Building and growing a private label business is a priority for almost all retailers. As a Private Label Manager, you are tasked with the success of the private label brand. Every period, every month you analyze your brand performance vis-à-vis the category and identify key consumer insights that can enhance your private label business.
Do you have the right tools they to quickly identify the cause for changes in your business? Such as: “Why are sales growing (or declining)? How loyal are my customers? Which competing brands present a threat or opportunity? Are my promotions driving results? How can I get more predictable outcomes with my next product launch?”
In this blog post, we highlight the three most important insights every Private Label Brand Manager should be able to access automatically and regularly. The teams we work with who use these to estimate the performance of their private label brand performance are always one step ahead.
UNDERSTAND SALES NUMBERS
If your purpose is to understand your sales numbers, then ciValue’s Sales Drivers report is the place to start. Let’s say you manage a private label brand in the yogurt category and sales are down for the period. There are ultimately only three things that can be driving it:
- You are losing shoppers
- Shoppers are visiting less frequently
- Shoppers are spending less when they do visit
If sales are down, one of these three (or, more realistically, some combination of all three) is to blame.
Note that to track these three properly requires the use of customer-level data. I cannot count the number of times I have heard people refer to “customer count” when what they mean is “transaction count.” If you are still counting transactions without tying them to a unique customer ID, it is impossible to tell if what you are seeing is the same number of people shopping less often, or a smaller number of people shopping at their usual frequency.
💡 Understanding what is driving your sales decline is the key to reversing it. If basket size is flat but customer count is declining, a basket-building coupon to active customers will not get at the root of the problem. On the other hand, if your customer count is actually growing, but visits and basket size have dropped, a cross-sell campaign to acquire more customers won’t help you.
ANALYZE COMPETITIVE & SALES DYNAMICS IN YOUR CATEGORY
Now that you understand what is driving sales results, you need to analyze the competitive and sales dynamics in your category. CiValue’s gain, loss and switching report helps Private Label Managers identify competing brands, understand the reasons for the change in private label sales, including movements from the private label brand to other brands in the category and vice versa.
Firstly, you need to understand how shopping behavior is impacting sales: how is a change in shopping behavior resulting in a gain or loss in the sales of the private label brand? When evaluating sales gain in the period for the private label brand, you need to break down your gain into:
- Sales gain from shoppers who are new to the store
- Sales gain from shoppers who are new to the category
- Sales gain from shoppers who switched from another brand to the private label brand
- Sales gain from increased consumption by shoppers who previously purchase the private label brand
Similarly, when evaluating sales loss in the period for the private label brand, you need to break down your loss into:
- Sales loss from shoppers who no longer shop at the retailer
- Sales loss from shoppers who have left the category
- Sales loss from shoppers who switched from the private label brand to a competing brand
- Sales loss from decreased consumption by shoppers who previously purchased the private label brand
Secondly, you need to identify the top competing brands that shoppers are switching from – and switching to – your private label brand. In addition to providing valuable insights on what shoppers perceive as comparable brands and products, this report will help you identify strategies to grow wallet share by increasing switching from a competing brand to your private label brand and to stem the loss from shoppers switching from your private label brand to a competitor’s brand.
ESTIMATE THE IMPACT OF YOUR PROMOTIONAL STRATEGY
Lastly, it is important to understand how your promotional strategy is working to make any tweaks needed and ensure that you meet or exceed your business targets. CiValue’s event analyzer report helps you evaluate the performance of your promotional events.
As a Private Label Manager, you have put a lot of thought into developing your promotion plan, including identifying other private label products or brands that are commonly purchased together by shoppers.
When evaluating a promotion, you must analyze the impact of the promotion on sales metrics, including total turnover, uplift, promotion penetration and effectiveness. Promotion penetration helps measure the percentage of items sold on promotion. Promotion effectiveness helps measure the sales return on the incremental discount invested in the promotion. A deep understanding of how the promotion is impacting your sales and margin is key to success.
In conclusion, modern management requires data-based decisions and consistent measurement. A good understanding of sales driver, competitors’ numbers and promotions effectiveness are essential for making quick decisions as well for tuning the private label marketing strategy. Your insight reports should be available automatically and at your fingertips to provide all of the above including breakdown by geographical regions, customer segments, and channels. Besides, data in reports should be accessible in the format of trends and should enable a convenient and easy comparison to the performance of the other category brands.
👉🏽 We have compiled the full list of insights needed for a successful private label strategy. Download our e-book to learn more!