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Analyst Says Private Label Future May Be Online

November 13, 2012
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Planet Retail Senior Vice President Marc Hubbard told the PLMA Live breakfast Tuesday that ecommerce sales of the world’s top three retailers are expected to boom in the next five years, and that Amazon could become the world’s third-largest retailer over that span.

Speaking before an audience at the Hyatt Regency O’Hare in Rosemont, Ill., before the start of the second day of the PLMA Trade Show, Hubbard said that sales of Carrefour, Walmart and Tesco were expected to grow between flat and 23 percent over the next five years. But online sales at Carrefour are expected to rise more than 215 percent, with online sales at Walmart (103 percent) and Tesco (107 percent) soaring as well.

Amazon sales are expected to rise 200 percent, which would make the online retailer the third-largest in the world.

As sales move online, particularly sales of larger bulk items that are delivered directly to homes, Hubbard said a few challenges would be presented to suppliers.

“There’s an impulse challenge. If you’re buying those products online and having them delivered, how much of that typical in-store merchandising is going to happen?” he asked. “How are you, the product manufacturer, the retailer, enticing someone to buy that product? How are you merchandising those impulse sales like candy and snacks, that could be as much as 1 percent of your sales? What can you do as a supplier to help highlight your products and increase basket size?”

Hubbard said that smaller format stores in urban areas, serving new and different customers along the way, could impact suppliers by forcing them to come up with smaller packaging and products for single consumers.

“Pack architecture is really important as retailers change their footprints,” he said.

But as omnichannels emerge – channel blurring that sees retailers such as Walmart or Walgreens selling into channels such as drug, convenience, grocery and more – Hubbard said the world is open for private label manufacturers.

“It means the opportunity to sell more products than you ever thought possible to more people than you ever imagined,” he said, citing refrigerated and frozen coolers in Family Dollar stores. “If you’re in that refrigerated or frozen area, who would’ve thought five or 10 years ago that you’d sell into that dollar area?”

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