At Daymon Worldwide, Private Labels Vie for the Shopping Public’s Eye

by Patrick Henry

The Meijer food chainís ìMî brand, as designed by Daymon Worldwide, is an entry-level brand for hardline good.

The word “private,” as used in expressions like “private collection,” “private school,” and “private affair,” carries overtones of high style, exclusivity, and inner-circle elegance. But when “private” meets “label” in the context of consumer retailing, the effect can be more like what’s evoked by “public works” or “public transportation”: drab, functional, and generally second-best.

For years, shoppers have known private-label products as “store brands” or “house brands”—foods and other packaged goods bearing the retailer’s logo, a cut-rate price tag, and a vague resemblance to the competing national brand. Private labels are everywhere these days, helping consumers stretch household budgets and providing their brand owners, the retail chains, with an important revenue supplement. Yet some would say that for all of their ubiquity and usefulness, private-label products remain the homely stepchildren of the store shelves, spurned by upscale purchasers and scorned by serious package designers alike.

Wrong, wrong, and wrong, retorts Todd Maute, a private-label marketing expert who has brought thousands of store-branded products to new heights of consumer acceptance through a highly systematic and thoroughly data-driven approach to package design. He says that private labels are shedding their penny-pinching image and their generic looks as stores, shoppers, and designers learn to appreciate them for what they really are—unique brands that can add value without ever having to apologize for trailing the nationals by any measure that counts.

Maute is in charge of the design division of Daymon Worldwide, an international company specializing in the sales and marketing of private label consumer products. At the division’s offices in Stamford, Conn., he directs a multi-service operation that works with product manufacturers and retailers to achieve the ideal positioning for private-label goods in store chains. Intensive market research underlies everything that Maute’s team does, be it a simple “line look” makeover for an existing group of products or a more complex assignment requiring not only the development of a brand, but the creation of a product to go along with it.

Pushed to the margin

Evangelistic zeal for private labels doesn’t cloud Maute’s understanding of how difficult it can be for them to win the respect he believes they deserve. “We’re in a very challenging portion of the business,” he says, because many retailers still relegate private-label products primarily to the role of enhancing margins in their respective categories. In this way of thinking, private-label items are there mostly to add to the thin percentages of profit that stores get from heavily promoted, top-selling national brands.

“Private-label is profitable because it doesn’t have big marketing dollars behind it,” says Maute. This is good news for the bottom line, but another story for product image. The less expense sunk into package design for a private-label product, the sweeter its margin at the checkout counter. But a package with a skimpy design budget usually looks it, and it’s seldom a look calculated to capture the loyalty of large numbers of shoppers.

However, according to Maute, fundamental shifts in retailing are raising the design bar and increasing the market potential for private-label brands. “The private-label industry has changed dramatically in the last few years,” he says, noting that national brands are being “commoditized” as mega-chains like Wal-Mart wring cost out of their systems by stocking and selling on a gigantic scale. It used to be that private-label brands, because of their lower associated costs, reliably drove margin, but that’s getting harder for them to do as the chains continue to achieve economies on their distribution of national brands.

Mere “alternatives” no longer

Hence the opening for visually appealing and correctly positioned private labels, says Maute: instead of remaining the “brand alternative” for the retailer, the private-label product can be the “brand differentiator” that lets the store offer “unique brands that the consumer can’t get anywhere else.” Proof of the new state of things, he says, is that private-label brands have enjoyed a better sales growth rate than national brands over the last two years; and that many house brands now are perceived as being no less desirable than their iconic national counterparts.

Another change strongly favoring private-label brands, according to Maute, is the chain store’s increasing importance as a marketing environment—a place where a shelf is also a billboard and the inventory advertises itself. “The store is the medium now,” he says, because it has supplanted broadcast and print as the primary influence on shoppers. He contends that consumers are much less strongly influenced by national-brand advertising than they once were, owing to the increasing difficulty of reaching mass audiences through the “fragmented” conventional media—which never were vehicles for private labels anyway.

As a result, Maute says, “almost 80 percent” of private-label purchasing decisions are made in the stores themselves, where consumers go armed with generic shopping lists but with no set-in-stone preferences for specific brands. They make brand decisions when they get to the stores, not before, offering well-designed private labels a golden opportunity to shine.

Two examples of ìMî brand packaging, created for Meijer, a grocery and general merchandise retailer operating throughout the Midwest.

What it all means, Maute says, is that the consumer marketplace’s welcome to private-label brands is warmer than ever. Who’d have thought, for example, that the country’s best selling dog food would be a private-label product, Wal-Mart’s “Old Roy”; or that the Meijer grocery chain would offer private-label wines; or that warehouse club Costco would roll out Kirkland store-brand tires; or that convenience chain 7-Eleven would launch a private-label beer, Santiago Cerveza de Oro, to go mano a mano with Corona?

But even in circumstances this propitious, success with private labels isn’t a simple thing to achieve. Maute notes that retailers need the help of service providers like Daymon Worldwide because the stores aren’t necessarily as well-versed at marketing brands as they are at retailing products. Their expertise and their focus lie in distributing packaged goods, not in branding or redesigning them, and quite unintentionally, says Maute, they may sometimes fail to fully leverage the value of the private-label brands they own.

Competing = communicating

That’s where Daymon’s design group comes in. Maute says that the team’s role is to “create unique brand alternatives” that compete with popular items by communicating the store brand’s value proposition to consumers through the appeal of -its packaging. The process begins with detailed consumer research. It then proceeds to the customer’s highest corporate level for approval of a broad strategy of design. Since the chain’s buyers are the people who make the ultimate decisions about what gets into the stores, Maute’s group works closely with these managers on the detailed expression of the strategy.

Kroger Tampons, part of the extensive line of Feminine Hygiene
products created for the Kroger supermarket chain.

Daymon’s other point of contact in designing or redesigning a brand for a private-label product is the manufacturer, because the manufacturer controls formulation, regulatory compliance, and other matters that can affect the branding strategy. Because using the manufacturer’s information to articulate the value of the product is how Daymon shapes a strategy to meet the customer’s expectations, “it’s really design by committee,” says Maute. “From a strategic standpoint, we work with the consumer and the customer; and from an execution standpoint, we work with the supplier.”

You probably have some at home

The supplying manufacturer funds the creation or renewal of a private-label brand just as a national brand manufacturer would fund its own brand and packaging development. Manufacturers engage Daymon to provide these services, says Maute, because they see it as an important investment in enhancing sales of their products and in building the loyalty of their retailers’ consumers.

Top left: Meijer’s ready-to-serve soups
Top right: Topvalu ice cream for Japan’s largest retailer, Aeon
Bottom: First Choice cereal, also for a leading Japanese retailer.

The fact that Daymon currently works with 3,500 product manufacturers globally on behalf of retailers accounting for one-third of all U.S. grocery sales indicates that the model serves all parties well. It also keeps the pace relentless for Maute’s group, who are continuously engaged in developing or refashioning more packages than it seems possible for even the most diligent team of designers to keep track of.

But big projects don’t faze them. Their assignment for the Meijer chain, for example, calls upon them to create a new look for hundreds of Meijer-branded products. As a company, Daymon Worldwide thrives on high-volume undertakings such as packaging inventory and management, including warehousing, logistics, and inventory replenishment. Daymon manages thousands of items with the help of proprietary software that tracks the progress of every stockkeeping unit (SKU) placed in its care—revealing, as it does so, the real secret of its mastery in the private-label marketplace.

Daymon’s skeleton key is data mining, a technique that it applies to everything it does—but most notably to its method of identifying the target consumer for package design and product development. “We’ve invested significantly in data,” says Maute, so that in minutes, his team can profile the consumer, the category, the competition, and the market dynamics: how viable the product will be, who will buy it, and why. Brand interaction studies based on sales and share within categories let the team pinpoint buying affinities, the signs predictive of a purchase of brand B by the customer who has bought brand A.

Nuggets of information like these help Maute’s group determine what direction the design or redesign of packaging for a private-label brand should take. He says that the data may tell them, for example, that the category’s audience includes both a “value conscious consumer who is not buying on price, and a more affluent shopper who is price sensitive.” In this situation, both a premium and a value version of a product might be created within the category to attract both sets of purchasers.

Meijer’s frozen entrees include a “lean” variety and are designed to compete against the national brands.

Daymon’s principal sources of intelligence on sales trends and consumer behavior, according to Maute, are the well known research organizations IRI, Simmons, and Spectra. Using their data, he says, the design group builds a customer profile that specifies “the drivers of purchasing behavior” for the product under review. Daymon also consults with the manufacturer to assess the product’s value perception. From these insights comes the design strategy.

Design strategies while-u-wait

It happens quickly, because it has to—the pace of competition in the consumer marketplace doesn’t permit long gestation periods. Maute says that proprietary software and “dedicated insight specialists” enable his group to identify the top-selling brands and the consumer profile of a given market within minutes, making it possible to complete data gathering and analysis for the average project in “at most, a couple of days.” He boasts that they could crunch all of the relevant numbers in an hour, if necessary, thanks to the volume of data Daymon can access and the speed with which it can be processed.

The exercise ends in the development of a one- or two-page “creative brief” containing all of the brand parameters approved for execution by the customer. Once the brief is presented to Maute’s team, the creative work can begin. When the time comes to manufacture the package, the team prepares an “electronic package development kit”—a questionnaire for the manufacturer and its printer to establish job specifications.

According to Maute, “there’s an ideal process and an actual process” for creating or redesigning a private label, depending on how complex the assignment is. He says that based on what the customer has asked for, the team takes one of three broad approaches to design, creating either:

• a “line look” for customers that want “one positioning across all products” with “a consistent architecture across all items”; or
• a “hybrid” look containing some consistent architecture—for example, the positioning of the retailer’s logo—but with flexible elements to address the dynamics of different categories; or
• a “category specific” design driven entirely by market data and consumer characteristics within a category.

The last approach, according to Maute, offers his designers more creative latitude than the others, but it’s also the most research-intensive, costly, and time consuming way to undertake a project. It’s much more time consuming, for example, than the line look redesign of value-tier products for a regional supermarket chain, an assignment in which the team was able to complete 3,000 of the customer’s branded SKUs in just 24 months by applying uniform design rules to them all.

Other projects may benefit from a more aesthetically driven approach that emphasizes product differentiation vs. rival national brands. For example, when a grocery chain customer wanted Daymon to launch a line of premium ice cream products, the team responded with a package design scheme combining rich colors, alluring graphics, and high-end photography to communicate the superior quality of the product.

According to Maute, the creative phase of a private label design project typically takes 12 weeks from initiation to release of production files to the manufacturer. He says that sometimes, however, the approval process can be considerably slower, delaying the emergence of the new package or product for months. In-house designers for national brands, he points out, don’t have to deal with the multiple levels of clearance that Daymon does. Another consideration in planning a redesign is that existing inventories may have to be exhausted before the new package can be introduced, a contingency that also must be factored into the timeline.

Creating or redesigning a private-label brand can also mean reformulating an existing product or creating a wholly new one. In such cases the process works in reverse, driving the introduction of a product to go with the brand or improving an existing product to live up to the enhanced brand image that Daymon’s customer wants it to embody. If the customer happens not to carry the product, no problem: one of Daymon Worldwide’s services is obtaining goods for clients around the world who want to sell them under private labels but lack access to sources of supply. For example, if a retailer wished to market a high-grade olive oil under its own premium brand, Daymon would dispatch appropriate personnel to the olive groves on a quest for fruit worthy of the label.

Maute turns Daymon customers’ brand aspirations into boxes, bottles, and bags with the help of over 60 associates around the world, including creative directors, designers, art directors, production specialists, and expert researchers. As the private-label market has evolved, so have the qualifications of his team. “We’ve invested heavily in hiring a different kind of person over the last five years,” he says, noting that the staff looks “dramatically different” from what it once did in terms of skill sets and the ability to use digital design tools.

Exorcising the “stigma”

Recruiting top-quality people sometimes can be a challenge, he admits, inasmuch as the private-label market still “carries a substandard stigma in the design world.” But he says that Daymon’s numerous successes on behalf of its customers’ brands are helping to remove this unwarranted perception, as is Daymon’s growing portfolio of design awards.

Maute’s credentials for leading the team include solid experience in design and business management. He began his career as an illustrator and worked for an ad agency in New Jersey for 10 years, eventually becoming its creative director and director of new business development. He started and eventually sold his own design firm in Manhattan. Hired by Daymon in 1994 to create an “internal advertising company,” he now is responsible for market research, package design and procurement, and international marketing.

He says that one of Daymon Worldwide’s next steps to encourage a renaissance in private labeling will be the opening of “Daymon University,” an educational center where the consumer-products industry can learn to tap the powers of store brands. Clearly, there’ll be no shortage of convincing case histories from Maute’s versatile team.