Mark Husson

Evangelist from abroad, Wall Street wonder

When developing store brand programs, retailers typically take their outside advice from consultants. But in the 1990s, when private label in the states was still young but developing, Wall Street was a major voice calling the shots, using European retailers’ programs as a model.

And the person leading Wall Street’s cry for innovation was Mark Husson, a British analyst at J.P. Morgan with a background in store brand program development and management at Tesco, Marks & Spencer and other UK retail giants. He relocated to New York in 1992 to cover U.S. food, drug and convenience retailers.

“With his European roots, he correctly felt American retailers were missing a sizeable opportunity,” says Jeff Noddle, former chairman and CEO of Supervalu, Minneapolis. “And I believe his focus on it was an instigator for many of the U.S. companies to achieve significant additional penetration, particularly relating to the type [of] quality private brands we see today.”

Believing in something better

It was then that Husson, who now works as an investment manager at London-based Cedar Rock Capital, met Dave Nichol, renowned brand developer and marketer for Brampton, Ontario-based Loblaw Companies, who said he “worshipped at the altar” of St Michael, a brand owned by clothing and luxury food retailer Marks & Spencer from 1928 through 2000.

“[Nichol] was kind of a kindred spirit because nobody else in America really had much of a clue as of what to do with private brands,” Husson says. ”Remember: They were merely referred to as ‘generics’ back then.”

Understanding that retailers had no excuse not to provide lower-priced, high-quality alternatives to the national brands’ products, Husson began authoring articles on the “private brand opportunity” that U.S. retailers were missing.

“For my investors, I could see the gap in gross margin of 2,000 basis points in some sectors, which was just not being grasped by the retailers at all,” Husson says. “And my point to the investors was: This industry was in a pre-consolidation phase, and technology was going to be able to enable the reporting to get far better — and for procurement to get far better — and there’s no reason why branding shouldn’t then follow, and then significant differentiated private brand strategies follow after that. Finally, that the increased profit and economies of scale would force consolidation.”

Husson also wrote pieces on why retailers need to defy the logic of consumer packaged goods giants such as Coca-Cola, which were telling retailers without loyalty card programs what their shoppers truly want. And at the time, Coca-Cola was telling retailers that they would profit by focusing more on selling Coke products than store brand equivalents — which is “just nonsense,” Husson states.

“Retailers didn’t have proper category management, either,” he says. “And they couldn’t figure out … the role of categories like carbonated soft drinks. My point was that if this is going to be a category that you promote the hell out of big brands for big Super Bowl or July 4th parties or whatever, then at least try to make some money out of it the rest of the year.”

Challenging the c-suite

So Husson compared and contrasted European, South African and Canadian retailers’ top-notch own-brand programs with the mediocre programs of U.S. retailers, almost “shaming U.S. food retailers and taunting them” until they got their act together. By doing so, he got the innovation ball rolling.

“Investors started talking to the retailers, [asking], ‘Hey this guy is telling you that you have this huge margin opportunity, and you seem to be ignoring it,” Husson says. “What are you going to do about it?”

And by the time America entered the 21st century, large chains finally began to do something about it by developing truly innovative programs.

“The consultant might have gotten into the merchandising groups, but you didn’t get the leadership from the CEO or CFO that you do when you attack it from Wall Street,” Husson says. “So if a Wall Street analyst says, ‘You’re leaving a thousand basis points of gross margin on the table,’ the finance director and the CEO start to prick up their ears.”