By Steven Howell, Solutions for Retail Brands (S4RB Inc.)
Retailers have long used private brand ranges to create a point-of-difference in a competitive market, although in recent years they have clearly stepped up their efforts to attract customers with “destination products” – premium or exclusive brands that cannot be bought elsewhere. When these work well, they develop a real sense of shopper engagement with the brand. This in turn develops brand loyalty and creates brand advocates encouraging shoppers to sing its praises to family and friends and recommending they try it.
One of the most notable examples of success of this approach is Kroger, whose Simple Truth brand makes it easier for consumers to choose organic, responsibly-sourced products. Consumer health and wellbeing trends are largely behind the proliferation of meat-free, GMO-free, sustainably-packaged, indulgent, and/or Instagram-friendly store brands we see today.
While the premium and exclusive brands have flourished in the past year, the basic/generic ranges, sometimes referred to as the discount end of the market, has suffered its most significant decline. Figures show that while premium enjoyed 10.6% dollar growth at the end of 2017, basics saw a drop of -2.3%.
By combining quality and value in their own brand ranges, retailers can strike gold. However, their success depends on a having the right suppliers who understand exactly what is required of them and who are totally committed to and engaged with the premium brand strategy. It goes without saying though that finding the right partners takes time, particularly when it comes to specialist producers who have little or no experience of working with supermarkets.
This is why a strategic approach to supplier procurement and management, which promotes continued innovation, is needed. Small-scale suppliers might not get it right first time. But with support, they can develop and reformulate products in order to meet retailer and customer expectations and respond to changing trends.
On top of fulfilling orders on time (which is still, of course, crucial), there are certain qualities that buying teams now need to look for in their suppliers, namely:
- Loyalty to the supermarket brand and motivation to deliver the best quality products.
- Full engagement around the retailer’s strategy, tactics, and goals.
- The ability to build a proactive and highly responsive relationship with the retailer.
- Understanding of the importance of being an Own Brand supplier.
To see how true collaboration works in practice, we need look no further than the UK, where private brand is one of the most advanced in the world. Waitrose, for example, has invested in software that brings it closer to its army of existing and potential suppliers, supporting them to become – and then remain – “retail ready.”
Such systems enable suppliers to take ownership of their journey with a retailer, providing opportunities to grow their understanding of industry best practice, safety, and compliance. They can also provide the resources needed to tap into emerging trends and gain constructive feedback from their retail customers. Time-pressed buying teams also benefit from a rich pool of suppliers, who could go on to develop the next award-winning range.
When Waitrose, known for its premium private label ranges and commitment to locally-sourced ingredients, wanted to showcase its regional produce, it invited suppliers to submit their own marketing text, rather than writing them in-house. As well as drastically cutting down the time it took to complete the task, products with the new descriptions performed 25% better than those without.
A gold rush usually starts small, so retailers must be prepared to nurture those who show potential and are, most importantly, loyal and willing to innovate. Stores already battle for their customers of choice; now they must strive to be the customer of choice among suppliers.
For further information S4RB’s software and consultancy services, visit www.s4rb.com.
Steven Howell is Sales Solution Consultant, North America at Solutions for Retail Brands. Steven brings more than 30 years of global experience in retail, CPG manufacturing, consulting, and technology to the Private Brands Industry. He specializes in product lifecycle management process design, supply chain management, organization design, business process improvement, project management, and system design and implementation. Steven has worked with organizations in North and South America on Business Development, Sales, Organization structure, Business Process, Technology implementation, and supply chain issues by understanding their business needs and translating into process designs, requirements and solutions, building key business & organizational capabilities.