Why Brands Have a Millennial Problem

With plain white labels and undesirable shelf position, generic or store brands used to be considered inferior to those with a household name. But like everything else in retail, times are changing. Today, house brands command 20% of the CPG market, with estimated revenues of $120 billion annually. Improved quality, more contemporary packaging, better retailer marketing, and competitive pricing, new “brandless” brands are changing the way consumers perceive these products.

Do Millennials Care About Brands?

Yes…and no. Researchers found that more than half of Millennials have no real preference between private-label and national food and beverage brands and are much more willing to experiment with brands than previous generations. They’re seeking value, quality, and convenience—and if a store brand like Amazon Basics, Whole Foods’ 365 Everyday Value, Aldi, or Trader Joe’s can offer those benefits, legacy brands may continue to lose share.

Is It Really Brandless?

One could argue that startups like Brandless and Movebutter, which offer high-quality private-label products, are indeed, brands. But unlike traditional brands, they take a different transactional approach. While traditional brands are built in legacy, “brandless” brands are rooted in building a legacy through community-building and social responsibility. They are building a different kind of consumer-activist brand where values matter as much as value.

It’s Not Just CPG

Target, Walmart, and Amazon have all rolled out private-label clothing brands in the past year and other retailers like Dick’s Sporting Goods are investing in a private-label strategy. While store branded apparel is nothing new, it often lacked in both style and quality. But sensing an opportunity, even Walmart is stepping up its fashion game with the hire of a former Saks Fifth Avenue and Ralph Lauren executive to lead their fashion categories.

Is Beauty Immune?

Of all the products we buy, beauty is arguably the most personal and becoming increasingly individualized—as evidenced by L’Oréal’s recent debut of their custom foundation and serum technology, which can whip up bespoke formulations in minutes. While the trend in beauty is toward customization, there are a growing number of companies offering no-frills, straightforward products that do what they promise at a budget-friendly price point. Brandless offers a limited range of no-frills personal care items (moisturizing shampoo, body scrub, hand lotion), drug chains offer their own lines with ingredients that mirror mass brands. While no-frills personal care products or store-brand makeup probably won’t appeal to the beauty enthusiast, they may appeal to a value shopper.

To engage Millennials, and a surprising number of their older cohorts, marketers need to keep in mind that it’s not just about the brand, it’s about engagement. What matters is the relationship the consumer has with the brand and the brand experience. Women’s Marketing is a marketing strategy partner to emerging and established consumer brands, with a deep understanding of the changing relationships women experience with brands.

Sources: Cadent Sea Change for Private Label 2017, Adage Marketers Millennial Dilemma 2017, Adweek Accenture 5 Brands Shaking Up the Grocery Industry by Changing What We Choose to Eat and How We Buy Food