Friday, December 10, 2010

Private Label brand managers need to keep swinging vs. lame slotting fees.


Diminished is the role of the legacy national brand manager in a world where private label is branded. When national brand manufactures continue paying slotting fee’s to grocery stores and supermarkets as the easiest way to reach the consumer. The slotting fee’s continue to go for space on the shelf but the key location End Caps are now being filled with the stores own private label products. If your paying a National Brand manager and your brand value is gone, fire the brand manager or pay higher slotting fees and fool some of the people some of the time.

Who likes slotting fee’s well for one Wall Street analyst love to see sales via pushing slotting fee’s at the end of a slow quarter to meet “goals”. Why they like it is beyond logical reason. Mediocre C-level grocery store chain managers like it better than being force to become merchants. They utilize slotting fee’s to supplement profits. Is justifying being a poor merchant with rationalization enough?

Brand managers of the private label products are utilizing a tool out of the National Brand Managers playbook to build loyalty, reinforce value and generate additional sales and profits for the store and their particular private label product. They are taking the end caps for themselves!

Price Chopper is utilizing what they call “power displays”. Wal-Mart is utilizing the end caps to reinforce value of their private label products and consumer is picking them up! Wegmans gets the customers coming and going utilizing the vestibules with the likes of Wegmans private label potato chips and the next week Wegmans own canned tuna and their own mayo for example. I say keep it up!

Deep in the store the private label battle continues with ready-to-eat and ready-to-heat portable food. All prepared fresh and in most cases right in front of the customer. Private Label Grocerant ready-to-eat and ready-to-heat food now has brand managers of their own and they are building sales not slotting fees. Think about it, building sales on demand from consumers? Novel ideation or business fundamentals, you chose.

Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. For more on Steven A. Johnson and Foodservice Solutions® visit http://www.linkedin.com/in/grocerant or on Facebook at Steven Johnson, BING / GOOGLE: Steven Johnson Grocerants or twitter.com/grocerant

4 comments:

  1. In Austin TX we have a strong "buy local" sentiment and San Antonio based H.E.B. does a great job of placing store and local brands on the shelf in direct competition. Their brands always taste great too.

    Our market is also served by Safeway affiliate, "Randalls" as well as "Whole Foods Market" and now "Natural Grocers" out of Colorado. Nice selections all, but the local farmer's market is a Saturday favorite.

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  2. Don't let me forget "Wheatsville Co-op" another local fave. They simply need to be in NW Austin where I live.

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  3. lovely blog makes me hungry though lol

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  4. Store Brands are lodged in the halls of grocery retailers who see price promotion as the primary vehicle to product success. Big Retailers are growing competitive channels with this strategy. Often the view of product development is removing the leading branded items in a category and replacing them with store brands or placing adjacent in the set. PL product innovation is the result of looking at successful brands and knocking them out of the set with a store brand or as you demonstrate grab the 'end cap' for often a me-too item or one of less then significant innovation.
    Retailers see success in their moves due to increased profitability on an item. My guess is grocery retailers find it difficult to understand their moves are resulting in growth in non-traditional channels and the continued deterioration of their dominance as the food supplying channel to consumers. Innovation exists especially well in the non-traditional accounts like Trader Joes, Walgreens, 7-Eleven, and Club.
    When the largest PL categories are simply me-too with a minor adjustment to the label the stores are losing on the creative efforts of suppliers. Sure retailers will find success with skimming customers in-store to their Randalls or HEB gallon milk at a low price but are they growing their business topline? Obviously not, the supermarket channel is yielding share every year and will continue as they weaken their business with simple price offerings on store products, limited assortment, and a lack of trial and creative product introductions including grocerant products.

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