Suppliers and retailers are ready to work together. If there has been anything good to come out of the supply chain strain that retailers and store brand manufacturers endured during the coronavirus pandemic, it is that both came out looking for ways to help one another more.
The Private Label Manufacturers Association held its annual Leadership Conference virtually, March 18, and the focus of the full-day of education was on improving private label partnerships between suppliers and retailers. Sessions included a a talk by Ken Harris, managing partner, Cadent Consulting Group, who also moderated a panel between Brenda Lord, vice president of private brands and quality assurance, CVS Health; Don Davidson, vice president, strategic sourcing, Albertsons; Troy Pelak, vice president, regional sales, Perrigo; and Clay Dockery, vice president, corporate brands, Massimo Zanetti Beverage USA. Lord also presented on the power of partnership with members of her team.
A mid-day workshop from Duncan Wardle, founder of iD8 and innov8, worked through innovation and collaboration for the retailers and suppliers attending the virtual event. Peggy Davies, president of PLMA, said during her president’s report that the conference had 62 retailers registered of the more than 160 attendees present. She also mentioned that in the coming weeks there will be a new plma.com site and that future events will be online, except for the World of Private Label trade show in December and The Private Label Trade Show in November, which are still planning to be in-person. The Chicago show will aim to fit around 1,200 booths and registration for that will begin soon.
The conference capped off with a special induction of former PLMA president Brian Sharoff’s induction into the Private Label Hall of Fame, the sole inductee. The association also welcomed a new look to the hall of fame.
Store Brands, part of its March print issue, fielded thoughts from friends and colleagues to honor Sharoff’s legacy.
Here are highlights from the morning’s educational sessions:
The Relationship Paradox
It’s never been easier to offer help today, but offering the right help is the real issue, Harris of Cadent Consulting said in his presentation on the supplier, retailer relationship “paradox.”
Harris referenced the unprecedented stress that has been put on the supply chain, due to the coronavirus pandemic, and said that it remains an issue. He cited a New York Times article less than two weeks ago that showed dozens of shipping containers backed up at a port, and quoted the CEO of an import/export company that said the company was paying $2,500 to ship a 40-foot container six months ago and is now paying $7,000, the highest the company had ever seen.
Harris warned that the supply chain will continue to be taxed since shipping containers will be scarce through the end of the year, coupled by the rise of e-commerce. For one, Harris said total U.S. e-commerce sales growth accelerated at the level of “10 years in 10 months.” He said suppliers and retailers will need to work together to focus on e-commerce and the continual strain of the supply chain.
The other issue facing suppliers and retailers: how to keep new shoppers. “With no restaurants, we’ve captured a new wave of consumers. Now the name of the game is retention,” he said.
One way of doing this is by focusing on the brand equity of these highly successful private brands. He suggested a five-part brand equity model to help evaluate a brand’s equity:
- Awareness — do shoppers at the retailer know the brand well;
- Trustworthiness — can the brand be trusted on a consistent basis;
- Uniqueness — how differentiated is the brand in the space it plays;
- High quality — are the products in the brand providing a good experience;
- Clear positioning — does the brand represent value or premium positioning and how clear is that to the shopper.
Harris added that private label is looking good going forward, as a third of millennials and Gen Z shoppers are more likely to buy private brands, according to their research, and in personal care, household essentials, and food, nearly 70% of shoppers prefer private label over the national brand.
Working With CVS
Lord of CVS Health presented with team members on what the retailer is looking for in a supplier partner.
She started by saying the retailer positions itself as, “customer obsessed,” and they “place them at the heart of everything we do,” so the biggest advice for a supplier looking to work with CVS is to know their shopper.
The retailer is also looking for new ideas to develop under their store brands, great quality in the products, fantastic costs, and a partner who wants a long-term partnership. The team members stressed that CVS is not looking for a “transactional” relationship but for a supplier to grow with. Oftentimes, the relationship begins small and if the supplier exhibits trust, passion and consumer insights, SKUs and platforms get added.
Another key for suppliers, amid the state of the industry, CVS is looking for a supplier with a robust supply chain, who has an ability to pivot when needed. They also said one of the quickest ways to get noticed by them is if they bring new ideas around technology.
Lastly, offering a tip of what not to do as a supplier partner, communicate slowly. “Bad news doesn’t age well,” they said. Partners need to call the minute they see an issue arise in a supply chain and not to be afraid to ask difficult questions, or even call out CVS if there’s something in their process that can slow a supplier down.
Lord wrapped up the session talking about the company’s new Live Better line and stressed that consumers are more conscious of what they’re putting into their bodies. The line even shares stories on its packaging of how products came to be, and the packaging stresses recyclability. Suppliers can look to that brand as an example of where CVS is headed.
Identifying specific ways for retailers and suppliers to work better together, Harris of Cadent moderated a panel between two manufacturers (Perrigo, Massimo Zanetti) and two retailers (Albertsons, CVS).
Communication became an early theme. Davidson of Albertsons said suppliers who did well during the early days of the pandemic had been on the phone with him in week one or week two. The suppliers were seeing the trend early, where it was beginning in club stores and on the west coast, and they called immediately with direct action saying how much product they can manage, asking what flavors, what items, etc. They figured out a plan together, right or wrong.
The flipside, Davidson said, were suppliers making decisions on their own.
Innovation was another key theme and Pelak of Perrigo said it is more than just an innovative product. He said suppliers can innovate around sustainability in their packaging and processes, help with brand positioning statements, marketing, style guides, help develop a platform, innovate in marketing, and more.
Lastly, improving private brands online, was addressed. Dockery of Massimo Zanetti said point blank that national brands have been better at selling online and there needs to be better collaboration between suppliers and retailers online.
Pelak added that there are many opportunities for store brands to take advantage of over e-commerce such as improving the product content, romancing the product online, using videos and images, leverage ratings and reviews, and employing an advertising platform to drive online business.