Sourcing The Perfect Suppliers For Private Brand Ranges
By Steven Howell, Solutions for Retail Brands
The private brand grocery sector has come a long way since the ultra-plain-packaged — and largely uninspiring — generic products aimed at budget-conscious shoppers that filled grocery store shelves. Research shows that the sector as a whole performed strongly in 2017, recovering from negative dollar growth of around 0.4% at the end of 2016 to +3.2% 12 months later.[1]
But looking at the sector at the top level often hides what is really happening with shoppers. Premium brands and innovative product ranges are showing substantial growth — with premium store brand goods showing 10% dollar growth specifically; yet discount products, in contrast, saw the sharpest decline at -2.3%.
These figures will come as no surprise to industry insiders, who have seen how far store brand products have come in recent years. U.S. retailers today are adept at responding to customer demand for quality yet good-value products, which could include certified organic, free-from, vegan, sustainable or luxury ingredients, Kroger, for example, has made great strides with its Simple Truth brand. Indeed, it is a retailer’s commitment to distinct and appealing private brand ranges that immediately sets them apart from their rivals to drive sales.
For private brands to flourish, the relationship between supplier and retailer is critical to success. This isn’t only in terms of delivering innovation and manufacturing good quality products, but also by being open and transparent about the origins of the products offered. The winning formulas come to fruition once suppliers are truly engaged with the retailer. Once this becomes two-way, then a strategic partnership is formed — rather than just a retailer-supplier arrangement.
But this doesn’t mean retailers should rest on their laurels once they have found a trusted supplier. As consumer trends evolve, grocery brands must collaborate with their partners. It demands a change of mindset from both parties, one that moves away from the straightforward acquisition of goods towards a joint commitment to product innovation.
Strategic supplier sourcing enables retailers to find partners that are capable of delivering products to the standards expected, and set a benchmark for future innovation. Not only must suppliers be able to fulfill orders on time, I believe there are four further key traits to look for:
- A strong understanding of what it means to be a supplier with their own brand;
- They know and buy into the retailer’s strategy, tactics and goals;
- Loyalty; and
- Commitment to building a strong retailer/supplier relationship.
We all know that a supplier that consistently displays all these characteristics can be hard to find, so when one comes along, retailers should do everything possible to secure buy-in and help them reach their full potential. Generally speaking, this means quickly identifying star players, investing in their training and crucially, fostering engagement.
Time pressures are common among retail buying teams, which is why technology is playing such a key role in supplier engagement. An online portal, for instance, will allow suppliers to submit product or company information, along with relevant certifications, although it should never be seen as a shortcut to reduce workload.
As well as allowing suppliers to navigate self-service systems, it is important to nurture them as they come up with award-winning, marketing leading product(s). By encouraging suppliers to complete company profiles via the portal, buyers can quickly identify their capabilities and put them in line for opportunities as they arise.
Just as it is important to build their brand reputation with consumers, so too should retailers demonstrate a strong value proposition to suppliers. This includes everything from relevant content and training academies to helping them get products into approval. An online portal helps suppliers reach retail readiness, filling in any gaps in their knowledge and operations and motivating them to get their products on the shelves — rather than seeing a competitor win the contract. Even those whose products fall short of the mark can gain valuable feedback and go on to make improvements.
Why all this matters, of course, is because the grocery landscape is constantly shifting as both established retailers, and new entrants, battle for a greater market share.
If we look to the UK, where the private label sector is one of the most successful and competitive in the world, supermarkets are now well-versed at using their private brand ranges to create a point-of-difference. Motivated suppliers, equipped with the right tools and guidance, are key to delivering ‘destination products’ — which are, of course, the building blocks of a destination store.
Steven Howell is Sales Solution Consultant, North America at Solutions for Retail Brands (SR4B). He brings more than 30 years of global experience in retail, CPG manufacturing, consulting and technology to the private brands industry. Howell specializes in product lifecycle management process design, supply chain management, organization design, business process improvement, project management, and system design and implementation. He has worked with organizations in North and South America on business development, sales, organization structure, business process, technology implementation and supply chain issues by understanding their business needs and translating them into process designs, requirements and solutions, building key business and organizational capabilities.
[1] Source: www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2018-reports/total-consumer-report-march-2018.pdf