Got the following email from an MNB reader:
I spent over 35 years of my career selling retailer brand and manufacturer’s brand products simultaneously to almost every retailer in North American with products across the store. There are no absolutes in the business, some retailers/wholesalers demand national brand quality in their private brand products and test them regularly to ensure that is the case, while others might be willing to compromise for the right costs on some items. There are brands that cannot be duplicated due to innovation, unique processing equipment or unique spice blends in the taste but if they are popular brands, you can be assured that a private brand manufacturer is trying very hard to duplicate it due to retailer demand. Retailers now have the scale to support retailer brand product innovation and to give manufacturers the volume needed to buy the same equipment that national brand manufacturers have.
A little known fact is that national brand quality can be a moving target and in many instances, products with the same ingredients, run on the same equipment can come out with slight variations in color taste and texture that are within an acceptable range. It can also be difficult to make the exact products in different production plants, even with the same formula and ingredients due to local water and equipment set ups. National brands constantly look to “value engineer” products and your favorite item can be very different when comparing samples over a long period of production runs as incremental changes in ingredients to save costs can create surprising differences.
A consistent finding is that there are two distinct consumers with some buying mostly national brand products and others buying mostly private brand products in their shopping cart. There is not much switching once a consumer has determined which product meets their needs for a given category. When I have supplied the leading brand as well as the retailer brand in categories at the same time, the sales data backs this up across several different categories over long periods of time. If low cost was the only factor, retailer brands would have more than the current low 20% market share, because surveys show that over 70% of shoppers buy retailer brand products, and if perceived higher quality was the only factor, then national brands would have more than their current share. It is no different than someone who is a Cadillac buyer probably does not start off looking in the Chevrolet dealer and the Chevy Malibu shopper doesn’t go to the Cadillac show room. But a Cadillac buyer might go to the Chevy dealer for a pickup truck even though Cadillac may offer trucks. The value proposition for each is derived from different factors and the factors are hard to change.
We have such a large, diverse population that no one product or type of product satisfies everyone. The successful retailer understands the make up of the population that shops their store and is able to merchandise a mix of retailer brands and manufacturer brands to meet the value needs of many different people at the same time.
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