Private Label Strategy: How to Meet the Store Brand Challenge

by Nirmalya Kumar, Jan-Benedict E.M Steenkamp

As retailers have become more powerful and global, they have increasingly focused on their own brands at the expense of manufacturer brands. Rather than simply selling on price, retailers have transformed private labels into brands. Consequently, manufacturers such as Johnson & Johnson, Nestle, and Procter & Gamble now compete with their largest major retail chains like Carrefour, CVS, Tesco, and Wal-Mart. The growth in private labels has huge implications for managers on both sides. Yet, brand manufacturers still cling to their outdated assumptions about private labels. In Private Label How to Meet the Store Brand Challenge , Nirmalya Kumar and Jan-Benedict E.M. Steenkamp describe the new strategies for private labels that retailers are using, and challenge brand manufacturers to develop an effective response. Most important, they lay out actionable strategies for competing against - or collaborating with - private label purveyors. Packed with detailed international case studies, valuable visuals, and hands-on tools, Private Label Strategy enables managers to navigate profitably in this radically altered landscape.

Genres: Business

288 pages, Hardcover

First published February 1, 2007

Reviews

[Dmitry · Rating 5 out of 5]

(The English review is placed beneath the Russian one)

Довольно примечательная книга, которая остаётся актуальной даже спустя несколько лет после её выхода. Разумеется, хотелось бы прочитать обновлённую версию книги, но, даже не смотря на то, что книга 2007 года выпуска, ситуация в ритейле мало чем изменилась. Более точнее, ситуация с марками традиционных брендов и марками торговых сетей, кардинально не поменялась. Поэтому я считаю, что книга даже на сегодняшний день сохраняет свою актуальность.

Необходимо также учесть, что и книг на данную тему очень и очень мало. В моей библиотеке бизнес-литературы из несколько сотен книг, только две книги посвящены этой теме.

Итак, авторы посвящают всю книгу вопросу борьбы между марками торговых сетей и марками традиционных брендов. Как правильно замечают авторы, до недавнего времени традиционные бренды вовсю доминировали в розничной торговле. Однако начиная с конца XX века и начала XXI ситуация коренным образом меняется. И главной причиной этого стало появления магазинов типа Walmart, который предложил совершенно новый вид торговли, новую бизнес модель. Теперь товары стали продаваться не только в разы дешевле, но и появились супер игроки, которые своим весом или своим масштабом стали диктовать условия своим поставщикам. Т.е. не только фермеры подпали под диктатуру крупных торговых сетей, но даже такие компании как P&G. Ведь у крупных торговых сетей имеется в распоряжении такой важный рычаг, как право дать и право отобрать место на полке. А учитывая, что подавляющее количество людей посещает только эти немногие крупные торговые сети, сети типа Walmart получили фактически монопольную власть. Ведь получается, что если сети не выставляют на полках определённые бренды, то этих брендов как бы и не существует (для покупателей, а значит и для рынка в целом). Откуда потребитель узнает об их существовании, если их нет в магазинах? Да, очень дотошные могут найти их в Интернете или в каком-то небольшом магазинчике, но большинство людей о таком бренде или брендах никогда не узнает. Т.е. торговые сети, в связи с их размерами, получили огромную власть и как следствие, огромные денежные потоки. И что же они сделали с этими денежными потоками? Они подумали: зачем выставлять на полки товары чужих компаний, если можно заполнить все полки товарами собственного производства. Учитывая, что многие такие товары создаются на тех же самых заводах, что и товары традиционных брендов, стратегия видится беспроигрышной. Действительно, и авторы пишут об этом, приводя итоговые результаты опросов, в которых разница между марками традиционных брендов и марками торговых сетей не то что минимальна, а в некоторых случаях марки торговых сетей выигрывают у марок традиционных брендов. Но тут есть загвоздка, о которой так же пишут авторы. У торговых сетей нет возможности создавать абсолютно новые товары или улучшенные версии прежних товаров, а так же нет возможности рекламировать их ведь купить-то их можно будет только в определённых торговых сетях (в отличие от тех же брендов компании P&G). Следовательно, инновации и маркетинг, являются главными орудиями в борьбе против марок торговых сетей. Хотя, не только это.

Вот обо всём этом, но более подробно и пишут авторы книги. Я хочу сразу предупредить, что книга читается тяжело. Т.е. человеку, который никак не связан с темой маркетинга и/или розничной торговлей я бы не рекомендовал браться за эту книгу, ибо шансов, что он прочитает её полностью, не так и много. Плюс, книга довольно монотонна, а сам текст довольно сложен. Тем не менее, книга затрагивает важнейший вопрос в сфере ритейла, который остаётся актуальным и посей день.

Quite a remarkable book that remains relevant even several years after its release. Of course, I would like to read an updated version of the book, but even though the book was published in 2007, the situation in retail has not changed much. More precisely, the situation with both traditional brands and retail brands has not changed dramatically. Therefore, I believe that the book even today retains relevance.

It should also be taken into account that there are very, very few books on this topic. IIn my library of business literature, out of several hundred books, only two books deal with this topic.

So, the authors devote the entire book to the question of the struggle between the brands of retail chains and traditional brands. As the authors correctly point out, until recently, traditional brands dominated the retail industry. However, since the late twentieth century and early twenty-first century, the situation is changing dramatically. And the main reason for this was the emergence of stores like Walmart, which offered a completely new kind of trade, a new business model. Today, not only have goods become cheaper but there are also emerging super players (Walmart) who, by their weight or their scale, began to dictate terms to their suppliers. That is, not only farmers have fallen under the dictatorship of the big retail chains, but even companies like P&G. After all, large retail chains have such an important lever at their disposal as the right to give and take away shelf space. And given that the vast majority of people visit only these few large retailers, chains like Walmart have gained virtual monopoly power. After all, it turns out that if the chains do not put certain brands on the shelves, then these brands do not exist (for customers, and therefore for the market as a whole). How will the consumer find out about their existence if they are not in the stores? Yes, the very meticulous can find them on the Internet or in some small store, but most people will never know about such a brand or brands. That is, the retail chains, due to their size, gained enormous power and, as a consequence, enormous cash flows. And what did they do with these cash flows? They thought: why stock the shelves with other companies' goods if we can fill all the shelves with goods of our own production. Given that many such products are created in the same factories as traditional brands, the strategy seems like a win-win. Indeed, and the authors write about it, citing the final results of surveys in which the difference between the traditional brands and brands of retail chains is not only minimal, but in some cases, the brands of retail chains win over the traditional brands. But there is a hitch, which the authors also write about. Retail chains cannot create completely new products or improved versions of previous products, as well as there is no possibility to advertise them because they can be bought only in certain retail chains (unlike brands of P&G). Consequently, innovation and marketing are the main tools in the fight against brands of retail chains. Not only that, though.

All of this, but in more detail, is what the authors of the book write about. I want to warn you that the book is hard to read. That is, I would not recommend this book to a person who has nothing to do with marketing and/or retailing. Plus, the book is rather monotonous, and the text itself is rather complicated. Nevertheless, the book touches on a crucial issue in retailing that remains relevant today.

[Matthew · Rating 3 out of 5]

Found this quite penetrating for a layman who isn't involved in the retail business per se, was surprised to see it get weak reviews on Goodreads (but strong ones on Amazon). Not a pleasure read, obviously, but despite that it was readable. Learnt quite a bit about how to distinguish between different private label strategies (premium, copycat, low-priced) and what questions to ask when trying to determine if a particular brand strategy is successful.

[Jonathan Collins · Rating 2 out of 5]

This book was a chore to finish. It started well. I really liked the first half that talked specifically about what retailers can do to grow private label. The back half where they talk about how big brand companies can compete with private labels really slowed down.

[Apurv Kashyap · Rating 5 out of 5]

Reinventing branding in the retail space

Private labels have begun making quite an impact in India. I have been able to see first hand the drive behind them and the ambition that has been placed upon them.
Yet, in terms of research, not a lot was available on the same. Most cases were bundled under generic marketing or branding or retail studies. A dedicated compendium was lacking.
This book happens to fill that void. Though it might be a bit dated, you will be able to extrapolate and present the insights from the book into the present context. Detailed, insightful and with an enjoyable narrative, it has been quite a ride reading this book and I hope to stumble upon some more such treasures in the long run.

[Abhinav Prathivadi · Rating 5 out of 5]

Fascinating read on how retailers are leveraging private labels to boost profit margins.

[Shryansh Sacheti · Rating 4 out of 5]

Practical book to give an insight about Private labels and their advantages/ disadvantages . The book also looks at Private labels from the point of view of the national label brands

[Veronica · Rating 4 out of 5]

A great book introduces private labels, talks about how retailers should react in this environment, dissects consumers into four different buyers. The biggest challenging is to shrink the quality between private label and manufacturer label. Innovation is an important weapon for manufacturers to win over.

[Joey Rath · Rating 4 out of 5]

A good overview of private labels, their strategies, and what manufacturer brands can do about it. However given when I read it..it's relatively dated and a lot of the same information could be found in newer marketing articles alongside newer strategies and case studies.

[Thomas · Rating 5 out of 5]

Excellent book. A deep dive of their seminal Harvard Business Review article, this book is a must-read for anyone working in consumer products brand management.

[Hannah · Rating 4 out of 5]

This was a required reading for a college course, but it was actually decently enjoyable in its own right! For those interested in Retail, this is an absolute must.

[sidharth Gurjar · Rating 4 out of 5]

Great book. Must read for anyone getting into the retail industry