Strength Within Numbers
By Elena Sullivan

During these difficult economic times, retailers in Europe are employing different methods in order to raise sales and build their private label platforms. The techniques appear to be successful but only time will tell if they last.

In terms of private label programs, retailers are focusing more on the needs of the value shopper. Thus, many retailers are making use of promotions and new discount lines to grow sales and introduce their private labels to shoppers who may not have looked at private labels before the recession, but now need to cut back on spending and are giving PLs a try. For example, Carrefour and Tesco have both increased their discount lines.

Despite the rise of new discount and first-tier products appearing on shelves, organic, eco-friendly, premium and exclusive private labels remain popular. As witness, Casino recently introduced an organic range called Casino Bio.

Cooperating Together

Different strategies to increase revenue and financial stability include the alliances of retailers to create buying groups; for example, Coopernic, which includes COOP (Switzerland), E.Leclerc (France), REWE Group (Germany), and Conad (Italy).

The buying group Cooperation Européenne de Référencement et de Négoce des Indépendants Commercants (Coopernic) seems to have had a big impact on private labels in Europe, as these five retailers are major players in the private label industry. The main objective of the alliance is to allow independent retailers to exchange know-how, reduce supply chain costs, expand their offerings and improve their performance, as well as to pass on to the consumer the benefits of better purchasing terms and conditions and easier access to products. Collectively, the retailers operate 17,498 stores across Europe, and a turnover of about 100 billion euros, which represents 10% of the sales in Europe – definitely not chump change.

Initially, the creation of Coopernic was greeted with some apprehension by grocery manufacturers as this consolidation enables the group to obtain some benefits to which individual retailers or manufacturers, do not have access. For example, a buying group may acquire goods or services at a better rate that might not be achieved through individual negotiation. Buying groups may also obtain other trading benefits such as special rebates or promotional support.

Along with being a part of the Coopernic group, Conad also operates as a cooperative with Italian alliances, making it a multi-faceted powerhouse. Conad is part of the Consorzio Nazionale Dettaglianti, or National Retail Consortium, which includes eight cooperatives. Conad has also formed strong alliances with Italian partners. For example, it developed a partnership with REWE Italia group and E. Leclerc. With this being said, Conad has created a strong support system, which enabled it to grow to become a major player nationally and internationally. (For more information on Conad see Cover story, Conad Close-Up on page 22.)

Given the weakened state of the economy, how will these cooperations and buying groups affect the smaller players who may not have the same power and resources? Will we see in the future an abundance of retailer consortiums and cooperations and the loss of smaller independent retailers? At the moment, these survival techniques seem to be working to the advantage of private labels, retailers and customers alike, so let’s ride out the storm and then worry about the retailers who fall behind.