OPINION: OPINION: Why brands and own-label must rebuild a relationship

Retailers must understand fully the potential long-term harm of overplaying the own-label card, Edwin Beckett says. Brands can foster good consumer relations

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

substantially.



Brand manufacturers cannot complain about competition when Sainsbury’s

stops short of de-listing, using lookalikes or abusing competitor

information.



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

brand values.



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

ploys.



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

industry.



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

ingredient.