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01/15/2020

Private label vet speaks to analysts about how store brands are changing retail

Dan Ochwat
Executive Editor
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Todd Maute, CBX

Analysts and investors are being asked to take note of private label.

Todd Maute, a regular contributor to Store Brands and a veteran of private label branding at design agency CBX, recently spoke to a group of analysts at an event at the Omni Hotel in New York, telling them to evaluate a retailer’s commitment to store brands when evaluating an investment. “If the retailer doesn’t have personnel focused specifically on brand-building, the company will likely struggle,” he said.

Maute presented at an investment conference put on by Stifel Financial Group, St. Louis, called “Private label: Threat to National Brands or Overblown Concern?” Stifel managing directors Chris Growe and Jim Duffy hosted the event and Maute spoke along with independent marketing consultants Roberto Ramos and Tammy Gianfortune.

Maute of New York-based CBX told investors at the conference: “We’re seeing a shift toward truly brand-led strategies, as opposed to merely securing a place along the spectrum of ‘good,’ ‘better,’ or ‘best’ relative to competing products at shelf,” Maute said. “Retailers that fail to grasp the need to fully commit to their store brands risk missing out on an opportunity to drive loyalty to their stores and create meaningful differentiation in the markets they serve.”

In the presentation, Maute called attention to the success that Kroger is seeing with its Simple Truth, HemisFares and namesake Kroger brands, and how Wakefern is transforming its ShopRite private brands with the newly launched Bowl & Basket and Paperbird. (See this profile from Store Brands.)

“It’s the difference between ho-hum, ‘25% cheaper’ potato chips and, say, garlic-infused, kettle-cooked chips in a gorgeously designed, matte-coated bag,” he said. “You’re talking about a radical shift.”

Maute stressed its only the beginning of this dynamic shift in private brands. “National CPG manufacturers are already facing stiff competition from brands launched by the likes of Costco, Kroger and Target. Amazon, which is only in its infancy with respect to store brands, could eventually make a major dent as well.”

An analyst who is aware of the growing power of private label, Ali Dibadj, a partner with Alliance Bernstein, New York, spoke at the November PLMA Private Label Trade Show, on how retailers are building billion-dollar brands with their private brands and are increasing pressure on national consumer brands. Dibadj said in the presentation that retailer private brands are pushing out mid-level CPGs in stores.

Maute sees retailers developing fresh, new strategies to dominate certain categories and restructuring their private brand operations around the concept of “win, differentiate and compete.” He said Kroger’s foray into plant-based foods is an example of this.

“That’s something that would have taken years to happen before, if at all,” Maute said. “Investors should take note: Store brands are giving CPGs a run for their money.”