Private Label: Through a New Lens
By Don Armagnac*

As you continue to build out your store brand offering your role as "brand owner" will continue to evolve, as will the practices and tools you need to compete.

Until last winter, the Commonwealth of Massachusetts grappled annually with the challenge of de-icing miles of slippery state-maintained roads. Year after year, the same solution was offered: apply salt to melt the ice and sand to enhance traction. When the cumulative effect of repeated outcries from environmentalists, who lamented of the negative impact from salt and sand—from damaging soil, to killing vegetation, mammals and marine life—finally reached a crescendo, someone decided to look at the problem differently. And when that person did so, an alternative option was found.

Turns out there was a de-icer made from the residue of the distillation of alcoholic beverages...in short, a beer sludge spray. With the application of beer sludge as the new de-icer, Massachusetts’ roads are better maintained, cars no longer suffer from the corrosive salt residue, the fish, flora and fauna are happier and the environmentalists have gone off to fight other battles.

Packaging Solutions

This article, the first in a series, is about that beer sludge. Not literally, but figuratively. Through this column, I would like to engage in a dialog with Private Label readers in the hopes that together we can see beyond the current ways of looking at your packaging and branding challenges to find the metaphorical “beer sludge solutions.”

Store brand retailers today stand at a critical juncture, requiring that you redefine your role from merchant/distribution channel to “brand owner.” As your store brand business grows, so do your responsibilities. And your shift in focus needs to encompass your store brand offering and your store as a whole. Your store brand and your retail outlet are now synonymous. Both brands are one and the same. As such, you need to think more like your counterparts, the traditional CPG manufacturers.

Key Elements

Two key elements they have learned merit our consideration as we seek a new frame for the problem and new solutions:

1. Time-to-market: Time is of the essence and CPG manufacturers appreciate each second it takes to bring a product to market. They know that category-creating products - those that are first to market - are more likely to generate greater revenue during the lifetime of the product than those that arrive second to the shelf. Let us hang onto this perspective.

2. Automated processes enforced by technology: Paradoxically, quality is a quantitative discipline. After all, ‘good’, ‘bad’, ‘high’, ‘low’, along with other nondescript qualitative measures, are not very meaningful. A systematic approach to process, underpinned by analysis, metrics and proper decision making is critical to any quality endeavor including branding and packaging.

Store brand launches are complex, involving multiple moving parts and outsourced partners all over the world. As such, they must be managed with a rigorous end-to-end process to achieve both quality and time-to-market.

Though time-to-market has always been at the forefront of consideration, an emphasis on process came late in the game, but is now a focal interest. In fact, a November, 2005 study by the Association of National Advertisers, whose membership boasts most of the major CPGs, reveals that 90% of companies interviewed stated that ‘accountability’ was the #1 challenge they face in marketing.

To that end, I believe a change in view may be to our advantage.

I am suggesting that we take a step back, away from the time-to-market pressures and look at “best practices” and “key metrics” across a variety of industries to determine that which can best be adopted to meet the requirements of store brand retailers and their manufacturing partners.

As you continue to build out your store brand offering your role as “brand owner” will continue to evolve, as will the practices and tools you need to compete.

And it is going to take a concerted effort to come out ahead. Complacency is all too commonplace in business.

The history of American business reveals that ignoring these incremental changes over time can prove terminal. Remember the introduction of the Volkswagon onto the American automotive scene in the 1950s? On the day the first boatload of VW “Bugs” hit the dock, you would be hard pressed to find a single foreign car in any parking lot across the country. And the automotive executives in Detroit never noticed the Bug’s steady migration across the continental United States. But by the 60s the Bug’s production figures surpassed those of the previous record holder, the Ford Model T. American automobile manufacturers have never recovered. Store brand has all the promise of being the hottest vehicle in your business, do not let your competitor be the next Bug.

It is the daily tasks that prevent you from seeing what is coming. And anyway you are getting the job done, right? You have a Macintosh, so you have “digital asset management.” You have email and FedEx, so there is outer-office “collaboration.” But is it really enough?

While monitoring and managing the transformation of your own role and responsibilities is key, equally important is keeping a pulse on slight variations in the market. There are constant regulatory changes such as the new labeling rules from the Food and Drug Administration re: trans fat and allergens. There are radio frequency identification (RFID) tagging requirements looming that will provide supply chain benefits as well as big changes in packaging.

There is tremendous interest among consumers in design; they are embracing all kinds of new packaging that offers portability, convenience in portion size, or just looks good sitting in their homes. In fact, various research pundits have documented that more than 70% of purchase decisions are now made at the shelf and that transaction is dominated by the package and by design.

One new lens is to create a process in which you have total visibility to all your store brand projects. Just think, as a retailer, you no doubt have in place software to support your supply chain and perhaps SAP to foster finance, but what technology platform is in place to look after labeling and packaging...the king pin to your store brand offerings?

The bottom-line: you, as newly-named Brand Owner, need to apply the same intellectual and process rigor to your packaging and labeling that pervades every single aspect of the rest of your business. Then, and only then, can you toast (though probably not with beer sludge) to your own success.