Last week I attended the PLBuyer 360 Conference in order to present an exciting new announcement that I’ll share with you here as well. RSR has joined forces with PLBuyer to create a private label share index. Powered by IRI’s data, the index tracks how private label merchandise in the grocery vertical is tracking compared to last year. The IRI data covers private label revenue, units sold, and average price across eight categories, focused on the United States. You can read about the first results of the index here.

What’s fascinating to me is that this effort comes at something of an inflection point for the private label industry. As multiple presenters indicating during the event, private label in the US has undergone a significant evolution, and is about to embark on a new transformation along that evolutionary path, making for the third such transformation.

The first came when private label when from Brand X or No Frills status to something of a me too vs. national brands. The second transformation occurred when “me too” became more aggressive — rather than just a proposition that focused on private label as a discount (but quality-driven) alternative to national brands, private label brands started shooting for more premium positioning.

The third transformation is upon us. Having become more adept at managing private label brands much more like national brands (a transformation that is by no means complete), retailers are now turning to private label as a strategic niche filler. Proctor & Gamble has historically stated that they want to be #1 o #2 in every category they compete. That typically means a billion-dollar brand.

Retailers don’t need to be that ambitious. They just need to be a top brand in their stores, and sometimes they don’t need to even be a top brand. In this sense, private label becomes the ultimate expression of localization. A retailer sees a gap in its assortment, and designs a product to fill that gap.

Part of the reason this is so fascinating to me is because of the trend Dr. Chris Caplice talked about at Manhattan’s user conference — the trend focused on distributing production. Part of the reason why big CPG companies don’t go after these niche brand opportunities is because they’re not big enough to be profitable — the scale of production just isn’t there. For manufacturers focused on providing private label goods, that’s simply not an issue. And the cost of producing these smaller lines seems to get more efficient every day.

If retailers focus their private label efforts on niche, local products that fill out assortments that CPG manufacturers can’t really afford to take on, does this change the competitive nature of CPG-Retailer relationships? Well, here at RSR we’ve heard the C word thrown around more lately — C for collaboration. And it’s being considered in a much more positive light in the past, in part because the technology to make collaboration happen — especially outside of the biggest manufacturers and the biggest retailers – is becoming much easier and cheaper to implement.

So expect to see more from us on a topic we don’t usually spend a ton of time on — private label in grocery. It’s exciting times, and fun to see a topic that plays off of so many other themes we already see in the marketplace.

As far as the index itself, private label products’ share of revenue over the latest rolling 52-week period is trailing the year before. However, most of the decline came from Fall of 2012, for reasons we’re still trying to figure out. As far as 2013 goes, private label is doing extremely well. And as more and more retailers move from a me too strategy to a unique value proposition to the consumer, it will be fascinating to watch as consumers respond to this latest inflection point.