P&G
is no longer competing with Unilever; instead both of
them are competing against Wal-Mart, Target, Marks &
Spencer and many other retailers. True enough, manufacturers
are no more each other's enemies; rather the retailers
are their common enemy. With Store Brands, aka, retailer
brands, which outsell most manufacturer brands in their
product categories, retailers are making life difficult
for the already demand-sapped manufacturers.
And,
the picture gets bleaker for manufacturers. In 1993,
it was estimated that in the US, store brands make up
about 14% of supermarket sales and one in every five
units sold. In 2001, AC Nielsen found that the US private
label market share in units was around 20%, and was
on par with that in France and the Netherlands, and
surpassed the penetration of store brands in Spain and
Italy. In UK, the market share stood at 45%, while in
Belgium and Germany it was 35 and 33% respectively.
In a recent study, again by AC Nielsen, it was found
that the unit sales of store-brand goods rose 8.6% during
the previous two years, as against a measly 1.5% for
national brands. Almost 20% of all items sold in the
US are store brands and behold, that average figure
is 40% in Europe.
It
is not that store brands are new; they have been in
existence right from the early 1960s, albeit in a different
form. Over the years, the retail brand wave that started
as a low-cost high-margin `me-too' business, has evolved
into a full-fledged matching-quality product alternative.
In the 1960s, 1970s and the early years of 1980s, the
retailer brand product ranges were largely `me-too'
versions of leading products of manufacturers. But gradually
after that, when price no longer served as a prime competing
factor and as channel conflicts gave way to a collaborative
relationship between the buyer and supplier, retail
brands transitioned into innovative products that were
same or better in quality and look vis-à-vis
the manufacturers' product. As Professors Steve Burt
and Shiona Davis say in their paper, `Follow my leader?
Look-alike retailer brands in non-manufacturer dominated
product markets in the UK', published in The International
Review of Retail, Distribution and Consumer Research
(April 1999), "The retailer brand clearly evolved
from its position as a product alternative (perceived
as a different quality/price option) for consumers,
to that of a brand alternative (perceived as equal to/better
than manufacturer brands)." |
