PL Buyer: A Little ‘Co-Opetition,’ Please
Private Label Buyer staff
a special arrangement, what follows is a summary of a current article
from Private Label Buyer,
presented here for discussion.
the past couple of years, many retailers have invested serious time and
money in private label product enhancements and innovation. The national
brands, meanwhile, have been losing more and more sales to these store
brand alternatives, thanks in part to a down economy that has consumers
seeking out value.
But the current national brand vs. retailer situation
does not necessarily have to play out as an “us against them” scenario. According
to panelists in a Sept. 29 webinar hosted by Willard Bishop, “co-opetition” —
the act of competing and cooperating at the same time to achieve mutual success
— might be in both parties’ best interests.
Andy Abraham, vice president of
Our Own Brands for Supervalu and a webinar panelist, said he believes many
national brand manufacturers have a good idea of what retailers are trying
to accomplish with their private brand programs today.
“I think the real question is, how well do they accept it?” he explained. “And
to that end, it’s really only to the degree that it doesn’t impact their
current brands or their current way of thinking.”
Whether they accept this
new reality or not, national brand manufacturers must make sure their products
are still relevant to the consumer, Mr. Abraham said, and not redundant on
the shelves, as retailers step up SKU rationalization efforts.
“I’m going to use an analogy,” Mr. Abraham added. “A few years ago, Alex
Rodriguez wanted to play with the Yankees as a short stop. And he had to
rethink, ‘Well do I try to throw out the other shortstop, or do I just play
third base and, therefore, have a different role on the team?'”
of course, is still playing third base for the Yankees — and the national
brands also need to rethink their game plan so their offerings do not
go head-to-head with retailers’ brands. Differentiation is a key part of
a retailer, Abraham sees co-opetition opportunities not just in product differentiation,
but also in actual production.
are a number of folks that have considered themselves a branded or a
branded-only company that have figured out the way they can deliver value
to the retailer is not only through their brand, but also through producing
or creating the flavors and the favorites that we want — to hold their
volume, essentially, and make it a better acquisition cost for us,” he
said. “It’s a lower cost for them, ultimately, [when] they push more
volume through their production facilities.”
Another retailer panelist
who said he would love to do the same is Anthea Jones, senior vice president
of store operations for BI-LO. In addition, he said shared promotions
such as a “buy a national brand item, get this
private brand item for free” sale can help drive private brand trial while
boosting sales of national brand items at the same time.
Questions: Should national brands help retailers grow their private
label offerings? Should national brands produce and/or promote
store brands? In
what other ways should national brands get involved in private