Many major grocery retailer buyers have been mandated to grow their private label share north of 25% of total category sales. In order to do this, there has been an onslaught of new private label SKU’s. Unfortunately, many are just mediocre imitations of national branded products and struggle to survive. How do you get out of this rut and get manufacturers to share some of their innovation on the private label side of the business? The key is to become a trusted business partner with small to medium size, innovation driven manufacturers.
Many of these companies have very innovative products and ideas but struggle to get broad retail distribution on their new branded products. If you offer to help them build their branded business in return for more innovative private label products, you are likely to get a strong reception. Manufacturers invest millions of dollars in research and product development before bringing a new-to-the-world products to market. They don’t want to give away product or packaging innovation without something significant in return. Most large, national food companies already have 90 to 100% national ACV distribution.
On the contrary, many small and medium sized food companies have less than 20% national ACV distribution. A major retailer can use the branded distribution carrot to incent smaller food manufacturers to bring product innovation to the Private Label segment.
“How to Spot Blue Chip New Products?” series…
- Part 1 – What do best in class manufacturers do to develop winning new products?
- Part 2 – What should I be looking for in a new product?
- Part 3 – What should I delist to make room for new products?
- Part 4 – How can I get manufacturers to bring innovation to my Private Label business?