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COVID-19 – What’s next for Private Brand?

Below is the first guest post in our campaign to help the Private Brand community during these trying times. The post comes from James Butcher, CEO, Solutions for Retail Brands.

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The New Normal

James Butcher, CEO, Solutions for Retail Brands

Nobody knows the long-term impact COVID-19 will have, but there is general consensus that when things return to ‘normal’, there will almost certainly be a new ‘norm’ in many different ways. There seems little doubt work habits and increased use of technology will survive beyond the immediate crisis for example, but what is COVID-19 likely to mean for private brands?

If there is anything good to come from COVID-19 (beyond the fact many of us have been saved our daily commute) then I predict a boost for private brands. 

Consumers Top Concern

The news headlines are about scarcity but that is not the priority for most people. Yes, clearly there are health concerns but there are more people worried about what this means for the economy and the long-term. 

Based on Kantar data the greatest area of concern is the economic outlook (47%) compared to health (39%) and the scarcity (20%). Therefore, as we saw in 2007/2008, there will be more focus on prices and value. This means more consumers are likely to turn to private brands. But only if they can deliver consistency and quality and as such become a suitable national brand alternative.

Beyond Premium Tier

In recent years we have seen the increase in premium own brands as the point of difference. Those retailers with a tiered own brand strategy focus on the Better and Best products in their range. That is likely to change. 

If retailers learn from the success of Aldi and Lidl in the last decade, they want quality products at a good value. Therefore, the focus will move from ‘innovation’ to value. 

Ranges are likely to reduce as retailers and their private brand suppliers work together to focus on the products that can be delivered at speed and volume in the short term – to address scarcity/availability – and value in the medium term. 

If retailers can deliver this with their own brand range and ensure products remain relevant to consumers, this is an opportunity for retailers to see growth. 

National Brand Loyalty Lost

In the more immediate term, scarcity also means consumers are having to forgo national brand loyalty. 

In what will forever be known as the great toilet paper famine of 2020 consumers will have to forfeit their Cottonelle Ultra Comfort or favorite Charmin if it isn’t on the shelf. But rest assured they will also not go home empty-handed.

Therefore, by necessity consumers will try new brands that they have previously shunned. And this will be more relevant in some categories than others. Toilet paper and household cleaning products are a good examples where retailers across the globe have seen increased demand.

Shelf-savvy Retail

Some retailers are focus on how to re-stock the shelves. Normal rules on ranging and category management out of the window as they try to meet demand. It appears that the smarter retailers are seizing the opportunity to (where possible) ensure those gaps on the shelf are filled with private brand products.

This is an opportunity for consumers to engage with new private brand products at an unprecedented scale. It must not be at the cost of quality. In this sense I don’t mean quality as ‘must be the best’ but quality must be good enough. It must be consistent. And it must match the brand promise. 

It could be seen as opportunistic but those that do it well – engage with consumers, engage with suppliers and address the issue of value at the same time – will see a positive long-term impact for their private brands.

Your Burning Platform

It is also the opportunity to drive change. The impacts of COVID-19 will be with us for months at least. Therefore, retailers and suppliers can collaborate on packaging and formats to drive cost and efficiency. 

This is also, therefore, the opportunity to enable change, such as packaging reduction. For example, in some markets refill packs for household detergents have been very successful. In others, consumers have resisted and stuck to what they know. They buy a nice fresh new bottle of detergent each time. If those same consumers are ever likely to change their habits and try refills it is now; it depends on what is on the shelf.

COVID-19 has had a positive unexpected impact on the environment. Industry has slowed. Travel has reduced. As a result, air pollution is down. The rivers of Venice are clear for the first time in decades and the fish are returning. Sadly, these impacts are likely to be short-lived. But there is an opportunity to influence longer-lasting impacts such as packaging changes, packaging reduction. Step changes toward already published commitments. Changes which can be led by retail private brands. 

This is an opportunity for private brand growth and to deliver real benefits and long-lasting value to consumers.

James Butcher, CEO
Solutions for Retail Brands

James Butcher is an experienced director and entrepreneur with over 25 years’ experience in retail, food, manufacturing, and packaging. Initially, with a focus on packaging coding labeling, artwork and inspection systems, James helped to revolutionize the retail barcode labeling market with Prestek. Following a trade sale to Markem, James helped achieve an estimated 70% worldwide market share for its SmartDate range of thermal overprinters as global product manager. This was achieved across categories including food, beverage, and pharmaceuticals, working with both global brands and private brand manufacturers. In the late 1990s, James was founding director of Claricom, which progressed to world market leader for Packaging Coding Management software and consulted to major retailers on barcodes, artwork management, and best practice coding and traceability. James Butcher joined Solutions 4 Retail Brands (S4RB) in 2009 as managing director and has led the transformation of the business from specialist advisers on retail brands, to the market leader in consultancy-led software provision of cloud-based software (Affinity™) for Supplier Engagement.

Featured guests

Winning in Center Store – How Retailers Prioritize for Success

After years of stagnant growth and lack of innovation in center store, it’s time to reinvent and prioritize the core of the supermarket.

The latest report from Daymon reveals a roadmap for success, highlighting areas that will drive change and presenting tools that will create success in 2020 and beyond.

A few of the top-level findings from the report include:

Center store revival is underway 
Center store is arguably the backbone of brick and mortar and a critical area of focus as retailers continue to navigate challenges like the rise of discounters, e-commerce, corporate consolidation and unprecedented bankruptcies. Center store departments have a 77% share of the total store, whereas fresh contributes to just 23% of total store sales. Using Private Brands to lead in center store will provide the competitive edge needed to ensure long-term sustainable growth in an increasingly dynamic and complex retail environment. 

Private Brand curation and innovation drive center store success
With 98% of National Brand assortment the same across retailers, Private Brand innovation is vital to success and growth. This is especially true in center store where Private Brands are growing twice as fast as National Brands and have a higher penetration than in fresh (19.1% vs. 18.1%).

Best-in-class retailers launch over three times more new Private Brand products than average and shoppers have taken notice. 73% of consumers who shop at these retailers say they always have new and interesting products to try and buy. In turn, these best-in-class retailers are rewarded with stronger share and shopper loyalty.

Private Brands must be treated as true consumer brands
Consumers want brands and products that are unique and tailored to their diverse needs. With more choices than ever, Private Brands must deliver to remain relevant, especially in center store where competition is fierce both within and between channels. To build and maintain a successful program, retailers need to treat Private Brands like true consumer brands by delivering value beyond price, offering exceptional quality, and driving in-store engagement to champion Private Brands with shoppers. 

Center store space is ripe for reinvention
While the average size of a supermarket in the U.S. is 45,000 square feet, center store footage is shrinking as most retailers downsize space in favor of expanding perimeter departments. At the same time, consumer shopping patterns are changing, but the traditional store layout has struggled to keep pace. In order to address these compounding factors, retailers need to rethink how to optimize their center store space, prioritizing a breakdown of the silos between departments to drive the transformation.

Featured guests

Private Brands Positioned to Advance in 2020


This guest post comes from Doug Baker, Vice President, Industry Relations – Private Brands, Technology, FMI.

The private brand industry is well-positioned to gain ground in 2020.

Why do I feel so positive about the outlook? It’s because of a growing private brand commitment and strategic positioning by food retailers.

These emerged in findings from two 2019 FMI research pieces: The Food Retailing Industry Speaks, and The Power of Private Brands-From the Industry.

Benefiting From Growing Commitments

The industry is prioritizing private brands through further commitments to space and SKU allocations. These commitments are very good indicators of category momentum.

Some 58% of food retailers surveyed for Speaks are planning increases in space allocation to private brands over the coming two years. Only 2% anticipate a decrease, and 35% said it would hold steady. The picture was equally bright for anticipated SKU allocations.

These forecasts underscore that retailers are committed to turning over more of their valuable real estate to private brands. Retailers recognize that private brand drives exclusivity, loyalty and the overall business.

Leveraging Consumer Trends

The private brand industry is staying on top of key consumer trends. A case in point is health and well-being.

This trend was ranked considerably higher than before on the list of top private brands growth opportunities cited in the Industry report. Health and well-being also figured in other highly ranked opportunities, including fresh foods and simple/clean ingredients/free-from.

As the Industry report noted, health and well-being means different things to different customer bases. Each retailer needs to figure out the relevancy for its own shoppers.

Growing Experimentation

The 2019 Speaksresearch found retailers are widely experimenting with ecommerce strategies. The private brand industry understands the importance of this experimentation.

Home delivery and click-and-collect internet sales were identified as important growth opportunities by more than half of respondents in the Industry report. This indicates private brand executives view e-commerce more as an opportunity than a threat.

National brands are sold on a growing range of platforms, but a retailer’s private brand is available only on that retailer’s own platforms, which include e-commerce. Retailers rightly view this as an opportunity for competitive differentiation.

Driving Innovation

Even as the private brand industry advances, it seems to remain humble. In the 2019 Industry research, trading partners were asked to judge their organization’s private brand innovation levels.

Only 14% said their organization’s private brands are leaders in innovation. That compares to 33% saying follower, and 54% saying in the middle.

These results make it seem the industry is very self-critical. But keep in mind that until the recent era of innovation, private brand was known as a “fast-follower” business. So given that lens, it’s not surprising that most respondents identify their organizations as somewhere between innovation leader and follower.

In my view, the long-term trend is clearly moving towards leader. I don’t mind that the industry is humble. It indicates retailers and suppliers won’t be fully satisfied until they drive innovation further.

There are a number of reasons to feel good about the upcoming prospects for private brand. Among the biggest are the commitment and drive of industry leaders working to build on successes.

Featured guests

Building a foundation for the future of private brand

\"\"This guest post comes from Paul Woodward, Senior Director, Retail Supply Chain Business of Oracle Retail

As a founder and pioneer of collaborative technical compliance solutions, I thought I would share the necessary steps a retailer and its brands can take to build a strong foundation to leverage new technologies.

Emerging new technologies like blockchain, internet of things (IoT), and artificial intelligence (AI) offer to revolutionize the ability to monitor and trace private brand products. These technical capabilities are available today with Oracle and others investing in developing and delivering platforms. But is the industry ready for it? Maybe not.

The key to the success of these technologies is data, specifically for ingredients, sources and manufacturing locations – data that the private brand grocery business has traditionally lacked. Why? Most grocers outsource the management of their private brand products to their manufacturing partners, co-ops or group purchasing organizations. They in turn rely upon the one up, one down principle, with no partner in the supply chain having complete visibility of all ingredients, their sources, or processing locations. This may be acceptable for simple products with only a few ingredients, but managing a complex product like tiramisu or a ready-made meal with dozens of ingredients, all coming from different sources, needs a different approach.

So how can brands prepare?

Understand your Supply Chain

Create a transparent supply chain map for your private brand products. Collaborate with your suppliers to identify all ingredients and register their supply chains and the journey of each product. This directory will serve as a foundation for new technologies to offer traceability and quality monitoring.

Connect, Share and Collaborate

Acquiring this compliance data is not as simple as asking for it. Each player needs to benefit from being involved; they need to see the value of participating. This will require solutions designed for each player. To leverage this growing global capability, retailers will need to adopt an open platform approach allowing data to be securely imported, augmented, and shared.

Compliance Sells

Today’s consumers demand transparency and the reassurance that the retailer has taken responsibility for their product and their supply chain. In a recent study, 66% of global consumers stated they expect immediate notification of a product recall, and 88% said if a brand immediately informed them of an issue, it would positively impact their trust with the brand.

It is now old practice to put ‘speed to market’ ahead of assessing safety and accuracy. It is now essential that R&D processes incorporate rigid due diligence in the assessment and verification of technical, quality, and compliance standards and claims. This level of pre-launch vigor will reduce error, enable the anticipation of risk, and provide a set of parameters that these new technologies can then test, track and trace against to ensure conformance.

In summary, you can’t test it, if you don’t know what you are testing for, you can’t track it if you don’t know where to look, and you can’t navigate risk if you don’t have a map. To take advantage of these exciting new technologies, retailers must first build a foundation of compliance data.

\"\"Paul Woodward
Senior Director, Retail Supply Chain Business
Oracle Retail

Paul pioneered and founded the first collaborative compliance lifecycle solution in the early 90’s which has gone onto to be the world’s leading application of its type. Over the past 20 years, Paul has worked and collaborated with many of the world’s leading grocery retailers, own brand manufacturers and service organizations to further develop standard solutions, practices and best of breed supply chain engagements. These solutions and practices are now widely used across Europe, North America and Australia for the end-to-end development, assessment and ongoing compliance management of over 750,000 products worth $60 billion per annum. Paul now leads Oracle’s global retail supply chain transparency, collaboration, product safety and Blockchain initiatives.

Featured guests

3 Winning Strategies for Private Brand

\"\"This guest post comes from Doug Baker, Vice President, Industry Relations – Private Brands, Technology, FMI

Succeeding in private brands requires great products, but that’s not all.]

\"\"Increasingly it’s also about pursuing key strategies to accelerate the business. A number of strategies were discussed at the recent FMI Private Brands DC Summit, including:

  1. Powerful branding.
  2. Solid engagement with consumers.
  3. Strong relationships with suppliers.

It’s important to further understand these strategies and how they are playing out today in private brands. The Summit attracted a wide range of private brand retailers, suppliers, and other stakeholders.

Powerful Branding

The importance of branding was underscored during an interactive segment of the Summit. I asked audience members to call out what they consider key attributes of a brand. We recorded the numerous responses on large sheets of paper and hung these on a wall.

Here are attributes the audience used to describe brands: trust; purpose; integrity; emotional connection; safety; loyalty; promise; control; ownership; intrinsic value; consistency; transparent; strategic; and differentiated.

Why was it important to conduct this exercise? In the 2019 FMI The Power of Private Brands: From the Industry report, retailers overwhelmingly used the word “brand” over “label” in describing how they view this business.

All of this indicates “label” is more tactical, while “brand” is more strategic.

Solid Engagement with Consumers

The Summit also spotlighted a number of ways for private brand retailers to solidify relationships with consumers. One of these is by promoting the FMI Foundation’s National Family Meals Month™ campaign. John Evans, director of private brands for Weis Markets, described how his company made private brands a centerpiece of its 2019 efforts around this campaign.

Initiatives included running ads in the retailer’s circular and HealthyBites magazine, showcasing meal solutions, making coupons available, conducting in-store events with dietitians, and leveraging social media, podcasts, and media appearances.

Another Summit presentation relayed how private brands are increasingly driving consumer decisions on which stores to shop. Mark McKeown, client insights principal for IRI, outlined findings from FMI’s latest The Power of Private Brands: From the Consumer researchCiting IRI data, he noted that 46% of consumers say private brands are very or extremely influential in their choice of food retailer, up significantly from 35% in 2016. Moreover, millennials are especially on board with this point – 54% point to a strong connection between private brands and store choice.

“If you’re a retailer, that’s really good,” said McKeown. “Your younger shoppers are saying that your brands are more important. So I would double down on that. What do you need to do with your brands to continue to have them be a critical part of why these consumers shop with you?”

Strong Relationships with Suppliers

The Summit underscored the importance of retailer engagement with private brand suppliers. A new research report on this topic was unveiled by David Taylor, client success director for Solutions for Retail Brands (S4RB).

“Private brands by its very DNA is a collaborative endeavor between manufacturers and retailers,” said Taylor. “Collaboration can become your competitive advantage. Successful supplier engagement means successful private brands.”

This research was based on an industry survey conducted in partnership with FMI. It shows a widespread industry understanding of the value of private brand retailer-supplier engagement, but less than satisfactory levels of current engagement. It also indicates huge opportunities for future partner collaboration, Taylor said.

So, what’s my overall take on the FMI Summit? I’m pleased that attendees gained a lot of insights on branding, consumer relationships, and supplier engagement, among other topics. These will be important areas to pursue as private brands move further along the journey from “fast follower” to innovative leader.