Store Brands-FMI webinar delves into private brand challenges, opportunities
Kristof Duna’s well-defined point was probably well-taken by the industry professionals who participated in a Store Brands’ webinar on March 29.
Duna, director of private brands for Merchants Distributors (MDI) and Lowes Foods, was asked by Kevin Francella, brand director of Store Brands who moderated the webinar, what findings from a recent survey of grocery retailers on private brands made an impression on him.
“I think it’s interesting that, according to the survey, private brands were identified as a retailer’s No. 1 tool for building competitive advantage. Yet in that same survey 60 percent of the respondents identified the biggest threat to private brands as a lack of capital investment to drive innovation,” Duna said. “To me this is counterintuitive and shows that sometimes we just need to get out of our own way.”
Duna teamed with Mark McKeown, client insights principal for IRI, in the first of the four-part webinar series, “The Power of Private Brands,” that Store Brands is conducting with the Food Marketing Institute (FMI). The webinar series is an extension of the survey and the subsequent report, “The Power of Private Brands,” that FMI’s Private Brand Leadership Council recently coordinated with Daymon and IRI.
The report confirmed that private label sales at supermarkets and regional grocers — hampered by deflation and a decline in supermarket trips — haven’t kept up with national brand sales the last two years. But the report stresses that supermarkets and grocers can take advantage of the growth potential of private label by customizing products, recognizing the need to invest to drive store brand innovation and embracing a wider range of promotional vehicles, including emerging social media platforms.
The March 29 webinar focused on the “From the Register” segment of the report, and targeted topics such as why the performance gap between private brands and national brands has widened. Duna mentioned that private brands are experiencing some of their greatest prestige even as the industry deals with some of its recent hurdles such as deflation and a decline in trips to supermarkets and groceries.
“[According to the report], about 98 percent of retailers now use private brands to differentiate, making [this] the No. 1 competitive strategy,” said Duna, who is also co-chair of FMI’s Private Brand Leadership Council. “This is a huge finding that validates the importance of private brands.”
McKeown led the research in the “From the Register” section of the report. During the webinar, McKeown discussed various category findings in the report that relate to private brands, such as organic.
“Private brands are capturing more share in organic than in non-organic,” McKeown said. “That surprised us given the amount of activity we see out there with brands, whether it’s with large brands that have jumped into organic or the plethora of small brands that used organic to get on the shelf. So we think there is something going on here [with organic private label as to why] retailers are doing really well. Are they able to leverage their organic brands that cross over multiple departments and aisles within the store, which is very difficult for national brands to do?”
In closing his presentation, McKeown left several questions for retailers to consider, including:
• If private brand shopper trips continue to decline in the grocery channel, how will retailers deliver private brand same-store sales growth?
• Grocery retailers are relying more heavily on private brand promotions, yet sales continue to lag. Is this investment sustainable, and will it lead to growth?
The next webinar in the series is set for Thursday, April 20, and will focus on understanding consumer trends as they relate to private brands.
To listen to the first webinar and to sign up for the remaining webinars, please visit The Power of Private Brands webinar series.