Retailers Keep Pressure on Brands
Retailers, at least as anecdotal evidence goes,
are playing hardball with suppliers, offering
them the choice of playing along or taking their products to other venues.
a recent story here about Costco’s decision to remove Coca-Cola products from
its stores, 50 percent of those in a RetailWire poll
said Coke would take the biggest hit from the move while 21 percent said
both parties would be equally hurt. Twenty-eight percent said Costco would
suffer financially from its decision.
Now, according to AdAge.com, Deutsche
Bank analyst Bill Schmitz has reported that CVS/Caremark
will pull the popular Energizer brand of batteries from its stores
in early 2010. The chain intends to go with its own line of batteries along
with Duracell. CVS said its private label line was the category leader in its
“We found we can better serve our customers with a simplified assortment,” CVS
said in an e-mail statement to AdAge.
The publication said CVS’s action
is part of an overall strategy that is focused on extracting more profits from
the sale of branded goods. The chain is said to be engaging in bill-backs much
as apparel merchants do.
“CVS recently began sending manufacturers ‘bills’
representing the difference between the profit they made on their brands this
year and what they expect to make,” according to unnamed supplier executives
who spoke to AdAge.
Discussion Questions: Is the type
of adversarial relationship seen between retailers and merchants in Europe
going to be replayed in the U.S.? What recourse do consumer goods manufacturers
have in an environment where retailers are focused on reducing SKUs and increasing