MINNEAPOLIS — Private-label innovations designed to meet the needs of top shoppers could proliferate as Safeway and Supervalu take greater ownership of their respective corporate brands, said Jim Hertel, managing director of Willard Bishop, Barrington, Ill.
Last week Supervalu announced a strategy shift involving its Own Brand teams working more closely with its merchandising and marketing teams. Given the plan, it will end its relationship with Daymon Worldwide on May 14.
“Supervalu now has a stronger foundation for the work that supports our Own Brands strategy, product development and assortment, pricing, placement and promotion planning,” said spokeswoman Haley Marconett.
The news followed Safeway's decision last month to end its relationship with Daymon on May 28, and create Safeway Direct Connect to facilitate a closer relationship with its store-brand suppliers. The retailers' independence could signify a desire to create more differentiated products, according to Hertel.
“I think we'll start to see an explosion of unique items that are only available at those retailers, instead of store brands being ‘me too’ or ‘ours does what there's does for 20% less,’” he said. “If all they wanted to do was have mainstream, national-brand-equivalents there would be no reason to dump Daymon, because it provides solid services in those areas.”
Private-label marketing, merchandising, design and planogram services are among those provided to retailers by Daymon, working on behalf of its private-brand supplier customers. Its expertise is provided on-site and at no cost to retailers. Daymon is paid a commission by the store-brand supplier.
Although it will no longer have a physical presence at Safeway and Supervalu, Daymon will operate off-site satellite offices to cater to its supplier partners.
Safeway's decision didn't likely influence Supervalu's since both plans were probably months in the making, said Hertel. Still, their timing could influence other private-brand marketers, he said.
“This [might] make some retailers sit up and think hard about why this is happening,” noted Hertel. “This could turn out to be a trend.”
Meanwhile, Daymon remains confident in the value of its role in the industry.
“None of us can predict what will happen in the future, but I think the vast majority of our customers have a deep and abiding understanding of the value that we bring to the equation,” said Daymon's chairman, Milt Sender. “They recognize that if they choose not to work with Daymon at some point, it becomes a greater cost to them and a greater cost to their manufacturers.”
Safeway's suppliers might have mixed feelings about the change, noted an industry observer who requested anonymity.
“They don't like paying commissions to Daymon or having them stand between themselves and the retail buying organization,” he said. “On the other hand, Daymon is a powerful advocate for private label and has a very strong marketing/merchandising team.”