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 PLMA Show Report - January/February 2008  |
Boom in Sales Forecast for Decade
$55 billion in annual sales could shift to store brands–away from national brands –within a decade, based on research presented by McKinsey & Co. at the 2007 PLMA Trade Show, held November 11-13, in Chicago. “It has been a good year for store brands: Market share went up; retailers introduced hundreds of new products; and consumers expressed greater confidence than ever before in the quality and performance of private label,” said Brian Sharoff, president of PLMA, in his welcoming remarks. “If the past is any barometer of the future, the trends will continue. Indeed, McKinsey & Co. forecast a potential shift of more than $55 billion in sales from national brands to store brands over the next decade if leading retailers accelerate their private label programs. According to Sharoff: “The reason for much of the growth can be seen on the trade show floor, with exhibitors displaying innovations in fresh, frozen, and refrigerated foods. These private label products have captured the imagination of consumers and helped retailers to define and differentiate themselves. “In health and beauty and household categories, the drive for innovation is no less significant, especially as drug chains an mass merchandisers assume new roles as nationwide marketers.” Chairman’s Comments “As private label manufacturers, I don’t need to tell you that the name of the game is no longer just about supporting our current business for the products that we make. It’s about managing our core competency as private label suppliers, leveraging our full knowledge and expertise to create new products, and opening new avenues for our customers to build the marketing value of their store brands,” said Bill Bond, PLMA chairman, in his welcoming remarks. Bond is vice president, Willert Home Products.
PLMA Highlights McKinsey & Co. Study–McKinsey executives Kari Alldredge, principal, and Matt Spanjers, associate principal, discussed the key finding of the company’s research study, “New World of Brands: The Next Wave of Private Label,” at the trade show’s annual Retail Trends Breakfast. If private label market share reaches 24% of sales within a decade, this could result in a $55 billion in annual sales going from national brands to private label. This projection is based on the premise that other major retail chains will adopt the marketing and merchandising strategies of the leading store brand retailers that now have achieved a private label market share of 22% of sales, versus the national average of 16%. According to the research the bulk of retailers are lagging behind, with a dollar market share of less than 16%. If these lagging chains begin to emulate the private label share leaders and pump up their store brands to drive growth and build consumer loyalty, it could put $55 billion in annual sales up for grabs. The report notes that the store brand share leaders have posted higher levels of overall sales growth versus non-leaders–5.3% versus 3.4% over the least three years. The McKinsey report points to the experience of store brands in Europe as a precursor of what can occur in the Unites States in the decade ahead. “In the 1990s, as many European retailers began to understand the impact that private label could have on their business, private label share more than doubled in several major markets.” The report singles out Tesco, the UK retailer, which increased its private label share by three percentage points annually from 21% to 34% over four years. Center Store Renewal–A new report, “Center Store Renewal,” was presented by Jim Wisner, president of Wisner Marketing Group, during the Sunday Seminar sessions. The 56-page report defines how to achieve the next generation of private label performance to drive new growth. The Tesco Challenge–Rodney Wood, consultant and former Tesco executive, provided insights into what makes the third biggest global retailer so successful at home and abroad. Today, Tesco is the market leader in 9 countries and active in 13, with 60% of its selling space outside of its UK home market. According to Wood, Tesco is all about “creating value for customers to earn their lifetime loyalty.” (For more insights into what makes Tesco tick -see this issue cover story.) Exclusive Licensing–Stephen Reily, CEO of IMC Licensing, discussed “New Opportunities with Celebrity Licensing: Licensing Trend Report 2007.” According to Reily, licensing is attractive to retailers for the following reasons:
Keynote Speaker–John Stossel, co-anchor of the ABC News program 20/20 was the keynote speaker at this year’s opening session. He provided a thought-provoking look at subjects ranging from government regulations, pop culture, censorship, and unfounded fear. PLMA Awards PLMA’s 2007 Salute to Excellence Awards recognize exceptional store brand programs in terms of product quality, presentation, marketing and merchandising, thereby bringing excitement to their private label offerings and driving new growth for the industry as a whole. The winners announced at this year’s show include the following: Kroger Co., Cincinnati, OH, for the Supermarket category; Idea Supermarket This year’s Idea Supermarket served as a resource center to show examples of the latest new product innovations from retailers around the world. On display were the new Fresh & Easy store brand products being marketed in the new Tesco USA convenience stores on the West Coast. Also on display were premium food lines from Costco, USA, under its Kirkland Signature brand; Compliments Sensations line from Sobeys of Canada; M&S Organics from Marks & Spencer, and The Best line from Morrisons, both of the UK; Mmm! Gourmet line from Auchan, and Ondilege foods from Casino, both of France; and BeLight healthy food from Aldi of Germany. Nonfood store brands on display included George housewares from Asda of the UK, 7 Classic Selections school/office supplies from 7-Eleven, USA; Balea beauty care from dm-Drogerie Markt of Germany, and Kruidvat infant and children’s products from Kruidvat stores in both Belgium and The Netherlands. The resource center also included PLMA’s New Product Expo, which showcased approximately 150 innovations in product concepts, ingredients and packaging in food and beverage, health and beauty care, and household products. Show Overview This year’s show featured nearly 1900 exhibit booths representing manufacturers from 35 countries. Product categories on display included fresh, frozen, and refrigerated foods, snacks, and shelf-stable groceries. Nonfood categories included health and beauty, household and kitchen, paper and plastic, general merchandise, DIY, consumer electronics, and home/office supplies. The show attracted more than 4,000 visitors and 2,000 buyers representing the major U.S. supermarket, drug chain, mass merchandiser companies plus convenience stores, department stores and specialty stores. |
