The Retail TouchPoints Network

Sourcing The Perfect Suppliers For Private Brand Ranges

By Steven
Howell, Solutions for Retail Brands

The private brand grocery sector has come a long way since the ultra-plain-packaged
— and largely uninspiring — generic products aimed at budget-conscious shoppers
that filled grocery store shelves. Research shows that the sector as a whole
performed strongly in 2017, recovering from negative dollar growth of around
0.4% at the end of 2016 to +3.2% 12 months later.^[1]

But looking at the sector at the top level often hides what is
really happening with shoppers. Premium brands and innovative product ranges
are showing substantial growth — with premium store brand goods showing 10%
dollar growth specifically; yet discount products, in contrast, saw the
sharpest decline at -2.3%.

These figures will come as no surprise to industry insiders, who
have seen how far store brand products have come in recent years. U.S.
retailers today are adept at responding to customer demand for quality yet
good-value products, which could include certified organic, free-from, vegan,
sustainable or luxury ingredients, Kroger, for example, has made great strides
with its Simple Truth brand. Indeed, it is a retailer’s commitment to distinct
and appealing private brand ranges that immediately sets them apart from their
rivals to drive sales.

For private brands to flourish, the relationship between
supplier and retailer is critical to success. This isn’t only in terms of
delivering innovation and manufacturing good quality products, but also by
being open and transparent about the origins of the products offered. The
winning formulas come to fruition once suppliers are truly engaged with the
retailer. Once this becomes two-way, then a strategic partnership is formed — rather
than just a retailer-supplier arrangement.

But this doesn’t mean retailers should rest on their laurels
once they have found a trusted supplier. As consumer trends evolve, grocery
brands must collaborate with their partners. It demands a change of mindset
from both parties, one that moves away from the straightforward acquisition of
goods towards a joint commitment to product innovation.

Strategic supplier sourcing enables retailers to find partners
that are capable of delivering products to the standards expected, and set a
benchmark for future innovation. Not only must suppliers be able to fulfill
orders on time, I believe there are four further key traits to look for:

A strong understanding of what it means to be a supplier with
their own brand;
They know and buy into the retailer’s strategy, tactics and
goals;
Loyalty; and
Commitment to building a strong retailer/supplier relationship.

We all know that a supplier that consistently displays all these
characteristics can be hard to find, so when one comes along, retailers should
do everything possible to secure buy-in and help them reach their full
potential. Generally speaking, this means quickly identifying star players,
investing in their training and crucially, fostering engagement.

Time pressures are common among retail buying teams, which is
why technology is playing such a key role in supplier engagement. An online
portal, for instance, will allow suppliers to submit product or company
information, along with relevant certifications, although it should never be
seen as a shortcut to reduce workload.

As well as allowing suppliers to navigate self-service systems,
it is important to nurture them as they come up with award-winning, marketing
leading product(s). By encouraging suppliers to complete company profiles via
the portal, buyers can quickly identify their capabilities and put them in line
for opportunities as they arise.

Just as it is important to build their brand reputation with
consumers, so too should retailers demonstrate a strong value proposition to
suppliers. This includes everything from relevant content and training
academies to helping them get products into approval. An online portal helps
suppliers reach retail readiness, filling in any gaps in their knowledge and
operations and motivating them to get their products on the
shelves — rather than seeing a competitor win the contract. Even those whose
products fall short of the mark can gain valuable feedback and go on to make
improvements.

Why all this matters, of course, is because the grocery
landscape is constantly shifting as both established retailers, and new
entrants, battle for a greater market share.

If we look to the UK, where the private label sector is one of
the most successful and competitive in the world, supermarkets are now
well-versed at using their private brand ranges to create a
point-of-difference. Motivated suppliers, equipped with the right tools and
guidance, are key to delivering ‘destination products’ — which are, of course,
the building blocks of a destination store.

Steven Howell is Sales Solution Consultant,
North America at Solutions
for Retail Brands (SR4B). He brings more than
30 years of global experience in retail, CPG manufacturing, consulting and
technology to the private brands industry. Howell specializes in product
lifecycle management process design, supply chain management, organization
design, business process improvement, project management, and system design and
implementation. He has worked with organizations in North and South America on business
development, sales, organization structure, business process, technology
implementation and supply chain issues by understanding their business needs
and translating them into process designs, requirements and solutions, building
key business and organizational capabilities.