Speed counts

A retailer that is first to market with a unique store brand product — or a fast follower of a branded innovation — has an advantage over its retailer competitors. But it cannot compromise product and packaging quality in the quest for speed.

During the 2014 PLMA Store Brands Reality Trade Show in Rosemont, Ill., Store Brands magazine hosted a retailer-supplier roundtable that addressed some speed-to-market challenges and how they could be overcome. Our roundtable participants included Aldo Cabrini, senior director, retail sales and marketing for Simplot Custom Foods, Boise, Idaho; Mark Coleman, vice president, retail division for Catania-Spagna Corp., Ayer, Mass.; Marie-France Gibson, vice president, private brands for Metro Inc., Montreal; Robert Hogan, director, global business development for Zip-Pak, Manteno, Ill.; Anna Kaplan, senior director of private brands for Rexall, Mississauga, Ontario; Erin Kouri, category manager for Kum & Go LC, West Des Moines, Iowa; Noel Matos, CEO of M Industry, Zürich; Allan Meyerson, senior vice president and executive creative director for GROUP360 Worldwide, St. Louis; Thomas Reali, senior director of own brands for The Great Atlantic & Pacific Tea Co. (A&P), Montvale, N.J.; Paige Schmeling, associate category manager for Kum & Go LC; Jan Tiel, executive director, corporate brands for Unified Grocers Inc., Commerce, Calif.; Linda Whiteside, category manager for Associated Wholesale Grocers Inc. (AWG), Kansas City, Kan.; and Keith Winters, private brand manager for Supervalu Inc., Eden Prairie, Minn.

When speed counts

Several roundtable participants agreed that speed to market is more important in relation to unique products than it is to national brand equivalents (NBEs).

"I think speed to market is more important when coming out with a new product because you don't want someone else to come out with it before you do," Kouri said. "If you're a fast follower, the idea is already out there."

Gibson agreed, noting that retailers that are trying to imitate a national brand product are essentially just trying to keep pace in terms of sales.

"When you're trying to innovate and introduce new products, you're getting one more item in the basket and probably building sales," she said. "You're getting some sort of recognition also towards your brands, so brand equity, and I also think customer loyalty."

But a couple of roundtable participants believe speed to market is more critical on the NBE side. A national brand product that's already established has momentum from the consumers' perspective, Cabrini offered, so retailers need to be as fast as possible in developing its equivalent.

"With a brand new concept, speed to market to me seems to be less critical just because the segment is not developed," he said. "So maybe doing a little bit more advance research and development allows you to develop — tweak the product — and maybe timing in that sense becomes a little less critical."

And sometimes it hurts to wait when following a brand to market.

"I think being a fast follower is key for speed to market because if you are emulating a successful national brand product, the longer you wait or you're messing around with designing packaging or just making the decision to go … it's going to be more difficult for you to actually, once you hit the scene, say 'I'm here — come get me,'" Winters said.

Retailers that aim to be first to market with something unique also open themselves up to a greater risk than fast followers, Hogan pointed out.

"First movers experience a 47 percent failure rate, whereas fast followers only an 8 percent failure rate," he said.

Think success before speed

Instead of talking about speed to market, Meyerson said, retailers perhaps should be talking about speed to success.

"Just because you cross the finish line first doesn't necessarily mean you're the winner," he stressed. "It just means you've crossed the finish line first."

Matos agreed, noting that M Industry's parent retail company, Migros, is extremely cautious when it comes to its motivation for speed. And other retailers should be pinpointing their motivation for speed, whether it be seasonality, resource issues or something else.

"That can be a glorious thing, picking up on a trend that everyone else seems to be picking up on, or trying to beat everyone in making it better by innovating," he said. "But you can really burn a lot of resources by speed, especially the resources a vendor might have."

The level of innovation also should play a role in speed-to-market decision-making, Kaplan said.

"You can develop as a retailer the most innovative concepts, but you do need to have a marketing budget and budgeting concept behind it to promote it [to ensure] the consumers will understand the innovation," she said.

Store format also comes into play here, Whiteside said. For example, in a chain store environment, retailers have control of the store set, so innovation probably is not as difficult as it is in a wholesale environment.

"Independent grocers don't have to carry everything you have, and you have to have a very clear story of what the product is, what the expectations are," she said of the wholesale environment, noting that AWG once launched a self-rising pizza crust into the market that failed miserably because it was ahead of its time.

A&P also was ahead of its time with a gummy vitamin launch seven years ago, Reali noted. The product failed back then, and the retailer now is trying to relaunch it.

"And now we're late," he added.

However, anything organic or non-GMO is hot right now, so being first to market with a product here likely would benefit a retailer, Reali noted.

"That market has been kind of defined," he said. "Being first in organic or GMO-free or something like that gives you a little different kind of take, in my mind, to not be bashful and have a great marketing program and really go after it."

Also worth consideration is whether or not the store brand itself boasts strong recognition, even up against the big brands, Matos noted.

"In a market where your store brand is relevant and the consumer has that expectation of it being a first mover, an innovator, then it's almost expected to be the first one out there," he said. "But it really is being conscious of what your brand is capable of doing in the market."

A number of challenges

Whether the goal is to be first to market with a new product concept, the fastest follower of an existing name brand product, or the simply the "speediest to success," retailers face challenges ranging from product and packaging development to marketing in getting there. On the packaging front, Meyerson said a lack of alignment and clarity upfront as to what it wants to accomplish can cost a retailer time.

Cabrini agreed, noting that the same problem is common on the product development side. The result is multiple revisions of the concept.

"Then the target becomes a moving target," he said, "and I think it is a barrier to fast time to market, for sure."

And the right infrastructure has to be present on both the retailer and vendor side, Coleman stressed.

"We've been doing business with a leading retailer, and they're redoing their entire private label program," he said. "And I don't really think they truly understand what was really involved with it. Their infrastructure wasn't right to redo everything at the same time."

Also posing a challenge are internal retailer teams with differing goals, Reali suggested. The goals of the own-brand leadership team don't necessarily mesh with the goals of the category management team.

"It's also the leadership of a company figuring out what they want to do with store brands and what level they want private label to be [in relation to} overall sales," he said.

Kouri echoed Reali's comments, noting that having agreement regarding the appropriate shelf space, margins and dollar sales goals is important.

"But at the same time, trying to build brand equity should be equally important," she said. "So until we get that, it's difficult to introduce some new things and take some chances."

In other cases, the vendor is the obstacle. Gibson noted that Metro has had difficulty in finding suppliers that could give them the right technology or the right pricing to be able to get NBE versions of the latest national brand innovations to shelf quickly.

Winters, too, pointed to vendor challenges here.

"I think there's a challenge with certain suppliers within certain categories where they think a successful new item is a fad rather than a trend," he said. "I'll use the squeeze applesauce as a 'for instance.' I think they were hoping this was a fad because they didn't have to then invest in technology, new lines, etc., to be able to package it in the squeeze pouch format."

Even being a fast follower is still a slow process, Kaplan pointed out. Retailers cannot cut corners — in reality, it takes six to nine months to develop the right product and packaging.

"It's a long process, and by that time, the national brand is already changing," she said.

Eye on success

The roundtable participants, however, had a number of ideas for overcoming the challenges that threaten speed to market — or speed to success. Here, a retailer-supplier partnership can go a long way, Cabrini suggested.

"If there was a relationship and partnership where you're going to have a similar amount of risk, similar amount of shared gains, the discussion can go a lot faster," he said.

Also critical is senior management support, Kaplan noted.

"Senior management support is very important because actually it becomes a company strategy to develop private brands," she said.

Technology also can work to boost speed to market. Tiel noted that Unified Grocers partnered with a third party that enables collaborative online review and approvals related to private brand products.

"You get e-mail prompts if you're behind or you haven't approved," he added. "I can't tell you how many times we've developed an item and somebody's waiting for somebody else to review their inbox for an approval or whatever. So we're hoping this will speed things up."

Coleman said his company is seeing more workflow systems that work in a similar fashion.

"You're not waiting for an e-mail, not waiting for a phone call, and have no excuse why you didn't get it done," he said. "Everyone is moving on it, and so it's been very successful from what I've seen."

But although workflow tools make sense and can speed up the process, they are not the answer to everything, Meyerson said. Organizations still need to develop the discipline internally to use that technology.

Winters agreed, suggesting that people "aren't as serious as they should be" during the first-round review process.

"It still really boils down to the human element," he stressed. "If we are going to get speed to market, that first time you're looking at it, annotate everything that needs to be annotated, and it's going to save time in the process instead of going through multiple cycles of review."