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PLMA President Addresses Need for Innovation

Posted: March 12, 2008

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This success is reflected in a growing population of loyal store brand shoppers. A nationwide consumer survey conducted for PLMA reveals that a large percentage of shoppers, 41%, now identify themselves as frequent buyers of store brand products. This represents an increase from five years ago when 36% described themselves that way and an ever bigger change from 15 years ago when only 12% said they were frequent shoppers. “But to realize the full potential of store brands, manufacturers and retailers must become more innovative and creative,” Sharoff said. “Some private label programs are already adopting this new approach. You can see it in Safeway’s O organics and Eating Well health-oriented ranges, as well as Kroger Co.’s licensing agreement with Disney for children’s products and the steady stream of creative new food products offered by Trader Joe’s.”

There is likely to be a big financial payoff for those who take this approach. A recent study by McKinsey & Co. identifies a group of best-in-class retail private label innovators and says if other chains follow their examples there could be a massive $55 billion shift in annual sales to private label and away from national brands. Such a shift has already occurred in Europe. Retailer brands there have made dramatic market share gains in recent years, climbing to 40% and above in Great Britain, Germany, Belgium, and Switzerland and to more than 30% in France and Spain. “In all these countries, retailers are investing heavily in new product development and marketing their store brands,” Sharoff explained.