How private labels became very hot

April 15, 2015

Anyone who hasn't recently been lying in a bathtub full of milk and cereal will have no problem recognizing the fat man with the bushy beard: Friedrich Liechtenstein, actor, self-promoter and 'super-horny' grandpa. The fact that the viral video is a commercial for Edeka - a gift, is something you notice when Liechtenstein dances around in front of a supermarket. And yet it's worth taking a closer look at what kind of products are being advertised here.

Included: A sushi box. Great cookies. And of course, very hot cod. Mainly products that are not part of your daily needs. Products that represent luxury in a certain way – at least for most students. The Edeka logo is emblazoned on the packaging; It is the retail chain's own brand, under whose umbrella over 800 products are currently marketed.

It is noteworthy that supermarket chains such as Rewe, Kaiser's Tengelmann or Edeka have such a brand in the mid-price range and are now invading the expensive delicatessen department with their own product lines. Ultimately, these own brands compete with the well-known manufacturer brands that are also sold in these markets.

In Germany, a supposed separation could be observed for a long time: supermarkets mainly sold manufacturer brands. Those who couldn't afford that went to discounters; they appealed to a different target group with their cheap own brands; But some customers were prepared to dig deeper into their pockets, so a few manufacturer brands were added to the range. And in order to be able to keep up with this strategy, retail chains developed their own entry-level price brands: Rewe started with yes! over thirty years ago! Edeka and Kaiser's Tengelmann followed suit with Good & Cheap and Attractive and Inexpensive.

Meanwhile, even a no-name brand becomes its own brand by rejecting 'established' brands. At least Matthias Beyrow sees it that way. The professor in the design department at the Potsdam University of Applied Sciences is particularly interested in the design of private labels. “Everything I get to know fulfills the brand function for me,” he says. And further: “Familiarity with the product eventually leads to product trust.” For Beyrow, this means that as soon as the own-brand pasta ends up in his shopping basket, he not only notices the product, but also the associated brand. If they convince him of their quality, it is likely that he will also test other own-brand products - even if he could afford the expensive manufacturer's brand. The own brands have also improved in terms of design; the classic concept – product photo and logo – is now often varied or changed. Matthias Beyrow's students showed that there is still room for improvement using the entry-level price brand Attractive and Inexpensive from Kaiser's Tengelmann. The results are pleasingly courageous; they show that Beyrow's students give their own brands more self-confidence than the manufacturer brands through their designs. Established brand manufacturers, on the other hand, complain that the success of their own brands is based primarily on their product innovations.

An argument that cannot be dismissed out of hand; Nevertheless, the retailers' own brands have to be carefully conceived, organized and designed. As a result, trading companies are currently increasingly looking for employees who can find out which products are popular with customers, which suppliers are suitable for cooperation and how best to market their own brand. And so the success of own brands is now allowing retailers to venture outside the usual paths. Although business administration graduates are still particularly welcome, students without a degree can also try their luck. Wilfried Malcher, Managing Director of the German Trade Association, notes: “Trade gives new opportunities to those who have dropped out of college.” Business students who dare to start their careers even without a bachelor’s certificate are sometimes given further training directly in the company after just a few semesters and some practical professional experience.

Consumers have a comfortable situation in this battle of brands: it not only ensures a differentiated range and falling prices, but also produces PR gems like 'Supergeil'.