Archive | Columns

Cheap-er Isn’t Better, It’s Just Cheap

Posted on 18 July 2014

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By  Christopher A. Durham: President & Chief Strategist , My Private Brand

Since their very inception, private labels have settled for being second best, always selling themselves as something less. Always cheaper, frequently “the same as if not better” and all to often, uglier. Continue Reading

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European Retailers Respond to Hard Discount

Posted on 18 July 2014

koen-1By Koen de Jong, Managing Partner, International Private Label Consult (IPLC)

In a number of European countries hard discount market shares are growing. This retail format successfully competes on price, quality, consistency and simplicity. In the meantime market shares range from 8 percent (United Kingdom) to an astonishing 43 percent (Germany). In response, many mainstream retailers have expanded or re-launched their budget private label lines to mitigate the risk of losing shoppers to discounters like Lidl, Aldi, DIA, Penny and Netto. Continue Reading

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So Much to See, So Little Time.

Posted on 18 July 2014

kohn-1By / Richard Kohn

For many working in Retail Brands, PLMA is a highpoint of the year. Where else, in a single day (or two) can you meet so many people in your network, find inspiration and see the newest innovations and product developments? Continue Reading

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The Celebrity Story

Posted on 18 July 2014

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By / Perry Seelert

Questions You Should Answer Before Any Endorsement

Associating your brand and company with a celebrity used to be the domain only of the big FMCG who could afford to do it, but no longer. The biggest brands in the world pursue celebrity endorsement as a key part of their communication strategy. For example, Pepsi, who has the lineage of using celebrities like Michael Jackson, Cindy Crawford, Madonna and Nicki Minaj. Nike also has sports stars/celebrities closely linked to their DNA, people who have truly transcended sport like Michael Jordan, Kobe Bryant and Tiger Woods. Celebrity is deeply rooted in these brands’ strategy, and it has become an integral vehicle for how we perceive Pepsi and Nike as consumers. Continue Reading

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Private Brands to Grow through Commitment to Consumers and Innovation

Posted on 18 July 2014

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By  David Lopes, President & General Manager , International Private Brand Development for Daymon Worldwide

When a typical consumer thinks of a private brand, what comes to mind? Many of us may immediately think of the store-owned products sold at our favorite local supermarket. Yet there are some amazing international private brands brought to life through cutting edge companies that are not only leading their respective markets but also dominating. Continue Reading

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Authenticity – The Way Forward for Private Label

Posted on 16 May 2014

kdj-largeBy / Koen de Jong, Managing Direct or at Internati onal Private La bel Consult (IPLC)

I once met with a manufacturer who shared with me how pleased he was to have successfully renegotiated his contract of supply at a major retailer. The product in question was private label pasta sauce. Unfortunately, to respond to the price target as set by his client he had slightly modified the recipe of the product to make it cheaper. As this was done in all openness and in collaboration with the retailer there were no hidden agendas.

I was reminded of this encounter as I recently visited a private label trade show where I met with a Sales Manager of an Italian pasta sauce manufacturer. The man was full of passion about his products produced in Calabria, the south of Italy. He proudly elaborated on how the geographic location and the close connection between the production plant and local farmers give to this family run business the opportunity to carefully select sun ripened vegetables, harvested at the peak of flavor. Using the most natural and fresh ingredients are the first step towards tasty recipes rich in flavor and nutritional properties he explained.

Raw materials processed in small batches result in products according to Italian tradition, without using preservatives and colorings. It will not surprise you that most of his products ended up in the market as premium private label products all over the world at prices superior to the local national brand in most of the cases.

Being a food lover myself (in fact I would never buy pasta sauce, I rather make it myself), I really enjoyed talking with this man, fueled by passion about his products. I shared with him the anecdote as described above and asked how he would respond if this would be the only option to keep a private label contract. His answer will not surprise you: he would never do such a thing.

As he sensed my fascination he went on by explaining that he was always very open about this topic with his retail clients up front. If vegetables of the required quality would not be available, his company just would not produce. As a result there could be limited availability to supply. However, we went on, his clients understood and accepted. One retailer in the United Kingdom even educates its shoppers almost proudly with small panels on-shelf stating ’unfortunately we are temporarily out of stock as our supplier has limited availability of quality ingredients’.

Those readers who read my columns on a regular base will understand why I believe this is the way forward for private label.

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“Simply” Too Much: Why Too Much Of A Good Thing Becomes A Bad Thing

Posted on 16 May 2014

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By / Perry Seelert

Simplicity and things that are simple are embraced by consumers today, and it is no wonder why. Literally everyone feels his or her life is too hectic, overwrought by schedules, overrun by trying to achieve work-life balance, overtaken by an array of products that are not intuitive and foods that are too complex.

Today, less is truly more, and the consumer seeks simplicity at virtually every turn. For retailers and FMCGs that are research-driven and looking to uncover consumer desires, frustrations and beliefs, the need for simplicity is seen in their qualitative focus groups, and many have taken it to heart.

My observation within retail is that many retailers have already latched on to this consumer truth, and they are saying it quite literally in their marketing and brand nomenclature. But bringing “simplicity” or “simple” to life can be more than just saying it and pasting it overtly within your brand naming.

Just look at the “simplicity”, “simple” and “simply” branding rage over the last couple years within retailer brands.

Aldi just launched “Simply Nature” and Target just restaged “Simply Balanced”. Stop & Shop and Ahold USA just launched “Simply Enjoy” and Kroger launched “Simple Truth”.

And let’s not forget “Simply Less” (Coles Australia), “Simply Valu” (Cash ‘n Carry), “Simply Right” (Sam’s Club/ Walmart), “Simply Nourish” (Petsmart) and Simply Chardonnay (Tesco). Please don’t write me if you identify another, as these are just the ones I have seen.

The FMCG brands are no exception here, with Simply Orange, Pillsbury Simply, Simply Organic, Keebler’s Simply Made and many others. It is “Simply” too much!

We could probably have the same conversation about the words “honesthonestly” and “basic-basically” too, but we will leave that for another day!

The retailer and own brands of the future don’t just follow branding trends, they lead them and exploit the idea beyond just the brand name, and what it says. Ikea is a retailer that is built on simplicity, yet rather than it translating just to what they say, it comes to life through their packaging, materials, and most of all through their step-by-step instructions. Consumers’ heads spin when it comes to complex instructions where there is always a part or step missing, and Ikea leveraged that throughout their whole product strategy.

Nest, which was just purchased by Google, is brand that is also built on a beautiful simplicity, whereby mundane products like smoke detectors and thermostats don’t have to be such ugly anchors in the home. Their simplicity is ringing true through the product’s design, and it is no accident that Google, a brand also echoing simplicity, was the purchaser.

Simplicity can be executed and come to life at retail through various ways – through product assortment at shelf, at the in-store checkout, and through e-commerce. The idea of simplicity is still one to be leveraged, through retail and through retailer brands, but you don’t necessarily have to embed it into your verbal language so literally. You will be better to give it meaning in many more ways in the store that your shoppers and consumers value even more than the name itself.

Perry Seelert is retail branding and marketing expert, with a passion for challenging conventional strategy and truths. He is the Strategic Partner and Co-founder of Emerge, a strategic marketing consultancy dedicated to helping Retailers, Manufacturers and Services grow exponentially and differentiate with purpose. Please contact Perry at perry@emergefromthepack.com.

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The Seductive Attraction of Private Label

Posted on 16 May 2014

front-line-featureBy / Richard Kohn

Even though the economy is improving and unemployment is declining, figures show that the growth of private label and retail brand purchases continues. CPG brand managers who have been telling their bosses (and shareholders) during the recession that volume will pick up again once the economy turns have to find a new excuse for the failure of their marketing budgets to capture the imagination (and share of pocket) of consumers.

The truth is there’s no way back. Private label share, captured during the downturn will not be easily given up by retailers – and for good reason. As a retailer, private label (be it traditional retail branded, tiered assortments or venture brands) are very seductive. And what’s not to love?

Shelves filled with products that sell in very high volumes promoting the strength of the retail brand, delivering significantly higher margins and utilizing the marketing spend of big brand manufacturers to pull growth in the category. For retailers, it’s the perfect storm… and that’s before we even consider the competition amongst manufacturers clamoring to supply these ever increasing sales volumes.

It’s not just a great deal for the retailer. Our consumers benefit massively through high quality alternative products which are often more innovative and always offered at a lower price.

So far, so good. This might appear like the start of a manifesto for all retailers to forsake CPG brands and go their own way. There are successful examples of retailers that have: Marks & Spencer, Waitrose (UK), Hema (The Netherlands), Mercadona (Spain) – before we even start to consider the discount powerhouses of Lidl, Aldi and Jeronimo Martins, however, even these chains understand that there is a place for big brands.

As retailers we appreciate that we cannot have it all our own way. We do need the big brands with their global marketing budgets to develop and grow the categories in which we offer our own brand products, and while there is short term an attraction of loading shelves with our own products we all know this is not sustainable long term.

We need the brands to survive and to be strong. We need them to sell products with premium pricing and create consumer demand through their marketing campaigns. We need them to have space on our shelves so that consumers have real choice when they shop in our stores.

Without their developments, innovation and investment there would be significantly lower overall category growth from which we benefit.

Operationally, it’s a challenging balance to achieve. Exactly how much of our ‘real estate’ do we give to the developer and how much do we retain as land owner. Seductive as it may seem, the old maxim still stands. It’s much easier to get products on to the shelf than off. So beware the seductive private label temptress, unless you are careful, she’ll lead you astray.

Richard is an expert in global marketing and an acknowledged strategic brand leader. He currently heads the private label division at one of the largest retail pharmacy groups in Europe. He’s held senior management positions in A brand CPG companies and led international marketing and strategy teams across CPG, consumer durable and business services companies. He’s also the European client partner for a leading brand excellence training institute which delivers brand and communications courses to Fortune 500 companies. Richard is dedicated to bringing the discipline and science of brand marketing and marketing communications to private labels, empowering them to cultivate critically essential marketing management competencies to lead them to build leadership brands. richardkohn@gmail.com

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Choice, Quality and Value for Money – who cares?

Posted on 20 February 2014

kohn-1By / Richard Kohn

Reading marketing communications from any sizeable retailer you’d be excused for thinking that ‘Choice Quality and Value for Money’ is the standard retailers’ mantra: from Jeronimo Martins and Lidl to Tesco and Carrefour consumers receive the message that this is the mission of their favorite retailer.

Obviously, the private label offering sits within that positioning … normally as the paramount example (tiered of course through good, better, best and niche) of their choice, quality and value for money assortment.

Yet, the go to market concept, positioning and strategy of each of these retailers is widely different, as is the range and assortment available in their stores. So what’s going on here? An average Tesco store supports 30,000+ skus, the average Biedronka only 5,000. So in one case we assume it’s consumer choice and in the other choices made on your behalf by the retailer. In one case the range of different quality offerings is clear, in the other we assume that the retailer has specified a quality product.

Once upon a time, Choice, Quality and Value for Money were differentiators for retailers. This was an insight driven phrase with significant resonance with consumers. Over time however, the insights behind this promise have become less relevant and now, Choice, Quality and Value for Money are standard entry requirements for any retailer. This happens in many product categories – think for instance about the time when Soft strong and long meant something in toilet paper: now it’s simply expected by the consumer as a cost of entry to the category.

Why is all of this so important in private labels? Because private label and retail brands have the potential, when positioned correctly, to achieve the same level of consumer loyalty as well promoted, national brands. As we move out of the period of economic uncertainty and restraint, private label offerings have to be more than me too products to retain sales once consumer confidence picks up. They have to offer more than choice, quality and value for money.

Consumers expect to see and experience strong product positioning in everything that they buy today. It’s a key decision made during product development and one of the most challenging operational decisions commissioning buyers should consider pre-launch. For private label manufacturers it will be increasingly important to come to your retailers with a good, compelling story why the consumer should buy your version of the product. If not, who cares if it offers Choice, Quality and Value for Money.

Richard is an expert in global marketing and an acknowledged strategic brand leader. He currently heads the private label division at one of the largest retail pharmacy groups in Europe. He’s held senior management positions in A brand CPG companies and led international marketing and strategy teams across CPG, consumer durable and business services companies. He’s also the European client partner for a leading brand excellence training institute which delivers brand and communications courses to Fortune 500 companies. Richard is dedicated to bringing the discipline and science of brand marketing and marketing communications to private labels, empowering them to cultivate critically essential marketing management competencies to lead them to build leadership brands.

richardkohn@gmail.com

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The Value of Attractive Packaging Design for Private Label

Posted on 20 February 2014

koen-1By / Koen de Jong, Managing Director at International Private La bel Consult (IPLC)

Over the past two decades, private label food products have grown substantially in sales and often directly compete for market share with national brands. Competition between private labels and national brands within the store (intra-store competition) generates consumer welfare through lower overall prices and greater choice for shoppers in the supermarkets.

The average consumer does most of its shopping on auto-pilot. Statistics show that only 18% of shoppers have a list, meaning 82% of purchases are done from memory or prompted when in store. This makes it all the more important for a retailer to invest in attractive and consistent packaging design. Attractive to allow for effective competition with the national brands and consistent to navigate the consumer in his decision making when in the store thus reducing shopper stress. At ’the zero moment of truth’ when the product is about to be taken off the shelf, appealing pack design may be critically important.

More interesting is it to note that Private Label also has a strategic role in the competition between stores (inter-store competition). It allows the retailer to differentiate from other supermarkets as the assortment, prices, product quality and packaging can all be tailored to retailers’ specific needs, allowing them to offer something unique.

A while ago I met with a relatively small sized retailer in the Netherlands insisting on having a unique private label of its own. I argued that product volumes to be sourced would be very modest due to the limited number of stores. Therefore, buying conditions probably would appear to be unattractive making a launch not viable. I was surprised by his answer as he explained that although he realized buying prices would by considerably higher his company still wanted to move ahead as the overall objective was to have a unique private label range thus allowing for an independent pricing strategy of its own.

The opportunity to differentiate from the competition was considered of strategic importance for which he was willing to pay a price. We have supported this retailer as our client and launched a limited number of SKU’s in selected categories. With a packaging design carrying the store banner brand and in line with the store identity the products really stand out on the shelf and are easily recognized by the shopper. It is yet too early to evaluate but the first results seem to prove that this retailer is doing the right thing.

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