PL Buyer: Private Label Merchandising Support Back In the Spotlight
By Denise Leathers
a special arrangement, what follows is a summary of a current article from Private
Label Buyer, presented here for discussion.
One positive outcome of
the recession: renewed emphasis on private label merchandising that drives
home the all-important value message.
A new Times & Trends report from
Chicago-based Information Resources Inc. (IRI) indicates that, after
falling for several years in the wake of clean-store policies, merchandising
activity is once again on the rise, and declines in grocery displays
are slowing as retailers seek new ways to communicate value to increasingly
price-conscious consumers. In fact, IRI reports, 54 percent of consumer
packaged goods (CPG) categories captured 30 percent to 49 percent of
their sales over the 52-weeks ending March 29 with the help of merchandising
support — a four-point increase over the previous year.
However, the report continues, merchandising
activity around private label products remains lower, on average, than
that in support of national brands. According to IRI, store brand merchandising
trails national brand merchandising in 58 percent of categories the company
tracks across food, drug and mass merchandise outlets.
Why the discrepancy?
Part of the problem lies in retailers’ reluctance to give up trade monies
offered by national brands in exchange for prime shelf and display space.
But according to John Wilkins, vice president of client and retail strategy
for the Atlanta-based strategic design firm Miller Zell, many chains
also lack the merchandising know-how of large national brand manufacturers.
These manufacturers often use sophisticated shopper insights to design
relevant, pointed merchandising programs.
“I also think private label manufacturers
and retailers have really been more focused on improving product quality
and packaging than on merchandising,” he added. “But they’ve done such
a great job … that that’s become the cost of entry. So now, for retailers
to really push private label forward, they’re going to have to pull other
levers. And the one immediately adjacent to quality and packaging is merchandising.”
Jon Hauptman, a partner at Willard Bishop
retail consultancy, says retailers are beginning to see a lot of reasons
beyond just sales and turns to keep private label on the shelf. Store brands
help to strengthen the store’s price image, “which is a key reason shoppers
choose one store over another,” he said.
Putting that realization into practice,
however, has been a bit of a challenge.
“I often see misalignment between strategy
and execution,” explained Craig Espelien, vice president and managing director
for retail brands at Plano, Texas-based Crossmark. “For example, the president
of the company wants to build private label sales, but the category manager
is still being rewarded for bringing in trade dollars rather than growing
store brand sales, so there’s no reason to change their behavior.”
there’s the question of money.
“There’s a belief that ‘We can’t merchandise
private label because there’s no budget for it,'” said Mike Snell, a former
retail exec who is now vice president of sales at Dover, N.J.-based Blanc
Industries. “But there is. … Smart retailers expect and understand that
they need to invest in private label merchandising and build it into the
Questions: Why is in-store merchandising support around private label
products lower on average than national brands at supermarkets? Is
now the right time for grocers to become more aggressive in merchandising
store labels? If so, how should merchandising around private as well
as national brands be rethought?