Retailers Must Be Aware Of Product Safety Risks

September 26, 2012
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In the past week, Trader Joe’s has been in the news for recalling its Creamy Salted Valencia Peanut Butter for potential contamination with Salmonella. The outbreak reportedly had affected 29 people in 18 states.

The recall was actually made by Sunland, the manufacturer which provided the 76 types of peanut butters that have been added to the recall. That has affected a host of retailers’ private brands – Target’s Archer Farms; Safeway’s Open Nature; Sunflower’s Serious Food, Silly Prices; Whole Foods Market’s Earth Balance; as well as retailers Fresh & Easy, Harry & David, Sprouts, and Heinen’s, all of whom marketed the products under the store’s name.

Although the recall originates with the supplier, because the products were done under private label, it is the retailers’ names that are making the headlines. And the major focus has been on Trader Joe’s, one of the leading private label retailers in the country (see the October issue of PLBuyer listing of the top 35 retailers in private label to see just how high on the list Trader Joe’s is).

As retailers have moved further into private label, with some such as Kroger and Safeway expanding their own manufacturing capacity to control both ends of the supply chain for their own brands, they have taken on the responsibility of handling product safety and recalls. In an interview with Trace One CEO Jerome Malavoy for our November PLB Pissue, Malavoy talked about the new responsibilities that retailers have today in their private label programs.

“It’s good to do business, but it’s very important to do it without too big of risks,” Malavoy said. “It’s very useful to be in a position to manage all the things which are linked to product safety and regulation constraints, which is now a very fast-moving environment.

“Product safety is a very key issue because customers are all connected, and if you have a small group of people unsatisfied, it spreads very quickly through social networks and such. And if there is a food crisis, it is impossible to take the risk of that type of thing because what is your brand then? Trust is the banner, and therefore the loyalty to the stores.”

Trust is the banner. For stores who are pushing into two and three tier private label platforms, who are moving into production as well as distribution, there are potential downsides that must be considered. Because at the end of the day, when your own brand of food is taken off the shelves for product safety concerns, shoppers are not going to look at the CPG machine, or the mid-level supplier, to decide whether or not to buy the product again. They will look at your stores. Your brand. Your identity. And then they will decide whether your store has done enough to earn their trust in that brand, and all the others under your banner.

Beware the risks ladies and gentlemen. And work on the issue of trust with your customers, because that is the key to keeping your consumers coming back when something has gone wrong.

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