On key market conditions:
There are some longstanding conditions that combine to create a market that is favorable to higher Private Brand penetration, namely high concentration, a strong presence of hard discounters, international involvement, surplus capacity in manufacturing and/or the advent of specialist private labelers, shopper demand, and retail strategy. An economic downturn always helps, too!

On the shift from national brands to Private Brand:
Unlike in 2008/2009, when we saw a boom in economy private label sales as shoppers traded down from both brands and standard private brand, the switching in 2011 has been from brands to standard private label ranges, suggesting that value is as much about quality as it is about price in the current environment.

On retailers adapting to demand:
We are still seeing most European retailers adopting the ‘good, better, best’ approach of economy, standard and premium, but there are an increasing number of retailers that are aggressively driving development in niches such as kids, organic, healthy eating and Fairtrade.

On innovation:
In 2011, I visited stores in Switzerland, France, Germany, the UK, Belgium, Bulgaria, Romania, the Czech Republic, Portugal, Spain and South Africa, and in every single market I witnessed innovative and impressive private label development and strategy… private label innovation is the name of the game.

On key players in European market:
The leaders at the moment are possibly the leading three UK grocers, and I’ve always got a lot of time for what Mercadona is doing. Casino, Ahold and Delhaize continue to impress, too.

On the components of private label pricing:
Because more of a private label item’s retail price is made up of raw materials and manufacturing costs, the ability of retailers to hold back inflation within their private label ranges is more limited than that of branded manufacturers.

On pricing matching:
Price matching and price comparison, such as that used by Sainsbury’s, Asda and Leclerc, often means that price – if indeed it ever was – is no longer a key differentiator. Retailers that offer the lowest prices are not necessarily going to win. Quality is an important part of the value-for-money equation, and private label is a key driver of quality perception.

On the future of secondary-purchase brands:
The likelihood of any brands outside of the top two or three surviving many categories is bleak. That said, as we have seen in the US, alternative channels such as fixed price-point chains, hard discount and online can offer opportunities for those brands that have been sidelined by major supermarkets.

On Private Brand in 2012:
There is no doubt that retailer brand remains a key strategic imperative for all retailers and, as such, will continue to remain at the forefront of activity in 2012. More cautious consumers equal more value-conscious shoppers.

This interview originally appeared in the February issue of ESM magazine.

Bryan Roberts is Retail Insights Director for Kantar Retail EMEA, based in London. Prior to joining Kantar Retail, Bryan was the Global Research Director at an international retail intelligence provider. Bryan has around 15 years of experience in the retail research and insights industry and has specialised in themes such as private label strategy, store concept development, Walmart, and discount retailing, working for clients including some of the world’s largest retailers and suppliers. Bryan is a frequent commentator on retail issues for the global media and a sought after speaker at trade events.

Bryan holds a Masters degree in International Political Economy from the University of Warwick, and has been a Visiting Fellow at the University of Surrey’s School of Management since 2009.

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Senator Bill Heffernan makes a point to John Durkan from Coles at a hearing yesterday. Photo: Alex Ellinghausen

Australian supermarket giants Coles and Woolworths told a Senate inquiry this week that they were not trying to increase sales on Private Brand products at the expense of branded competitors.

Coles merchandise director John Durkan told the Australian Senate inquiry into Australia’s food processing sector that sales for Private Brand products had risen strongly over the last four years.

He said “customer choice” was behind the popularity of Private Brand rather than a deliberate strategy by Coles to increase sales margins by acting as both a retailer and producer.

Durkan rejected claims previously put to the Senate inquiry about Coles’ private label strategy, ranging decisions and product sourcing.

“We have seen claims that supermarkets are actively deleting branded products to replace them with private label brands. That is simply not the case in Coles’ supermarkets,” he said.

“Branded products continue to represent over 75 % of overall sales in Coles, and our strong view is that customers will ultimately decide what level of private label products they will buy.

“Shelf space ranging decisions are made on the basis of sophisticated customer preference modelling, not on any strategy to replace branded products with private label.”

Coles also dismissed claims that Private Brand products are increasingly being sourced from overseas suppliers and said Coles’ Private Brand contracts had helped to create almost 10,000 new jobs in the Australian food manufacturing sector in the last four years.

“Again, the facts do not support the claims. Nearly 100% of our fresh produce is grown in Australia, and nearly 90% of our private label grocery products are made in Australia, and we are committed to keeping it that way,” Durkan said.

“Our strategy involves increasing all of our sales, of which home brands is just one part.”

He claimed Private Brand products, like milk and bread, weren’t being given better positions on supermarket shelves or being oversupplied.

“The way we apportion our space is based on how much volume we sell of a particular product,” Durkan said.

“As you can imagine, our whole aim is to be in stock for our customers. We don’t have enough room to over-space products.”

The supermarket also took the unusual step of releasing diagrams of its shelf plans to dispute claims that it was promoting private label goods at the expense of branded products.

Durkan said even though Private Brand had seen “double-digit” growth over the last few years, branded products still represent over 75% of overall Coles sales.

“Our strong view is that customers will ultimately decide what level of private label products they will buy.”

Woolworths was criticized for not making a submission to the inquiry, although the supermarket did attend the hearing in Canberra.

“I do want to express my disappointment about your engagement with the inquiry,” committee chair and Liberal senator Richard Colbeck said.

“I don’t think you’ve done yourselves any favor’s at all, to be honest.”

Ian Dunn, Woolworths head of trade relations, acknowledged that there was “no doubt” that “some sectors” of the food processing industry were facing challenges.

Dunn claimed Woolworths dealt “fairly and honestly” with suppliers and said the supermarket’s relationships with both large and small suppliers were excellent.

He defended the increasing dominance of Woolworth’s Private Brands and said that these ranges supported Australian suppliers.

“Woolworths invests heavily in co-operating with suppliers on new product development. We have a strong bias of support for Australian supply of our Own Brand ranges – Homebrand, Select and Macro – for which we willingly pay a premium, and which has seen considerable investment by us in small- and medium-sized manufacturing around Australia,” said Dunn.

Dunn said the Macro brand was made up of 350 products, more than 80% of which were sourced from Australian suppliers.

“This range is experiencing growth eight times the rest of the market and new products are added to the range largely where there are no other products like it in the Australian market.”

However, Dunn admitted just 6% to 7% of all frozen vegetables sold in its stores were Australian-grown.

He said, of the rest, 30% came from New Zealand, 30% Chinese and 30% from “the rest of the world”.

Source: Smart Company

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I will be presenting: Private Label: Does BRAND Really Matter?

Traditional private label product development has focused on “me too” national brand equivalent products, however the emergence of retailer owned BRANDS with a consumer focused, differentiated positioning is significantly changing the game. This presentation will focus on the impact of BRAND on product development answering the questions: What impact will the evolution of private label to retailer owned BRAND have on new product development and management? How will the development of Private Brand portfolio strategy impact product development. How will these new Branded products increase differentiation and create customer loyalty.

Retail speakers include:

• Mary Rachide, Division Vice President, Private Brands, Family Dollar
• Sam Mayberry, Vice President, Private Brands, Supervalu
• Joe Ennen, Senior Vice President, Consumer Brands, Safeway
• Jenny Longo, Director of Private Brand, Longo Brothers Fruit Markets, Inc
• Robert Koss, Vice President of Marketing, Longo Brothers Fruit Markets, Inc
• John Paul, Vice President, Marketing & Advertising, Nash Finch Company
• Mike DeJulio, Director of Corporate Brands & Specialty Foods, Price Chopper
• Chuck McDaniel, Director of Category Management, Brookshire Brothers
• Doug Baker, Vice President of Sales, Federated Group

Register by April 20, 2012 and receive our early bird discount, only $895 per person! Bring a colleague to learn more and save more, only $795.00 per person when 2 or more people from the same company register!

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I can’t help but notice that the list of winners is also a list of retailers who have impressive Private Brand portfolios or who are dramatically reinventing their Private Brand portfolios. I can’t help but believe that there commitment to creating and growing their own Brands played a significant factor here.

Traditional Drug Stores Trump Value Retail Pharmacies
Although general merchandisers such as Walmart, Target, Costco, and Kmart have rolled out value pharmacy departments, American consumers indicate they are more likely to purchase from more traditional drug stores like Walgreens, CVS and Rite Aid, according to the 2012 Harris Poll EquiTrend study. In fact, Walgreens takes the top spot as EquiTrend’s first-ever Drugstore Brand of the Year, while CVS and Rite Aid came in second and third, respectively, in this new category for 2012. Top scores for Familiarity and Purchase Consideration boosted Walgreens to the top.

Target Hits the Mark as Value Retailer
In the Value Retailer category, Target is once again the Value Retail Brand of the Year, surpassing Walmart. While this is just the second year of this award category, in 2007 Target supplanted Walmart in overall Retailer rankings, and has maintained its lead ever since. Top scores for all three elements of brand equity – Familiarity, Quality and Purchase Intention – drove this strong performance.

Kohl’s Connects with Consumers
While all brands in the Department Store category have dropped in 2012, Kohl’s continues to rank above JCPenney to become the Harris Poll EquiTrend Department Store Brand of the Year in this year’s Harris Poll EquiTrend study. Kohl’s edged out JCPenney in 2009 and has been able to maintain its lead in the rankings ever since. Kohl’s shows the highest overall brand equity score, carried by a strong performance in Purchase Consideration. Earlier this year, Kohl’s also was the top mid-tier department store brand in the Harris Poll Customer Relationship Series, which measures customer experience with brands.

“The fact that Kohl’s ranked first in both surveys indicates that its brand promise is being successfully fulfilled through the actual shopping experience,” says Mike Chadsey, a senior consultant in the Customer Solutions Group at Harris Interactive. “This is probably why we see such strong scores for Kohl’s in Connection and Momentum.”

Nordstrom is Top High-End Department Store
While Nordstrom has been part of EquiTrend since 2010, this year it takes its place at the head of a new category: Luxury Department Store Brand. Top levels of Familiarity and Purchase Consideration drove Nordstrom to the top as the 2012 Luxury Department Store Brand of the Year. Lord & Taylor and Bloomingdale’s, included in the study for the first time, placed second and third respectively.

Speedway is the Convenience-Store-of-Choice
As Americans speed through their busy days, many shop at convenience stores, with some that are stand-alone stores and others which are part of retail gas stations. In the inaugural year for the Convenience Store Brand of the Year, Speedway takes the top spot, followed by Arco am/pm and 7-Eleven. While consumers are most familiar with 7-Eleven, Speedway’s top scores for Quality and Purchase Consideration led to its highest ranking in this category.

Costco Debuts as Gasoline Retail Brand of the Year
With the rising price of fuel, where Americans go to gas up is more important than ever. This year marks the first time Harris has included Costco in its EquiTrend retail gas category. The brand takes the top spot, debuting as the Gasoline Retail Brand of the Year. Costco supplants Speedway, which was the top-ranked brand for the last three years. Other brands scoring above average in brand equity include Hess, Shell, Sam’s Club, Sunoco, Speedway, Arco, ExxonMobil, and Chevron. While Shell enjoys the highest Familiarity in the category, Costco Gasoline boasts the highest Quality and Purchase Consideration among its competitive set.

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Echo maintains a network of over 24,000 carriers, which will now be available to Daymon Global Logistics at market competitive rates, along with a customized web portal to provide increased visibility and control of the supply chain. “Daymon supplier and retail partners will now have the ability to leverage our proprietary technology and take full advantage of a transportation and logistics management team to meet the individual needs of each Daymon partner,” stated Doug Waggoner, CEO of Echo Global Logistics.

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