Having spent a large part of the last ten years working within FMCG retail in the U.S., I am seeing the tide finally turning in and around private brands.
The switch within retailers from a ‘me too’ lower cost alternative, to the emphasis on building and taking true ownership of their private brands is now becoming the norm rather than the exception.
In building true brands, finding and developing products that can differentiate the brand owner is now the focus. The race is now on to find and maintain great supplier partner relations with a joint commitment to the retailer’s private brand.
Increasing numbers of U.S. retailers are recognizing the need to take ownership and improve direct relationships, and to re-invent their relationships with brokers and agents. What many are not recognizing is that these brokers have played a critical role in supplier management on behalf of the retailer. In removing this, the retailer can risk taking a backward step in supplier relations.
To assist in this new world, technology and related service advances have rushed to provide an environment where it is easier for the initial contact between prospective suppliers and eager private brand retail buyers to take place.
This evolving trading climate will increasingly mean that the best suppliers have choice over who they work with.
As the power balance shifts, the retailers that don’t adapt will be left with the usual suspects providing the generic copies of questionable ‘me too’ quality.
To move from the ‘buying’ approach (focusing on the national brand equivalent), there is this need to have a more collaborative relationship to build unique private brand products. This requires engagement, a new approach for most.
Supplier engagement is ultimately changing the dynamics of the relationship, from single dimension to true partnership, and helping to support the goal of brand development.
So what needs to happen to make that change? As with all relationships, the initial contact plays a highly significant part in setting the tone and the chance of success.
Great supplier engagement demonstrates to the vendor that the relationship is going to be built on a platform of true partnership, with the retailer trying to do everything in its power to make things work.
This is not just about one single meeting or event, but an ongoing, built-in process.
To be successful right from the beginning, the internal private brand team needs to be more efficient than old broker networks, focused on value-add by using appropriate engagement tools to empower suppliers. It needs to boost performance through excellent communications, superb support structures, and clear and transparent expectations.
This all promotes a win-win for the private brand team and suppliers.
The retailer is setting up a truly ‘One Team’ approach to the private brand that the partners can share. This demonstration of retailer commitment makes a difference to suppliers.
Retailers that excel in this gain a competitive advantage.
Given the numbers of suppliers involved, the big return on investment is easy to grasp and measure.
Our clients across the world have seen the benefits as suppliers spend more time and care in addressing consumer complaints, accelerating product development, and enhancing ideation.
For those looking for double digit levels of private brand penetration, the transformation from classic supplier relations to true engagement is essential.