How strong is the store brand industry right now?
“You’re a consumer trend and a job machine,” said Bill Simon, former president and CEO of Walmart U.S., who keynoted the second and final day of the Private Label Manufacturers Association’s Virtual Washington Conference.
Besides Simon, other speakers at the Wednesday morning event included Nancy Cook, Politico's White House reporter who discussed public issues and culture wars in the media; Chuck Brooks of Brooks Consulting International talking about cybersecurity; and Maureen Ohlhausen, partner at Baker Botts, who outlined the latest developments in antitrust.
Simon discussed retailing and the economy and said that private brands are more on-trend than branded products because consumers are moving away from buying brands as a badge and are looking for innovation and uniqueness, which store brands provide.
He also said manufacturers and retailers provide what representatives in Washington care about most — jobs. He urged the virtual attendees to continue to take risks in their businesses, be leaders of their companies in an ethical way, have a vision and show compassion.
The economy is driven by consumers, and while it may be a mess right now, he said, the consumer goods and private brand companies share a big responsibility to serve consumers and do well by consumers. It’s those actions that can help the economy recover, he said.
Simon, a contributor to Fox News and MSNBC, who served in the Navy and as an advisor to Jeb Bush, also asked for business leaders to not give into the negativity of the current Washington political climate. He reminded them that it doesn’t serve a business to think it needs to have one political party in power in order to succeed, because half the time they will be disappointed.
From the perspective of his Walmart experience, Simon also commented on the rise of e-commerce over the last few months of the pandemic. COVID-19 has accelerated online shopping and he expects it to stick, but that he’s always seen e-commerce eventually representing around 20% of retail and believes that remains the magic number. This will change by category, too, but it’s just happening sooner so manufacturers are best to understand packaging and fulfillment as e-commerce progresses.
Amazon, Google, Apple, Facebook
As a former acting commissioner of the Federal Trade Commission, Ohlhausen shared insights on the recent antitrust subcommittee hearing that questioned leaders at Amazon, Google, Facebook and Apple about various practices, as well as a report that came out yesterday from the Democratic party on antitrust reform.
Overall, she said the hearing questioned the companies on different topics as opposed to one larger antitrust law or issue that needed to be addressed. Amazon had to testify in regards to its private label practices; Google talked about its promoted results; Facebook addressed its acquisitions of small startups; and Apple answered to its app store and the high commissions involved. The hearing, in her opinion, was more political than actionable.
The antitrust reform report that launched yesterday is similar in that it’s one party’s suggested actions to break up large technology companies into its business segments, prohibit acquisitions and other issues that stem from the report, but there isn’t a lot of steam to change any antitrust law.
Ohlhausen also addressed COVID-19 and its impact on mergers and acquisitions, saying they have fallen dramatically while being enforced more. She said merger activity was down by 55% globally in Q2 and down 85% in the U.S. in Q1. She also said U.S. agencies are investigating 70% more acquisitions than a year ago with less review time.
COVID-19 has also impacted companies trying to protect themselves from cyber attacks. Brooks at Brooks Consulting International said since March, cyber attacks on companies have grown by 400-600%, primarily affecting healthcare and financial institutions.
He said companies, including those in retail, are more vulnerable under remote working conditions, and as technology continues to expand so does the threat of a cyber attack. Artificial intelligence, Internet of Things, cloud computing, big data and more all bring vulnerabilities.
Looking at global brands, 73% are hit by hackers looking to take over websites to force them to crash, and he said small businesses are big targets of hackers.
Brooks said companies can protect themselves by training employees in cyber-hygiene — training them not to open links they don’t know the source, watch what they share on social media (as that’s a major way hackers get into company data is through personal accounts), have strong passwords, and other tactics. He said instituting good cyber-hygiene, adding a firewall and other basic tactics can reduce a threat by 90%.
Lastly, in its wrap-up, the PLMA announced that it expects to return to the Grand Hyatt hotel in Washington, D.C., Oct. 4-5 2021 for the next Washington conference. It also shared more details on its virtual Private Label Week event that can be found here.