FD Buyer: When is ‘The Right Time’ to Expand or Pull Back Private Label in a Category?
Bob Anderson, retired VP/GMM of private label at Walmart, is president of Store Brand Consulting, Rogers, AK.
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
One of the toughest things to know is when you need to expand your store brand within a category. It’s just as tough — perhaps even tougher — to know when to pull back.
As a buyer, you need to be a calculated risk-taker and agent for your customer. Don’t buy just what you like or what is selling. You always need to be looking for new items and trends (not fads) in the market and in your life.
I keep a close eye on health trends and issues such as obesity, diabetes, blood pressure and gluten-free. At the same time, ask yourself how can you improve the sales and profits of your stores.
The answers? Well, don’t just wait for the CPG folks to come out with an item. Be proactive. Bounce your thoughts and concerns off your suppliers. If you’re discussing "better-for-you" products, go one step further and ask a medical professional for their thoughts, as well.
I know being first into a category has not been the role of store brands, but I would challenge you to change that. We did just that with the Great Value brand and were first to market with fat-free coffee creamer, lactose-free powder milk and several others, including gluten-free. In established categories such as yogurt, look at the sizes, flavors and styles that are doing well and see if there is room for growth.
Some of my best ideas came from traveling and seeing new items and flavors in other countries or even in other ethnic neighborhoods around me. Look at what’s new on restaurant menus or even look back at things you liked to eat as a kid. As with any change, you need to have a plan for both entry and exit.
Now let’s consider items and categories that need to be cut back.
First, by the time a CPG company has told you an item is being discontinued, it has already been dead in your stores for a long time. A trick I liked to do was stop by the local closeout chains once a month and look at their inventories. You may be surprised at some of the items there.
Next, make sure you are competitively priced. If so, get with the supplier and see if this is something they’re seeing as well, or just an issue with your item/category.
Beware of CPG companies that continue to add new items without delisting any. A perfect example of this was baked chips. When they were added, we were told that they were the new trend, but in fact they only cannibalized traditional chips. Remember the axiom: When you add a new item, something else has to go.
Discussion Questions: What should guide decisions on whether to expand or pull back private label in a category? What other telltale signs besides those offered in the article serve as an indicator to expand or contract PL in a category?