LAS VEGAS — Manufacturers that are not willing to collaborate with Ahold on strategies that will benefit both private labels and national brands risk having their products replaced by corporate brands at Stop & Shop and Giant-Landover, Jeff Martin, executive vice president of merchandising and supply chain for the banners, said here last week.
“Private label is here to stay, and it's going to grow,” he told manufacturer attendees during a panel discussion at Information Resources Inc.'s Reinventing CPG and Retail Summit at the Wynn Las Vegas. “You can either fight your way through it or figure out how to live and promote and go to the consumer together. So either stay with us, or private label will probably take your place.”
Rob Chumley, senior director of category strategy for the Kellogg Co., acknowledged the importance of such collaboration but said it remains a challenge, since not all retailers are as forthcoming as Stop & Shop/Giant-Landover.
“They are at different points of evolution in terms of their interest and willingness to have a conversation,” he said.
Likewise, manufacturers are keeping their cards close to their vest, said Steve Goodroe, executive-in-residence at the Terry College of Business at the University of Georgia.
“I hear a lot of them say, ‘I'm not taking new product ideas to retailers, since they'll steal them,’” said Goodroe, who spent 30 years at Procter & Gamble.
A lack of collaboration on promotional strategies has also revealed itself on shelves, where manufacturers and retailers are forfeiting profit margins unnecessarily, panelists said.
Moderator Thom Blischok, who is president of consulting and innovation at IRI, recalled a recent shopping trip where a retailer in Phoenix positioned a facing of Kellogg's Raisin Bran promoted at “a really special price” beside three facings of its store-brand equivalent, at an even better price.
“It seems that when you're both competing at the same time, or in that toss-up space, you're both cutting your margins,” he said.
Chumley agreed, saying that to achieve mutually beneficial results, trading partners have to stop “stepping on each other” by competing for the wallet share of so-called toss-up consumers, who straddle the store-brand/national-brand fence.
“Any time we're competing at the same time for the same wallet share, we're both going to lose,” he said. “It's about unveiling strategies with private label, finding solutions based on insights and developing tactics that are granular.”
Goodroe suggested that retailers stick to private-label loyalists, while manufacturers target shoppers who prefer their brands.
“You've got shoppers coming into the store who want to be a part of private label, and you've got even more shoppers coming in who want to be a part of national brands,” he said. “Figure out how to make a shopping experience that both want to be a part of, and we all win.”
