X

Oracle Retail Blog helps retailers stay current on customer successes, hot retail trends and industry best practices.

The Power of Retail Product Lifecycle Management Software and New Opportunities for Private Brand Retailers

Doug Macdonald
Oracle Retail Brand Compliance Business Development Manager

Grocery retail product lifecycle management (PLM) software, like Oracle Retail Brand Compliance, continues to evolve to help retailers tackle the challenges of own brand management or private label. In this article, we explore the upside and the challenges associated with retail brand management and how Brand Compliance is supporting the growth. Let's explore the steps that private brand retailers can take to make food safety simple and the market opportunities, based on our experience working with the world’s leading private brand owners. 

In my previous blog we explored the consumers’ point for view and identified three priorities:

  • Consumers want to know what’s in their food
  • Consumers assume their food is safe
  • Consumers care about the environment, sustainability, and ethical practices

In this second blog, we’ll look at private brand food safety from the grocery retailers’ point of view – the upside and the challenges. We’ll look at retailers’ motivations to develop and sell private brands and we’ll explore how the relationship that private brand owners have to their manufacturing partners, either direct or indirect, affects visibility and transparency.

Retailers’ Motivation for Private Brands

With 98% of national brand assortment the same across retailers, private brands are more critical than ever to retailers’ success. Private brands have always been about giving customers more choices and improving retailers’ margins. From their origins, as cheap and cheerful alternatives they have evolved into aspirational brands in their own right and are now rapidly displacing national brands in consumers’ hearts. 

"Best-in-class retailers managed to launch an average of 516 new private-brand products, compared to the industry average of just 161."

According to Daymon, a private brand's solution provider, a differentiated, curated assortment of products as well as consistency in price and messaging are critical to not only give a competitive advantage but also building brand and banner trust. However, not all retailers are equal. For example, Daymon notes that best-in-class retailers managed to launch an average of 516 new private brand products in 2018, compared to the industry average of just 161. And it’s clear from walking the aisles that the leaders are using this advantage to roll out new and fresh products that are capturing the interest, and wallets, of their shoppers. 

This performance gap can be explained by a fundamental difference in how retailers source their private brand products. While the leaders choose to work directly with their manufacturing partners, others with more limited resources outsource much of the work to buying cooperatives and group purchasing organizations (GPOs), leaving them less well-positioned to respond quickly to the opportunity to grow their private brand portfolio.

Meeting Customers’ Expectations for Visibility

As consumers, we want to know what’s in our food. According to a recent report from FMI, almost all consumers (93%) say it’s important for brands to

"93% say it’s important for brands to provide detailed information about what’s in food and how it’s made."

provide detailed information about what’s in food and how it’s made. In addition, the vast majority of shoppers in 2018 (74%) say they would switch from the brand they usually buy to another brand that provides more in-depth product information, beyond what is on the physical label. More specifically, consumers say they want a complete list of easy-to-read, plain English ingredients, followed by in-depth nutritional information. And roughly a third also want details on how products are produced and information on how ingredients are sourced.

Grocers working directly with private brand manufacturers thus have an advantage when it comes to visibility: they can specify exactly what information they need and directly verify its accuracy. Ingredients can be checked, allergens and nutrients verified and marketing claims substantiated. Additional information can also be provided via in-store displays, smartphones and company websites.

Ensuring Food Safety growing plant - Ensuring food safety with Oracle Retail Brand Compliance

Although serious food contaminations are thankfully rare, they do still happen. For example, in just the last 18 months we’ve had two major outbreaks of E. coli that were tied to consumption of romaine lettuce. Not only does this make a mark on industry perceptions, but it also impacts customer trust, brand loyalty and the bottom line of companies involved.

Retailers can protect their private brands in two ways, both of which are facilitated by a direct connection to their manufacturers: through proactive involvement in product development and ensuring a faster reaction in the event of an issue. 

During the development of new products, private brand leaders can, for example, align marketing claims with ingredients (gluten-free, nut-free, etc.) and ensure labeling accuracy (the cause of 50% of product withdrawals), especially in relation to allergen declarations. They can also ensure that manufacturing locations hold the appropriate health and safety certificates, that storage locations are maintained at the correct temperature and that transportation will be speedy.

Grocers are at the sharp end of the food chain through their daily interactions with consumers. This is important to note since consumers expect 

"66% expect immediate notification of a product recall." 

communication on recalls immediately. In a recent Oracle study of global consumers, 66% noted that they expect immediate notification of a product recall and 28% stated they expect notification within a week. Furthermore, 88% said if a retailer immediately informed them of an issue, they would be more likely to trust them. 

Having immediate access to complete product information gives private brand leaders an advantage. Once a contaminated ingredient is identified, affected products can be quickly found and shelf withdrawals can begin immediately with the help of Oracle Retail Brand Compliance. Compare this with the response time in days or weeks if third parties and manual searches are involved.

Many Retailers are Stuck in the Middle

When taking a look at the “maturity model” of the private brand industry, leaders manage and drive their own programs, work directly with manufacturers and have a relatively high private brand penetration. This gives them better product visibility, transparency into their supply base and improved margin enhancement. Challengers, meanwhile, are stuck in the middle. Their reliance on intermediaries denies them a close connection with the manufacturers of their private brand products, limiting visibility, transparency and margin enhancement. 

Explore Regional Private Label State of the Industry Reports

For a better understanding of how to get unstuck, take a look at these regional reports which examine the state of the private label grocery industry in the APAC, EMEA and NA regions. The reports include private label share volume percentages by country and the changing legislative, regulatory and consumer expectations. They also provide insight on what leading private label brands are doing to successfully navigate the modern retail supply chain and growth of their private label share of shelf. Download the reports below to move out of the middle. 

Access the NA Report

Access the APAC Report

Access the EMEA Report

     

 

 

 

 

 

 

 

 

 

Be the first to comment

Comments ( 0 )
Please enter your name.Please provide a valid email address.Please enter a comment.CAPTCHA challenge response provided was incorrect. Please try again.