Mark was recently interviewed by the Netherlands’ Foodmagazine for their February Issue. He is the featured speaker on March 10 at the EFMI Business School, which is hosting the Dutch Private Label Congress. Check out the English translation of the interview below, after the actual article.
What is the central message you want to convey to a Dutch audience in the speech you are going to give in the Netherlands?
I want to convey a message of vigilance, that for own brands to continue to grow we must be determined in our understanding of consumer trends, we must invest in new media to tell the brand’s story, and that we must be more experimental and fearless than ever in our new product development. Bigger, consolidated brand companies have never been more vulnerable, and it is why they are buying mission-oriented companies (Plum Organics, Annies Naturals, Bolthouse Farms) rather than develop these products themselves. They grow through acquisition, whereas we as retailer brands are distinctly advantaged to grow through authenticity.
You have worked with retailers around the world on their private label. Which chain, in your opinion, currently sets the standard for other supermarket chains? What are some of the lessons others can learn from this case?
It may sound cliché and particularly biased as an American, but it is Wegmans for me that still sets the standard. I was just visiting their stores last week and they had a new product that they were marketing called Tom Tom sauce, a chili based Asian inspired unique product under their own brand. It was invented through true restaurant inspiration, supplier collaboration and it was merchandised in no fewer than 20 spots throughout their store. Their MENU magazine demonstrates how to cook with it, inspires culinary possibilities, it is woven into their social media and more. Wegmans is not afraid to constantly invent and stay ahead of trends like convenience, health and simplicity, and their resounding passion for food is evident. All of this is reinforced through an own brand program that achieves 40% penetration.
You have spent most of your career working for Daymon. Would you, now that you have left this company, advise retailers to work on their private label through a third party? What are the arguments in favor of this?
I don’t think any retailer today should be outsourcing their ownership and commitment to own brands, and increasingly this needs to be organic to the organization to be successful. However, I do believe retailers need consultative partners to drive them to best in class approaches and thinking around own brands. It is because we see what we see, and often we can develop tunnel vision if not inspired by a collaborative partner. I think Daymon in most places, where the model is attached to earning brokerage from a supplier, is going to be increasingly repellent to retailers who want to get to truer cost of goods relationships. But having partners that drive your own brands and thinking that underlie success is critical. Most people want to be pushed, and it is actually why we created our company called Emerge.
Daymon is best known in The Netherlands for being involved with the Jumbo supermarket chain. Can you share some of your experiences on the Dutch market? Or maybe another European market you are very familiar with.
I have always been impressed with the Dutch consumer and their enlightened view towards own brands, which the retail community has fought very hard to achieve here. So one thing that is nice and beneficial to the cause here, is that you don’t have to make the argument about own brands in the market and persuade the Dutch consumer to believe in them. They accept them and embrace them, but that doesn’t mean things can’t be pushed to the next level. The Dutch consumer has always embraced technology as part of the shopping experience too, and I think it is interesting to consider how technology could uniquely support the own brands mission and motive to a greater extent. The Millennial generation today tends to be very digitally native, and we should utilize this to our best advantage. The Dutch market like many other European markets has been affected by the success of Aldi and Lidl, but the strategy you utilize through your own brands to fight the onslaught shouldn’t necessarily be the same. I look forward to talking about this in my presentation.
In The Netherlands the market share of private label dropped slightly in 2014. Does this development surprise you? Can it be a trend or is this a one off?
It shows that the big FMCG’s are not simply going to roll over, and that is why we should be constantly investing in understanding consumer trends, invest in new media to support our brands, and be more vigilant than we ever have been. It is not that the market and consumer has reached a saturation point, but they have to continue to see own brands as the ones who will invent and not mimic.
Looking from a broader perspective. Do you think the rise of online retailing is a helping or rather hindering the further growth of private label.
It is hindering it today because it is completely two dimensional. You see a bad thumb nail image and a price and a never ending list that feels inundating. It is not a simple experience and it is one that doesn’t allow us to tell our brand story and brand advantages. If we can enrich the online experience with our brand message, which the medium is ripe for, this could be a huge windfall for own brands. But today, because it is two dimensional, we look pallid compared to the brands. We often are de-prioritized at the bottom of the shopping/category list too.
Is there a limit on the growth of private label?
Of course there is a limit, because we are creatures for brand variety. Most retailers shouldn’t have 100% own brands anyway. But there has never been a better time, generationally speaking, to market own brands and make them a hugely credible part of younger generations’ lives. Younger generations aren’t impressed with the big, institutionalized brands, and they tend to be more experimental in nature. If we tilt our own brand invention and marketing to these trends, we will be positioned to gain share and, importantly, be meaningful parts of these consumers’ lives.
What, in your opinion, are some of the more exciting current developments in the field of private label?
I actually think the most exciting thing is its universal acceptance across all channels today. In the American market you really see this change happening in the marketplace. The #1 outdoor sports retailer is Recreation Equipment Incorporated, and their own brand tents outsell Northface. At Lowe’s Home Improvement in the DIY channel their Kobalt brand outsells many of the leading tool brands. Sears’ Kenmore grills outsell Weber grills and Safeway’s O Organic brand is one of the largest organic brands in the country. This fundamental shift is happening throughout the world, consumers are accepting own brands more than ever before, which gets back to my message of invention, investment and vigilance. We have to continue to push harder.