This is an evolution of yesterdays post on the Daymon/Supervalu split with some added details and information directly from Daymon.
Yesterday in separate but concurrent announcements to their respective employees, Daymon Worldwide and Supervalu revealed that they will end their five-year “strategic sales and marketing” partnership for Private Brands effective May 17. It’s the second major retailer that’s parted ways with Daymon this month – Pleasanton, CA-based Safeway made the same call at the beginning of March. Supervalu, a retailer/wholesaler with banners throughout the US, is headquartered in Eden Prairie, MN, and Daymon is based out of Stamford, CT. The Safeway split is set to happen on May 28. The Supervalu decision also includes its Albertsons division.
Daymon teamed with Supervalu on its PB program in December 2005, when then- group vice president, Our Own Brands, Michael Witynski said, “Our main goal was to select a partner whose strengths in brand management and retail merchandising can help us to achieve our objectives in delivering revenue growth behind market-leading mega-brands, we are committed to driving our competitive advantage by leveraging scale and innovation while over-delivering on consumer expectations. Daymon’s experience, global industry knowledge and strategic alliances will help us bring this to our consumers.”
Some five years later the Supervalu leadership team has changed dramatically, and with the appointment of the former senior vice president and chief operating officer of Walmart International Craig R. Herkert as Chief Executive Officer at Supervalu, the writing seemed to be on the wall. Witynski departed Supervalu’s corporate HQ to take over at Shaw’s in New England, and his former Supervalu boss – Duncan MacNaughton – has left the company.
Both Supervalu and Safeway are expected to take their PB activities in-house rather than appoint another one of the major brokers. Daymon President Alex Miller said his company would open off-site satellite offices near both Pleasanton and Eden Prairie to service its supplier partners. “When one door closes, another one opens and we see this as an opportunity to focus more on our supplier needs in the region,” said Miller. He also said “Daymon is a diversified global company with processes and businesses that differentiate us beyond brokerage. We operate in 22 countries and own profitable businesses that include packaging design, in-store activation and consumer events. While the loss of these two customers is disappointing, they represent only a single digit percentage of Daymon’s overall business … over the past six years at Supervalu and five years at Safeway, we have helped them launch their new portfolio of brands and grow their Private Brand penetration steadily over time. We are proud of the work we did at both of these companies and value our long-standing partnerships. We hope to continue to work with them in a new capacity.”
About 150 Daymon associates will be impacted by the loss of business at Supervalu and Safeway combined, and Daymon is hoping “to place them in new satellite offices or somewhere else within the company. In response to a written query by MPB, Daymon said Daymon said it would also consider letting associates out of their non-competes on a “case-by-case basis” so that they could go to work for either Safeway or Supervalu, depending on where they worked for Daymon.
As Private Brands continue to evolve and develop it will be interesting to see how the Daymon model adapts to retailers who believe that Private Brand should be an in-house core competency. The big business of building brands is still a long way from selling groceries so the opportunity to evolve a business from brokerage to brand building is huge. Daymon has certainly diversified over the years and hopefully the latest announcements will spur them to continue to push the bounds of private label and create “Brands.”
Supervalu and Safeway are ranked number four and five respectively on Supermarket News’ Top 75 Retailers for 2010. Supervalu has 2,450 stores with an estimated $41.3 billion in annual sales and Safeway has 1,730 with an estimated $40.8 billion in annual sales.
According to a statement by Daymon Worldwide: “Daymon’s business model continues to evolve. These are challenging times but we have shown that we can clearly navigate and drive our business. We are confident the market strategies we have in place will place us in an even stronger position to build our business.”
Other notable Daymon clients include: Ahold, Kroger, Wegmans, 7-Eleven, H-E-B, CVS, Dollar General, Harris Teeter, SEARS/Kmart, Topco and Winn-Dixie.
It should also be noted that earlier this year Radio Shack ended its PB partnership with Daymon.
Stay tuned as this story continues to unfold.