Tie Salaries to Private-Label Performance

CHRISTINE BLANK

ORLANDO, Fla. — Accountability for private label throughout an organization is critical to store brands' success, said Craig Espelien, former director of store brands at Supervalu.

Espelien, now a partner in consulting firm E&S Global Professional Services in Minneapolis, spoke to retailers and private-label manufacturers at the Private Label Manufacturers Association Leadership Conference here last month.

Store brands will not succeed if executives and staff in the organization — from executives to store managers — do not talk about their combined goals, measurements, promotion and other issues, for the private-label brand.

In addition, Espelien said, executives and others responsible for private label should be rewarded or docked pay based on delivering the agreed-upon goals.

“There needs to be accountability for delivering on common objectives. If there is not a rewards system, why should I do it?” Espelien said.

In turn, executives should be held accountable if store brands' sales goals are not met.

“Salary adjustments and bonuses should be tied to store-brand sales,” Espelien said. Before that, though, the metrics for success or failure should be established. “Are we driving sales, share, profit and SKUs? Is there a growth of offerings, as well as elimination of non-critical [SKUs]?” he said.

The goals and metrics set up when the store brand was launched — as well as issues that may have led to success or failure — should be regularly reevaluated.

“Enlightened leadership will say, ‘Let's identify the areas of shortfall [and] let's recalibrate and set new goals and a timeline,’” Espelien said.

“[Ask yourself], are we getting to market fast enough? Did behavior change? Are we staying true to our brand? Are we staying true to our price point? Are we eliminating SKUs that are not working?”

In addition, consumers should be surveyed to find out whether they like the products or not, and leadership should find out whether executives and staff like the chain's store brands.

“With my own staff, I asked them, ‘How much of your grocery bill do you spend on [Supervalu's] private label?’ If you're not proud of your private label, get rid of it,” Espelien said.

Espelien also said he believes there are often too many national brands on store shelves, particularly in commodity categories, in part because retailers are concerned about losing slotting fees.

“We have to change that,” he said.