Retailer and CPG Panel Attempts to Ease Tension Over Store Brands

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October 15, 2009

Over the years, as brand marketers were investing in more strategic and collaborative retailer relationships, retailers focused successfully on store brands that directly compete with their national brands.

The current state of supplier and retailer "co-opetition" is confusing and frustrating to many industry players and requires new attitudes and behaviors from both branded suppliers and retailers, according to a Willard Bishop white paper based on a webinar panel the consultant hosted in September.

The crux of the matter is that some consumer package goods companies view retailer brands as competitive, while many retailers fear losing lucrative consumer packaged goods (CPG) marketing dollars.

The white paper titled "Co-Opetition's Impact on Retailer and National Brand Manufacturer Relationships" explores the issues and opportunities of these complex relationships, and identifies ways to establish mutual gain.

Webinar panel participants included senior management from Supervalu, Kroger, BI-LO, Giant Food Stores, T. Marzetti & Co., Barilla America and Sunstar Americas.

The following are key takeaways from the session, which the white paper explores in more detail:

• The tension that the growth of private brands produces is felt most strongly by the number three or four share brands in a category, or brands without a distinct "reason why" they fill consumer needs better than private brands can.
•  Alignment around satisfying consumer need is the key to long-term successful collaboration between retailers and manufacturers, and national brand marketers should accept that private brands likely play a significant role satisfying such needs.
• Collaborative merchandising joining complementary national and private brands is a low-risk, high-return approach to quickly generate mutual benefits and reduce tensions between trading partners.

Because private brands are here to stay and meet shopper needs, "long-term accommodation is in CPGs' best interests -- they will need to find ways not only to co-exist, but also to create value for themselves and their trading partners to truly succeed," Willard Bishop concluded. "Collaborative merchandising is a low-risk, high-return starting point for CPGs to identify productive responses to the growth of private brands."

Read These Related Articles:

• Wal-Mart Follows Kroger Lead in Private-Label
• Managing the Growth of Store Brands
• Deflationary Pressures Cut Grocery Company Sales and Earnings
• Meijer and Kroger Forecast Double-Digit Store Brand Growth
• Aggressive Competition Forces Walmart to Test Even Smaller Formats

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