The home improvement industry is showing a trend towards greater emphasis on private labels, which is largely being driven by DIY stores. These stores aim to attract consumers to their premises by providing a broad range of renowned brand products, while also offering a more affordable option through their private label products.
Previously, private label brands were often viewed as low-quality and inferior copies of well-known name brands, but it appears that this perception has shifted. Recent results of USP Marketing Consultancy’s European Home Improvement Monitor show that consumers are increasingly positive about private labels, which may have serious consequences for the name brands.
Consumers show an equal preference for name brands and private labels
Our results show that European consumers are quite receptive to private labels, with over 50% expressing a positive outlook toward them. Conversely, only a small fraction of consumers hold a negative perception of private labels. The positive attitude towards private labels seems to be somewhat influenced by the DIY experience. The more experience consumers have, the more likely they are to be positive about private labels.
Aside from this positive attitude towards private labels, we see that preference for them is growing. As opposed to last year, the share of consumers preferring private labels is now the same as the share preferring name brands. Clearly, the label of lower quality that used to be attached to private label products is not that strong anymore, which has major consequences for name brands.
Quality no longer justifies the premium price of name brands
In the past, name brands have been able to justify their high prices by claiming that their products are of superior quality compared to the lower-priced private-label alternatives. However, this argument has become less convincing over time, as private label products have improved in quality and are more and more perceived as on par with name brands.
Of course, there are still some name-brand products that truly offer superior quality or unique features that cannot be replicated by private labels. However, for many products, the quality difference is negligible enough for consumers to opt for private-label products. That makes it increasingly difficult for name brands to justify their higher prices based on quality alone.
Brilliant branding and innovation are more important than ever
It seems name brands cannot just rely on superior quality anymore to distinguish themselves and justify their premium prices. This makes innovation and a strong brand image more important than ever, as those are the keys for name brands to keep distinguishing themselves from the private labels in the eyes of the consumer.
Name brands can maintain their dominance in product innovation by excelling at research and development and producing new and innovative products. This image of innovation can reinforce a strong brand image that creates trust, loyalty, and affinity among customers, making them more likely to choose the name brand over private labels.
The focus of this branding will differ from product group to product group, though. We researched consumers’ attitudes and brand preferences for home improvement products in 14 product groups and have seen major differences. For an overview of branding in the European home improvement sector, we refer you to USP Marketing Consultancy’s European Home Improvement Monitor.