How to slow the rise of the unbranded economy

How to slow the rise of the unbranded economy

The late 19th Century saw the emergence of packaged goods such as Coca-Cola and Johnnie Walker, with ‘brands’ starting to differentiate themselves from more generic competition.

Fast-forward to today and, over time, such brands have become increasingly about perception and accumulated meaning. Consumers associate brands with a set of emotions or attributes, while brands also create memories. Some household names have become so synonymous with their offerings that they overtake the category almost entirely – think in terms of Sellotape for sticky tape, or Google for search.

The importance of brand becomes particularly acute as the Christmas season hurtles towards us. Branded products vie for attention over their unbranded, and often cheaper, counterparts; especially in an era of austerity.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, has spoken in recent weeks of “the most promotional market we’ve seen in ten years” – yet still it’s rumoured that the retailer will be splashing out to the sum of around £5m for Elton John in its upcoming Christmas campaign. We’re also seeing seasonal expressions of a growing development: the rise of the unbranded economy.

Lidl unveiled a plum and cinnamon gin to rival mulled wine, for instance, and it also launched the Bellarom budget coffee machine, which, at £49.99, will set you back a fraction of a George Clooney-endorsed, Nespresso-branded equivalent, but allows you to use the same coffee pods.

These are just the latest examples of threats to household names in established markets, from challengers offering highly competitive pricing combined with simplicity. They demonstrate that, even at Christmas, when people are willing to spend on a bit of luxury, notions of what consumers most value are shifting.

Modern-day brand value has become even more critical to success in the light of this type of product commoditisation, while an era of transparency can make it even more difficult to justify the price differential between branded and unbranded products.

This has already dawned on retailers, which appreciate that consumers today aren’t willing to pay for ‘frills’ without good reason. And it’s why Tesco recently confirmed plans to launch Jack’s, a discount chain stocking a vastly simplified product range, most of which will be unbranded products carrying the ‘Jack’s’ label. Demonstrating, in the wake of the successful disruption of supermarket retail by Aldi and Lidl, that brand value is connected increasingly in consumer minds with those ideas of convenience, simplicity, and keen pricing – as Amazon well knows.

But there’s also more to it. Transparency and ethics also play a big part. For instance, we’re witnessing significant changes in the beauty sector. People still want luxury but greater clarity, too. Capitalising on this are relatively new brands such as The Ordinary (‘clinical formulations with integrity’), and new cosmetics subscription service Beauty Pie, both of which cut through complexity and aim for greater levels of honesty in telling the story of the technologies and ingredients used in products. And we’re seeing these values of purity and simplicity reflected in the brand’s packaging, similar in one sense to the unbranded products in the sector, but providing strong brand value in terms of information and an ethical or original stance or offer.

We’ll witness this ethical differentiation more this Christmas, and it’s taking on new forms in terms of unexpected brand pairings. Take the fact that Selfridges is selling Iceland own-brand, palm olive-free, mince pies. This might seem an unnatural partnership but the retailers share a commitment to eliminating the use of palm oil and doing their bit to end deforestation. The perceived value of the product is increased because of what it (doesn’t) contain and the ethical approach this reflects.

It’s clear that addressing sustainability and environmental concerns is vital for brands because people are, at best, willing to pay more for an ethical brand, or, at worst, will refuse to buy if a product is perceived as toxic. Recent research found that 90% of millennials would buy from a brand whose social and environmental practices they trust, and 95% of them will recommend that brand to a friend.

Fast fashion retailers are taking notice. Primark and H&M are among those that have adopted sustainability initiatives following demands from consumers. Primark, on its recent launch in Germany, acknowledging that while the market is the home of Aldi and Lidl and loves a bargain more than any other, there’s a need there to build a reputation for high ethical standards, which it has achieved initially through measures such as a poster campaign providing information about its factories and how it sources fabrics.

Providing experiences is the other big factor that will stem the tide of the unbranded economy. This Christmas, The Body Shop, as part of a wider drive to capitalise on the wellness trend, is turning to experience with its ‘Enchanted Forest’ pop-up in East London, aiming to provide a "sensorial journey designed to pamper, inspire and inform". Guests will be able to book makeovers and massages, and tickets for talks on reducing stress during the festive season.

Initiatives such as the Body Shop’s show that it’s far from inevitable that the age of the brand is over, but also that brand owners must recalibrate the value they’re bringing to people.

Our feelings towards brands are complicated, and so it’s a good idea to establish a shared understanding about how you define your brand and what it means for your business. The ramping up of intensity in the brand battlefield calls for a clear definition of value in this audience age.

Budget airlines know the importance of standing for something, good or bad, with Ryanair’s CMO having spoken frequently about short haul flying being a ‘functional’ rather than an emotional purchase. Some brands can indeed survive by servicing a need rather than creating desire, but the value a brand offers clearly differs depending on the product or service.

A brand is what a potential customer thinks of on hearing your brand name. It might bring a promise of quality, reliability, taste or fun; and it must offer this more so than its unbranded counterparts. Take the runaway success of Fever Tree tonic water which has clearly set out its stall as being about the pursuit of flavour as opposed to the lowest price. Authenticity and a compelling or original band story helps, too.

This Christmas, we will spend billions gorging ourselves on special products and experiences to gift and enjoy ourselves. But we might not always need a brand to affirm our choice or make us feel good. Branding is a wonderful, anthropomorphic thing that has the power to turn an inanimate object into something of intangible desire. It’s just that the formula for desire has changed and if brands don’t get to grips with it, we’ll continue headlong towards ever more aggressive price wars and a largely unbranded economy.

Zaid Al-Zaidy is the chief executive of The Beyond Collective

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