Brand leadership and the global growth in store brands was one of several topics that Nielsen Chairman & CEO David Calhoun covered during his recent presentation at the CIES World Food Business Summit in New York City.July 29, 2009
A Store Brands Decisions exclusive
Brand leadership and the global growth in store brands was one of several topics that Nielsen Chairman & CEO David Calhoun covered during his recent presentation at the CIES World Food Business Summit in New York City.
Calhoun opened the discussion by identifying the "steady freight train" of retailer consolidation around the globe as the biggest macro force driving the growth of store brands. These large retailers are expanding on their supply chain cost advantages and moving into other areas such as branding, merchandising and building store equity, according to Calhoun,
The increased focus on building store equity is resulting in more sophisticated store brand efforts. "Private label one day will leave all of our vocabulary and store branding will become the term of the day," Calhoun added.
As evidence of store brand sales growth from these more sophisticated efforts, Calhoun shared a chart showing store brand growth in 30 countries during 2008. With the U.S. at 17 percent growth in the middle of the pack, countries such as France, Spain, Germany and the U.K. all experienced growth in 2008 of more than 25 percent.
"The correlation between retail share and the extent of store branding is indisputable." said Calhoun, illustrating his point with a graphic showing share of store brand sales in 18 of 24 countries that increased in direct correlation to the share of retail sales concentrated in the top retailers in that country.
In addressing the issue of store brands versus national brands, Calhoun attempted to debunk the notion that private label beats all during difficult economic times. "The truth is number-one brands more than hold their own," he said. To support his central message of "strength wins," Calhoun explained that "underinvested brands" will face the toughest test, whether those brands are national brands or store brands.
"This is actually not a battle between stores and national brands," he said. "When the strong meet the strong it's a winner. If the focus is on the consumer [the strategy] always wins. Every category is different; there is no generic win here. If you get to that consumer with 'strength and strength' it's almost always a winning formula."
To hear David Calhoun's comments on the future of store brands at the CIES World Food Business Summit, watch this brief video.