Private Label Strategy: How to Meet the Store Brand Challenge ...
There’s an increasing number of books being written on how manufacturers need to wake up to the power of retailers. What makes this book one of the best I’ve read is its comprehensiveness and detail. Looking at both the US and Europe (where the phenomena is more developed), the authors lay out the different types of private label strategies with rich case studies and hard data. If you want your senior management/clients to start addressing private label, this book is a gold mine.
Worldwide private label sales in 2007 were $1 trillion, and growing. This has been abetted by consolidation within the retail industry – eg. Wal-Mart’s $126 billion in private label sales exceeds Nestle’s (largest manufacturer) total sales of $75 billion.
Apparel, packaged goods, electronics, financial services, books – all are involved.
Private labels are mostly copycats, and don’t face the risks and costs of new product introduction. Even without attaining great success, they provide leverage vs. manufacturers.
Walgreen’s averages $677/square foot in sales, with prescription drugs making up 63% of those sales.
Retailer gross margins on private labels vs. manufacturer brands are about 25-30% higher, but may be less profitable due to slower turnover.
About the only takeaway from this book is that private label sales are large and growing, and the major manufacturers’ clout and profits suffer accordingly. There really are no good counter-strategies, except to reduce costs and perhaps spiff up packaging, advertising.
This book is a good academic text, mixed with real life consulting examples from the world of big retailers and big CPG companies. But there’s little prescription for the scores of companies smaller than, say, P&G, who find themselves far below #1 and #2 category leader positions. Essentially, the retail chains and the market leaders will eat your lunch…
In the old days, black and white stenciled labels clearly marked generic brands. Those days are gone. Today many private-label goods are more sophisticated than their competitors’ parallel products. The growing popularity of private brands has changed the branding, retailing and product development marketplace, which was already shifting in response to globalization, faster trend development and advanced consumerism. Nirmalya Kumar and Jan-Benedict E. M. Steenkamp have a solid understanding of these developments. They buttress their explanations with interesting case studies from leading merchants and manufacturers. Retailing is an exciting business, and the authors bring forward the right mix of research and specifics to make a lively case for private labels. getAbstract recommends this to anyone seriously interested in retailing, the changing shape of consumer society and, of course, shopping.
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Walmart topped the