This article published in the grocery industry trade magazine Progressive Grocer presents an interesting if somewhat simplified analysis of the justification of Private Brands in a grocer’s mix. As retailers build their brands, this category-by-category analysis of all products is certainly essential in maintaining a healthy business; however, they must begin to include the value of their own brands in the equation. Retailers can and should be building Brands as assets with value that goes well beyond the productivity of one SKU and becomes an asset on the balance sheet, driving both investor value and consumer loyalty.
Less is More—Are Store Brands Exempt?
In an industry where retailers are dramatically changing their go-to-market strategy by trying to do more with less (simplifying their stores and revamping the center store), are store brands exempt from consideration? According to a recent Wall Street Journal article, the nation’s largest retailers are expected to decrease the assortment of items in their stores by an average of 15 percent over the next year. Even big-box stores such as Walmart are putting the pressure on manufacturers to simplify their offerings—in some cases, by as much as 30 percent to 40 percent. A question that manufacturers are afraid to ask is: How do store-brand items fit in with this new vision of de-cluttering the store?
Industry experts are finding that using one universal assortment strategy when managing store brands across all categories isn’t as productive as setting a strategy by category. Within certain categories, the assortment of store-brand items could be exempt, expanded or even contracted in the pursuit to simplify the shelf while simultaneously growing sales.