The rising trend of private brands
Take a closer look at private brands
Today, private or store-labeled brands are seeing unprecedented growth as companies invest more time and resources in developing and positioning their own private brand products to match the quality and reputation of established national brands.
Market expansion by retailers has given consumers access to a greater variety of brands. Combine this with the digital economy we live in, and we have more choices than we could possibly ever need. As a result, consumers want fewer options when trying to make a purchase decision. Studies show that consumers are stressed by the abundance of choices available to them, which causes what is known as “decision fatigue.”
Consumers want streamlined options from brands they can trust. A trusted private brand that extends across a variety of product categories can make shopping easier on consumers who want lower-cost, high-quality items.
The rise of private brands
Consumer behavior is changing. People want more value for their money and recognize the improved quality of many private brand offerings. Consumer confidence in private brands continues to grow as U.S. private-branded products showed two percent growth in 2017, outperforming branded tiers. In fact, private brands are growing three times the rate of national brands, with shares projected to grow to 25 percent in the next decade.
One of the key drivers for the growth of private brands is the vertical integration of retailers and distributors. As companies vertically integrate, they uncomplicate the process of getting products into the hands of consumers. This translates to cost-saving alternatives in a variety of product categories. Millennials in particular are more willing to buy less expensive products. They have lower incomes and spending power, so for this demographic, value shopping is critical. Millennials are more likely to compare ingredients, and when they’re the same or very similar, they don’t want to pay more than necessary.
Consumers aren’t foolish — if a company offers a sub-par quality product, that perception will reflect negatively on the company that produced and distributed it to market. As such, the quality of private brand products has increased in recent years.
Private brands in veterinary care
How does all of this translate to the veterinary care industry? In a time of flat industry growth, many veterinary hospitals have relied on service fee increases to drive incremental growth within their individual practices. Unfortunately, recent market studies have shown a direct correlation between rising fee schedules and decreased veterinary visits. This should come as no surprise, as cost-conscious millennials have now become the largest demographic of pet owners in the market.
Adopting private brands within a veterinary clinic is a great way for practices to increase profitability while maintaining their current fee schedules. When veterinarians develop an annual budget, pharmaceuticals and supplies are typically among the most expensive items on the list. Even making small changes, such as switching to private brands for routine procedure products (such as syringes and gauze), can help veterinarians find savings fast. When maintaining the same retail price or service fees, the lower cost of private brand items can boost practice profits by as much as 20-30 percent.
Advantages to purchasing private brand products
Digital channels have made price comparisons easier and faster than ever. When looking at brand name and private brand products side-by-side, it’s clear which product comes out on top. Private brands allow consumers to leverage the scope of a company and allow the company to build trust through their product offerings. When it comes to the veterinary world, private brands:
- Provide access to a large selection of pharmaceutical and hospital supply products that are of comparable quality to many leading national brands.
- Offer a trusted brand that clinics are familiar with across many essential product categories, decreasing decision fatigue while shopping.
- Can help clinics maintain competitive fee schedules during challenging market conditions & compete in an age of digital price shopping.
- Present clinics an avenue to increase profits while offering cost-conscious clients options to meet their budgets.
As a trusted healthcare provider, you can remain confident in the knowledge that you’ll continue offering high-quality products to your clients. Consumers have already taken the plunge. Isn’t it time you switched to private label brands?
With Covetrus comes an even more comprehensive set of integrated services and technology solutions centered all-around the veterinary practice, including our Global Prescription Management platform and online pharmacy service.
Call 855.724.3461 to schedule an appointment with your Covetrus representative who can generate a customized cost savings report on everyday items you purchase for your practice.
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