In the past few years, U.S. food retailers have turned private brands into success differentiators for their businesses. Is there more room for advancement as a new decade begins?
The answer is yes, according to Steven Howell, solution sales consultant for S4RB (Solutions for Retail Brands). That’s because retailers are focusing on creating brands that differentiate their businesses instead of just following the lead of national brands, he said. However, further gains will require that retailers execute well on key consumer trends and drive further collaboration with private brand suppliers, he added.
The Shelby Report recently conducted an interview with Howell, whose company focuses on consultancy-led software solutions for retailer private brands, including its cloud-based Affinity platform.
What are some key trends ahead for U.S. private brands in 2020?
Retailers will focus on adding innovation to their private brand portfolios in 2020. This will include better-for-you and free-from items, sustainable products, and foods that help boost enjoyment. Moreover, there will be a bigger focus on transparency for products and brands, including with sourcing, ingredients and telling the stories of brands and products. Retailers also will make quality and packaging upgrades to their portfolios.
What are retailers doing to drive private brand growth in categories such as organic, premium, better-for-you, fresh and sustainability?
This is a big area of focus in private brands. For example, on the premium side, we’re seeing retailers innovate in ways that lead the industry, rather than merely copy national brands. This includes new directions in artisanal and locally produced products. On the better-for-you end, retailers are spotlighting clean label, plant-based diets, and removal of chemicals.
Which are some retailers successfully connecting the dots?
There are more and more retailers achieving success. These include Kroger with innovative brands like Simple Truth; H-E-B and Aldi with clean label items; Natural Grocers with organic-focused frozen and fresh products; Lidl with third-party endorsements of its brands; and Raley’s with fresh packaging that is more transparent.
What are some pitfalls to watch for?
A big potential pitfall is the failure to optimize retailer-supplier collaboration. That is a problem to avoid. Suppliers need to align their private brand strategies with the retailers’ strategies. Retailers must find the right suppliers to fit their needs. Better collaboration protects the sources of supply and ensures that retailers have an ongoing flow of innovative products. There also is increased need for improved communication as the industry increasingly focuses on private brands as opposed to just private label. A new S4RB-FMI report addresses in depth the current state of retailer-supplier engagement. (That report can be accessed here.)
How does the emphasis on ‘brands’ change trading partner collaboration imperatives?
Building brands is hard work. It takes an army to achieve great results, and suppliers can make the difference. Working as one team with partners to increase engagement and challenging them to innovate will result in better products and more satisfied customers.
What are the opportunities to improve supplier-retailer working relationships in next year or two?
There are a number of opportunities. These include forming longer-term retailer-supplier relationships and having leaders demonstrate that the commitment starts at the top. It’s also important to have clear retailer strategies, increased sharing of information and more established processes for engagement.