planning
• Track forecasted trends using product groups
• Gain regional insights with store groups
• Leverage predictive simulations using the most sophisticated pricing AI on the market
• Manage any combination of stores, channels, and items

By integrating these features into their promotional strategies, retailers leveraging Revionics' promo solution can expect to enhance the appeal of their private label products and significantly boost profitability and market share.

If you're looking to elevate your promotions strategy and handle private label promotions like a seasoned pro, click here to learn more about the Revionics Promotions Planning and Optimization solution.