Innovation is next frontier for private brands: FMI

Dive Brief:

Eighty-two percent of surveyed food retail executives plan to increase private brand investments moderately or significantly in the next two years, according to a new report from the FMI - The Food Industry Association (FMI).
Only 10% of surveyed executives said they see innovation in their private brands as “very” far along, per the report. Food retailers said they see packaging, branding, purchasing, logistics, inventory management, engaging with younger consumers and supporting sustainable measures as some of the ways they can boost innovation.
FMI’s emphasis on innovation in the report comes at a time when grocers have been expanding product assortments and penetration for their store brands.

Dive Insight:

FMI said that the majority of survey respondents who said they plan to increase private brand investments in the near future can help set up retailers on the path for more innovation.

The report is based on a survey of 63 industry executives between March 17 and April 14, along with companion interviews with food industry executives.

“Respondents said that while new products are always an important part of innovation, the efforts need [to] go well beyond new item introductions,” FMI said in the report.

Among areas of importance for private brand innovation, 80% of respondents noted value/price, followed by appealing to younger consumers (73%), improving transparency on product information (60%) and elevating health and well-being benefits (58%).

To boost price and value innovation, respondents noted opportunities to emphasize value beyond price (60%), play up value across price tiers (51%), spotlight enhanced value in comparison to national brands (38%) and focus on opening price points (17%).

“Manufacturers were most likely to suggest ‘emphasizing value beyond price’ while retailers were big proponents of ‘playing up value in all tiers,’” FMI noted.

While innovation can help grocers weather supply chain woes, FMI said that suppliers and grocers aren’t always in agreement on how to approach innovation. “Enhanced communication will be crucial for ironing out the differences,” the trade group noted in the report.

Retailer survey respondents also said they want to have clear metrics and expectations in trading partner relationships as part of a larger push to use more metrics and measurement with private brand innovation.

While there’s a gap in innovation, 94% of respondents said they are either “midway” or “well along” with honing in leveraging store brands as a point of differentiation for their customers.