Guest Commentary

March 12, 2010
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Store Brands: Agents of Change

In many businesses, the rudiments of physics seem to apply. It could be said that developed markets, like resting objects, tend to resist change. Usually these markets are oligopolistic and have a few established shareholders. They generally are the survivors of competitive battles that have reduced the number of participants to those last left standing.

The shareholders of these markets almost always have vested interests that cause them to want to maintain the status quo. These interests include such things as investments in plants and equipment and technologies, as well as the simple fact that they have their share of the pie and are making money on it. A legitimate question among their senior management would be, “Why rock the boat?”

The result of this mindset is the development of very few true innovations or products that radically redefine a marketplace’s landscape. These shareholders are, in general, disinterested in change. Usually the reshaping of the market, at least in the near term, is in very small increments - unless prompted by some catastrophic event.

The usual catalyst and agent of change for a market is an interloper. And interlopers come in many forms. They can be technological, for example. A drive-in theater might have seemed like a great business investment in 1965, but in 1980 it looked pretty dismal. A video rental store might have seemed like a wonderful investment until online video rentals came onto the horizon.

Or the interloper can be societal. For instance, it once seemed the need for quick, easy foods that consumers could prepare with minimal effort at home (and that supplemented our “eating out” lifestyles) was an unrestrainable market force. Alas, the interloper that had supplanted the standard fare at the family dinner table 30 years ago now is being overtaken by yet another interloper brought on by troubled economic times - a retro-interloper, if you will. People are rediscovering Julia Child and The Joy of Cooking once again, at home.

The interloper also can be customer- or client-driven. It can come in the form of customer initiatives. It can have names such as sustainability or an objective that calls for 30 percent of category sales in store brands, product allocation rationalization or some other yet undreamed-of thing. As the famous quip goes, “the only constant is change.”

The point is that we must not be caught unaware. As store brands move toward our 30th year as a major movement, I would exhort us in the industry not to fall prey to what some others have.

Store brands now are significant shareholders in almost every product category. Over the years, we have been the fresh face, the new idea and the purveyors of growth and improvement. We have been the agent of increased profitability. We have been the agent of change, helping to create and define differentiated store identity.

It certainly would be a shame if ever we lost our way and became satisfied with our share of the market, joining the shareholders overtaken by inertia. I am looking forward to a fresh new year for store brands.

 

Steve Fay is executive vice president and sales team leader for Roscoe, Ill.-based Berner Food & Beverage, www.bernerfoods.com.

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