As a supermarket analyst and a former marketing manager involved in the development of [U.K. supermarket chain] Tesco's now formidable private brand, I would like to respond to your article on a speech by GMA [Grocery Manufacturers of America] President C. Manly Molpus contained in the Feb. 21 issue. [See related private-label story on Page 15.]
oward this new reality.
Mr. Molpus cited research showing consumers have reduced their annual trips to the supermarket by two. The "lost two shopping trips" are due to geographic expansion of clubs, not the brand-pulling power that was indicated by Mr. Molpus. Comparable-store sales in clubs in 1993 were down 5% or more.
We at J.P. Morgan are not suggesting that the existence of a strong private brand is the primary reason people shop where they do, but we believe absence of a private brand does alter the consumer's overall sense of the value proposition of a store.
Do private brands, as Mr. Molpus said, lose their appeal when the economy recovers? In the United States, the old me-too, generic private brand certainly did suffer in the 1980s, but in the United Kingdom a high-quality, well-packaged, value-added private brand surged throughout the buoyant period of Thatcher's 1980s.
Speaking as someone who has been involved in development of unique store brands, and in whose staple diet was Marks & Spencer's chilled recipe dishes, it is clear to me that private-brand retailers and manufacturers can innovate; and perhaps, national-brand manufacturers should be innovating in developing private brands for retailers that do not compete head-on with their existing wares.