Retailers must understand fully the potential long-term harm of
overplaying the own-label card, Edwin Beckett says. Brands can foster
good consumer relations
Last month’s disappointing results from Sainsbury’s are an indication
that there are limits to the power of the retail brand, even when
reinforced by sub-brands such as Novon and Classic Cola.
There’s nothing illegitimate about competition from own-label products.
They have their own brand values and their quality has improved
Brand manufacturers cannot complain about competition when Sainsbury’s
stops short of de-listing, using lookalikes or abusing competitor
But it’s important that brand manufacturers, and their advertising and
marketing agencies, don’t let the case for brands go by default.
Moreover, retailers, if they are to sustain their own brand values, need
to reflect on the perils of vertical integration.
But when does a desire to promote an own-label product compromise the
sense of fair play to suppliers, and service and choice to consumers?
Retailers have become skilled brand builders and have much bigger
generic ad budgets than branded products - and the improved quality of
much of that advertising should be recognised.
But by being seen to drive consumers towards their own products at the
expense of familiar brands, retailers may risk undermining consumer
trust as they blur the role of retailer and producer.
It’s arguable that the recession not only contributed to consumers being
more price driven but also led some manufacturers to neglect their
investment in the marketing and product development needed to sustain
Moreover, brand owners have neglected the veritable seedcorn of our
businesses - the case for brands. While the British Brands Group has
been busy promoting individual products, the importance for the consumer
and for the economy of branding has been allowed to go by default.
Smart opinion began to have it that ‘brands’ were no different from most
own-label products except for investment in advertising and marketing
Brands are about guaranteeing consistency and quality; they are about a
continuing relationship with the consumer. That relationship is
shattered if a brand manufacturer fails to live up to the promises and
values of its advertising or falls short of consumer expectations.
The continuing relationship between the consumer and individual brands
is what makes possible the constant investment and innovation that
ultimately broaden choice and increase the value we can deliver. They
enrich and make more certain what the consumer can buy.
We try to ensure policymakers grasp the importance of inward investment,
capital spending and jobs that depend on the brand manufacturing
Recently, the relationship between some retailers and branded goods
manufacturers has come under stress. The de-listing of secondary brands
took its toll and sharing promotional plans with your biggest customers
at the very time they are developing into your most potent competitors
is a drain on goodwill.
However, the issue should become less raw through the new code on
lookalikes, overseen by the Institute of Grocery Distribution. The
negotiations brought both sides together in an attempt to recognise and
control the localised phenomenon. We are monitoring the effectiveness of
the code and will seek to extend its approach to new sectors.
We hope that a combination of the IGD code and customer reaction will
presage a renewal of retailer-brand manufacturer relations. However
reluctant a conclusion it may be for some retailers, the fact is that we
need each other. Own-label products aren’t always everybody’s favourite