The private label scenario How is the role of Retailer Brands, Industrial Brands and SMEs evolving in FMCG supply chains and in retailer chain supply?

How is the role of Retailer Brands, Industrial Brands and SMEs evolving in FMCG supply chains and in retailer chain offer?

The new architecture of the product offer generated by emerging consumption and the role of Retailer Brand products opens new models of collaboration between Brand Manufacturers and Retailers. On the one hand, the Category, field for synergistic marketing actions, on the other, the production of MDD products by the Brand Manufacturers, with the sharing of product innovation over time.

Retailer Brands are growing globally and in European countries beyond any expectation, with market shares exceeding 50% in several countries. The success of Retailer Brands with different positioning and the growth of discounters, with Retailer Brand sales of 60% - 90% in the channel, is a quantitative measure of a phenomenon that is destined to endure. The qualitative measure, on the other hand, is the establishment of buyers' and consumers' perceptions of Retailer Brands’s reliability, credibility, sustainability and innovative attitude, which live up to, or actually overcome, National Brands.

On the other hand, faced with the obvious, sometimes explicit, the strategy of retailer chain focusing on the intense and rapid development of Retailer Brand and the growth of discounters (today accounting for a share of 21.7% according to Nielsen and, in a couple of years equal to a share of 24%, according to the forecasts of IPLC Italy) the strategy of National Brands and/or SME production companies appears sometimes unclear and inconsistent.

National brand companies are more extended and varied than companies in retailer chains, but it seems hardly possible to imagine that they are not strengthening or designing strategies for dealing with the phenomena. This is certainly an interesting matter to all FMCG enterprises.

Fonte: NielsenIQ RMS MAT Q2 2022

NATIONAL BRAND COMPANIES, SMES AND THE DEVELOPMENT OF RETAILER BRAND PRODUCTS

As for retailer brands, several ‘native’ brand enterprises have established with major retailers , among others, the production of retailer brands products. In several cases, the ground for collaboration is the category, the most important strategic business unit in the organizational models of retailer chains, along with channels and points of sale, to generate the expected commercial and managerial performance. Thanks to the Category, advantages sinergy can be identified, through data

sharing and retail-mix choices, in order to plan positive actions and outcomes for the benefit of National Brands and retailers. That of retailer brand production by branded companies is a dying taboo: fewer and fewer National Brand companies feel the need to use different owned or controlled factories to disguise their involvement in production.

In these days, a branded company has just started production on behalf of a discount chain, using its brand name on the backpack of the discounter chain's retailer brand products. For SMEs, on the other hand, the dilemma is how to produce retailer brands and, at the same time, retain the retailer, so as not to be replaced by a competitor and not to jeopardize their margins. Several SMEs, however, without a partnership with large retailers through retailer brand production, would have never reached the same distribution value and volume they have achieved. For example, for hundreds of SMEs, which developed Regional, PDO, PGI, PL lines, often exported, retailer brands have been an extraordinary, if not unique, opportunity.

THE DISCOUNTERS: A STRATEGIC CHANNEL

The current growth rates of discounters, a channel present in Italy for several decades now, are accelerating and, according to Nielsen, are currently similar in percentage, to those of the e-commerce channel.

If the discounters, several years ago, were a taboo for National Brand companies, today wellknown of them are on the rise, coupled with targeted in-store communication and discount flyers. For National Brands it’s hardly imaginable that consumers have no access to the National Brand products in almost ¼ of the retailer chain market. On the other hand, some discounters have decided to include branded products to make their stores look more attractive, improve their reputation, reward their customers, and make them perceive the great value for money of Retailer Brands over the National Brand product, by comparing them in the same store.

This promotional campaign by Lidl compares the basket price of its Retailer Brand products with the price of other branded products in the pos

Including National Brand products on the flyer leads to a larger number of visitors in stores, category rotations, and promotes retailer brands. In fact, retailer chains aim to assess sales and margins of stores, departments, categories and their products, including retailer brands. A flash-survey aimed at professionals in FMCG has been reported below. Consisting of one question with 4 different closed-ended responses and only one option allowed (the one considered most likely by the respondent), the survey gives an interesting insight into the current moment. See the questions below and, if you want, try to provide your answer as you read the questions, then compare it with the results below.

In light of the extraordinary growth of discounters in Italy, what will the National Brand do?

❶It will gain a stronger shelf presence in discounts.  It will establish all-round collaborations with non-discount brands, up to the production of retailer brands, making sure they keep their National Brands sales shares under these retailers.  It will heavily invest in R&D, new products, and communication, (re)winning over consumers.  It will compensate for the sales decline in the Italian market with more profitable positionings abroad, with larger, more reliable, and less expensive retailers to manage

50%

of respondents chose the second answer, valuing the possibility of a more intense and privileged partnership between ‘Brand manufacturers and Brand retailers.’

18%

chose answer three: the domestic market is increasingly mature and competitive, and opportunities abroad offer less costly sales growth and greater product profitability.

21%

chose the first answer: discount retailers are becoming such an important channel that National Brands can no longer ignore them.

Finally, 11% of the respondents chose the third answer, probably confident in the National Brands’ ability to maintain their leading role in product innovation and attraction over retailer brand products.

Obviously, we’re still in the game and the future may hold new challenges. To conclude, some highlights on the current scenario as a further: ➜ National Brand products are gaining an ever-stronger shelf and flyer presence in some discounters, improving the attractiveness and reputation of the discounter to its shoppers and consumers.

➜ SME products (featured in assortments, including exclusively or as Retailer Brands) are a means to show support to the local area and communities, especially by non-Italian retailers. ➜ Two major retailers in Italy have announced Retailer Brand sales share targets to be around 40% and 50% in the medium term.

➜ Affordability for consumers is increasingly being communicated in terms of smart spending, value for money, etc., as much for premium and gourmet products as for basic, essential, fixed-price products. ➜ Discounters offer value-added and affordable brands and products for health, sustainable, for your daily wellbeing, with organic, PDO, PGI certifications or approved by authoritative bodies or associations, as in the case of several Retailer Brand in retail.

➜ Some retailers who innovate the omnichannel digitally, with different loyalty programs, for customized communications, with promotions and exclusive initiatives targeted at individual customers, enriching their supply with catering proposals, services and value-added products ... ➜ ... some others chase discounters risking, with no ‘upstream conditions’ in their supply chains and consistent positioning, not being competitive and credible. ➜ Some national brands launch marketplaces by developing direct-to-consumer (D2C) relationship models that reduce the intermediation of distribution and retail and ... ➜ ... some retailers develop specialized marketplaces aimed at specific consumer and retailer targets and needs, introducing themselves as ‘category killers’ and challenging the marketplaces of large generalist online retailers.

Marca by BolognaFiere:

more than 900 exhibitors, 22 retailers in modern distribution and 6 pavilions

Over 900 exhibitors have confirmed their presence at the nineteenth edition of Marca by BolognaFiere scheduled on 18 and 19 January 2023. To complete the parterre of the only Italian fair dedicated to the private label, 22 of the most important retailers of Modern Distribution gathered in the Scientific Technical Committee: Ard Discount, Brico Io, Bricofer, C3, Carrefour, Conad, Coop, Coralis, Cortilia, Crai, Decò, Despar, D.it-Distribuzione Italiana, Italy Discount, Lekkerland, Marr, Risparmio Casa, S&C, Selex, Unes, VéGé and, last recent entry, MD.

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The business community of the sector will have the opportunity to visit the six pavilions involved by Marca by BolognaFiere for the approximately 23,000 square meters of net exhibition area, confirming the growth that the private label is recording in Italy as in Europe.

The two thematic salons Marca Fresh and Marca Tech are confirmed. The first one, which will occupy an even larger area this year (850 square meters), is the successful format reserved for fresh and very fresh fruit and vegetables. Marca Fresh, which is registering a positive response among operators, will be an experiential container for all players in the supply chain, a place to share content, experiences, enhance best practices and new market trends. Technological acceleration and innovation in the area of sustainability are needed now more than ever. With this in mind, Marca by BolognaFiere will host the ninth edition of Marca Tech dedicated to intermediate goods for the MDD supply chain. Marca Tech will offer the business community the latest trends to innovate and operate sustainably and effectively.

At Marca by BolognaFiere, the outcome of the International selection of novelty products organized in

collaboration with IPLC-The Retailer Brand Special-

ists will be presented; it is aimed at finding the best products in the main categories of FMCG, ready to break through to international markets. Also on display at Marca by BolognaFiere are the brands’ novelty products, those released on the market in 2022 or being launched in 2023.

To stay up-to-date on the contents of the event:

marca.bolognafiere.it

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