Niche labels effectively exploit consumer megatrends to drive innovation and fill gaps missed by legacy brands. Several new entrants embody qualities that target healthy and clean living, and personalised and experiential features. Their force is facilitated by digital tools, such as app-based diagnostics, and social media to voice their story, especially with retailers previously sceptical on their potential. Hi-tech ventures are the new M&A targets for players seeking to renew their portfolio.
Several niche labels compete on functional quality at relatively low price points when compared to premium legacy brands. This may hit a nerve, as consumers realise that product quality does not always justify excessive mark-ups. Essentially, niche brands are using their “honesty” as a weapon.
Digital diagnostic solutions and blend-it-yourself products are driving personalisation with the help of an “authoritative voice”. Consumers can better match product choices to their personal needs. Where personalisation is not yet on a brand’s portfolio, focus should be on a product’s “hero” effect to consumers.
As eco-friendly claims proliferate, they become a given. Brand owners need to go a step further by adopting fully-fledged green and clean labels, such as water-efficient solutions, and packaging conducive to cutting waste, such as refillable options, and dispensing solutions that utilise the pack’s full content.
Niche brands are driving multi-dimensional remedies in dermocosmetics, with the launch of probiotics-based solutions and a comeback of traditional remedies such as TCM, Ayurveda and Andean herbal mixtures. Brand owners may need to lobby for regulations to protect “honest” solutions from rivals exaggerating their claims. Consumers, while discerning, generally remain unable to make technical distinctions for a fully-informed purchasing decision.
While acquisitions of high-equity brands facilitate value creation, partnerships with novel start-ups before they even bloom allow the larger partner to pool financial resources and strategic know-how to help the start-up to grow, while reaping the benefits from the onset. The advantages extend to granting the start-up owner the autonomy needed to operate without too much interference.
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