Sobeys Decreases Private Label Products

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Aug 23, 2002
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A Canadian supermarket chain has taken the opposite approach from retailers that have increased their roster of house brands in tough economic times, according to a report from Canada’s National Post.

Sobeys is reviewing a five-percent scale-back in its private label program this year. Canada’s second biggest grocer favors culling weaker products and promoting stronger ones in its approach to private labels, according to Bill McEwen, chief executive.

Some analysts believe the chain is trying to distinguish itself from Loblaw by refusing to challenge the country’s biggest grocery chain directly in private labels. Loblaw, with its President’s Choice, PC Organics, Too Good to be True and No Name house brands, is the undisputed industry leader.

Sobeys’ private label program, at 14 percent of sales, is less than half the size of Loblaw’s. It is believed that Sobeys can promote its status as a leading distributor of national brands by limiting its private label program. Such a move could also help the retailer secure better discounts with national brand suppliers who have an aversion to competition with cheaper private label versions of their products, an analyst says.

Moderator Comment: Is Sobeys making the right move by reducing its private label program?

Sobeys reported consideration of a move away from private
label certainly makes our list for retailers practicing contrarian thinking.
It will be interesting to see how this plays out. [George
Anderson – Moderator
]

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