Transcript Slide 1

Trends in Retail Competition:
Private Labels, Brands and Competition Policy
A Symposium on the Role of Private Labels in Competition
between Retailers and between Suppliers
The Institute of European and Comparative Law
in conjunction with the Centre for Competition Law and Policy
Oxford, 9 June 2005
Sponsored by Bristows
CCLP (S) 04/05 (III)
Private Label
Their Role for Retailers
&
Their Impact Upon Competition
Part II
Source of Own Label Growth UK
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
34.2
15.3
19.4
31.8
13.7
15.6
8.8
14.7
30.0
16.4
1975
1997
Brand Leader
No 2Brand
Brands over 2%
Brands under 2%
Own Label
Share of UK Crisp Market
100%
90%
22
26
26
27
29
30
30
31
32
35
80%
70%
15
14
13
12
12
9
12
60%
17
14
15
15
50%
2
3
40%
30%
9
11
9
2
11
10
2
12
9
10
9
3
3
15
11
10
8
14
10%
23
23
22
25
47
48
2
8
2
7
6
4
4
3
5
33
35
5
7
11
11
5
12
3
3
2
12
11
6
6
7
6
30
31
32
31
11
1
10
2
11
8
6
20%
23
40
26
35
0%
1984
Private Label
1985
1986
1987
Other Brands
1988
KP
1989
1990
Sooner
1991
1992
1993
Golden Wonder
1994
1995
Smiths
1996
MTD
Walkers
Changing the Focus of
Competition
• From Relevance based on
– Consumer Research
– Product Development
– Perceived Value
• To Price
Category Management
For a Retailer it is the means for
determining pricing, merchandising,
promotions and product mix based on
category goals, the competitive
environment, and consumer behaviour
Centre for Retail Management
Northwestern University
(1993)
Category Management:
The Annual Plan
• Retail Complexity
– Thousands of SKU’s
– Hundreds of Categories
– Frequent Promotions – Price Change & Gondola
Ends
– Numerous New Product Introductions:
Recipe change, Pack Size, New Brands
• Branded Suppliers Submit Advance Plans of
Promotions, Price Changes & New Line
Introductions
• Year End Rebates Linked to Planned Activities
Category Management:
The Annual Plan
• Retail Complexity
– Thousands of SKU’s
– Hundreds of Categories
– Frequent Promotions – Price Change & Gondola
Ends
– Numerous New Product Introductions:
Recipe change, Pack Size, New Brands
• Branded Suppliers Submit Advance Plans of
Promotions, Price Changes & New Line
Introductions
• Year End Rebates Linked to Planned Activities
The Retailer as A Double Agent
• Agent For Their Own Label Products
• Agent for Manufacturer Brands
• Controls the Pricing, Listing, Space
Allocation and Promotion of ALL Brands
• Has Advance Notice of Planned Activities of
Manufacturer Brands
• Has a Margin Incentive to Promote Own
Brands
Summary
• UK grocery retailing is characterised by vertically
integrated oligopolists
• Control of the supply chain has facilitated the
expansion of private label
• Private label facilitates differentiation and higher
retail margins
• Retailers act as agents for their products and their
suppliers brands
• Retailers control all of the in-store marketing
variables and have advance notice of the brand
plans of their suppliers
• Most product innovation is initiated by producer
brands
Retail Integration
“CONNECTIVITY”
The linking of hitherto individual processes of distribution
(customer dialogue; merchandising; shelf replenishment;
inventory control; depot management and delivery;
procurement; buying; supplier operations)
by information technology to provide total transparency
and instant communication, thereby reversing the Supply Chain.
From Producer Push to Consumer Pull
Category Management
What is it?
• Partnership with Suppliers?
• Managing the In-Store Marketing levers?
–
–
–
–
Space
Promotion
Range
Price
• Part of efficient consumer response?
• Measured performance?
• A new business process?