At this year’s PLMA Trade Show (the ‘World of Private Label’ International Trade Show) in Amsterdam, there was inevitably a lot of discussion on the parallels and differences between Europe and North America in terms of private label - or 'own brands'.
Now, it is always difficult to draw a direct comparison in markets generally because there will always be some clear leaders. In retail it’s the likes of Loblaw Canada with their President's Choice brand but there is also fast followers (or even laggards) in any market too. Taking these outliers into account, there is still apparent consensus that, in general, private brand products in North America are behind those in Europe in terms of quality and innovation.
This statement is probably contentious to some. But it is hard to have unanimity when even the term 'quality' is unclear. To some, quality means differentiation. To others it is about 'being the best'. I think that above all it is about delivering on the brand promise - whatever that is - and to deliver it consistently. But that is probably for another blog! Here, I will consider consistency and innovation.
Most people I spoke with at PLMA recognize that Europe is ahead of North America - again, generally-speaking. The own brand systems and processes established at some of our UK retail clients such as Asda, Co-op and Waitrose have had many more years to become established and robust, and this results in greater consistency. There is still the need to continually increase supplier engagement and collaboration between retail teams and private brand suppliers, and continually improve, but this is an area where Europe (and arguably the UK) sets the benchmark.
Many in our industry would agree this is true in terms of Innovation, but the discussion at PLMA essentially said "Yes, in terms of product innovation, but what about technical innovation?”
The manufacturing base and in some cases simple geographic constraints means it is harder for retailers to develop exclusive private brand products, especially for those smaller regional retailers. Ben Miller, Global Insight Director at IGD, put a different perspective on technical innovation where he suggested there was greater appetite to accept new technology, and the tech start-up culture continues to drive innovation.
We are all too aware of Amazon’s continued innovation. Putting their Alexa ‘representative’ in millions of homes and their innovative Amazon-Go staff-free stores.
But there are examples outside of Amazon where grocery retailers are embracing technological innovation. For example, Ahold-Delhaize have built an auto-pick warehouse ‘back of store’ to pick and pack your basic grocery staples whilst customers impulse shop meals-for-now and meals-for-later in the store.
Technology for dynamic pricing models and electronic shelf-edge labelling is being led by the USA (albeit potentially not quite cost effective enough yet for mass adoption).
Kroger is working with autonomous self-driving vehicles for that ‘last-mile’ delivery.
Apparently, technology for staff-less stores is also being led by US technology companies; discussions are on-going with a number of European retailers and the deal already signed to implement in Poland.
Indeed, as Walmart’s Chief Technology Officer, Jeremy King, said (against the back-drop that Walmart has built a great retail organization) “For years now... I’ve wanted people to understand we are building a tech organization”.
There is a lot North American retailers can learn from UK retailers around private brand systems, process, supplier engagement and collaboration to drive successful products and brands. But that information flow is two-ways, especially it would appear so in terms of retail tech.
“It is not all about Amazon” as speaker Lidia Palubina, Senior Consultant, Kantar Consulting said, as she also warned off the march of Alibaba. More on that another day…
Further reading: Putting the fire into Amazon’s private brands.