CHICAGO -- National brands and store brands will share store shelves in the future, according to a panel of speakers at the Promotion Marketing Association of America's annual Update conference here. It is only the proportions that are in question.
"The consumer tells us there is need and room for both," said Douglas Conant, senior vice president of marketing at Nabisco Biscuit division of Nabisco Foods Group, Parsippany, N.J. "Store brands have worked hard to improve product presentation and packaging. They have challenged us to rethink how we do business."
Brian Sharoff, president of the Private Label Manufacturers Association, New York, another panelist, wondered how many brands will survive on store shelves in the future.
"The number is dwindling," he said. "The projection of two well-known brands, a private-label and one other may be accurate. The question is what will you do to save [the branded items ranked] 4 to 6? I don't think there is anything that can be done to save them."
Growth in the number of items retailers carry has made it more important for national brands to stay on the leading edge, said Ronald Lunde, senior vice president and director of retail marketing and integrated communications at Leo Burnett Co., Chicago, another panelist.
"Store brands are catching up. People have different expectations as they get more sophisticated." Burnett cited Nabisco's SnackWell's line for creating a whole new business. "A brand became an innovator."
With the consolidation in the grocery industry, the challenge to the brands is to make sure their items have unique points of difference, Conant of Nabisco said. "You need to stand out or fall off the table. Focus on growing the entire category, not just your own brands. But make sure your brands can draw from that growth."
Robert Hodge, president of the Cincinnati-Dayton marketing area for Kroger Co., Cincinnati, also a panelist, said Kroger was presented with 21,000 new items in 1993. "That is about 40% of what we carry."
National brands have not always been marketed efficiently, Hodge said. He criticized coupons that get 2% redemption and questioned the value of spending on electronic merchandising. "Why can't these dollars be turned around to drive cases through better promotional material and to close the huge pricing gap?"
He recommended that brand manufacturers look at cost, approach the table with the attitude that both sides want to make money, and keep an open mind to what is good for business.
"We sit down with a lot of [national brand] people and design programs that fit what we are trying to do in our marketplace," Hodge said.
Lunde of Leo Burnett said, "A brand manufacturer has to really understand private label is a brand. Private-label manufacturers have improved their quality level and packaging. Consumers will pay a premium for a brand, sometimes 10%, but not 75% or 100%." He added, "The end of brand loyalty may have been greatly exaggerated. Private-label dollar shares were higher in 1981 and 1982 than in 1993, according to SAMI/Burke figures. A 1993 Yankelovich Monitor survey found that 72% of consumers were very reluctant to change brands once they found a brand they liked."