Why did Thomas Dux really fail?

Why did Thomas Dux really fail?

Feb 10, 2016 | Branding, Marketing, retail

There is a whole lot of discussion around the progressive closure of Thomas Dux stores by owner Woolworths, and the assumption that it will be closed down if a trade sale does not evolve.

Maybe there is a plan to save it, but I cannot see it, and having bought some rubbish grapes at an inflated price in the Lane Cove store during the week,  I do not know what it might be.

Not a lot of the discussion actually addresses the strategic failure that is the foundation of the commercial failure, just its superficial symptoms.

Strategic failure seems to have found its way into Woolies DNA over the past 15 years or so. They became so financially dominant in supermarkets that they forgot that they still have consumers to keep loyal, suppliers to keep in business, and competitors very keen to eat their lunch. They have done OK in petrol, well in liquor, absolutely bombed in hardware, poorly in general merchandise , and missed office supplies, electrical and furnishings completely, and are fiddling around with odd things like pet health insurance. Not a lot of logic in that mix.

I have watched Dux closely since the launch,  had a number of clients products listed, and visited all the Sydney stores multiple times since the first Lane Cove store opened. Until a short while ago, I really thought they would defy the corporate odds, and make it work.

The apparent failure is a sad day for the specialty end of the Australian food manufacturing industry, what is left of it, one less way to reach consumers.

So, with the clarity of (almost) hindsight, where did they go wrong?

 

Confused business model.

Whilst Dux had separate management, they operated out of the Woolworths warehouse, using the WW back office systems and presumably KPI’s which are all focussed on mass merchandise, stock turn and margin. This makes sense to the accountants who seek efficiencies but in the end forces the big brother behaviour on the upstart sibling who needs to do things differently to survive and prosper.

They forgot their “Why“.

Perhaps they never had it beyond a kneejerk response to an upstart competitor. The slogan “Inspiring your passion for food” is at least a half way decent one, until you see packets of mass market products available in the Woolies and Coles stores next door at lower prices. As a consumer, going into Dux , the presence of such items is inconsistent and diminishes any claim to a differentiated and valuable consumer value proposition.

Value delivery.

Consumers are not stupid, there is a limit to the price they will pay for something with a fancy name, fuzzy claim and benefit, and not much else. Pushing the prices beyond that limit in order to boost the GM% is pretty silly, because you do not bank percentages, just dollars. It is a fine line, but by observation, they got it wrong as much as they got it right, which is not enough.

Discounters are not the competition.

Giving in to the accepted wisdom that discounters are winning and that Dux is competing for the same consumer dollar is nonsense.  Consumers are looking for an experience, for specialist products not available in mass retailers.  They started well with their “foodies”, in store chefs available to give advice and recommendations, but the enthusiasm for this potentially differentiating strategy seems to have waned over time. Behaving like a discounter in some Sku’s but like a high end, fancy pants deli in others just confuses consumers, and I suspect their own staff.

What you will not do.

Strategy is, amongst other things, about what you will not do, as much as it is about what you will do. Thomas Dux seems to have forgotten this lesson and succumbed to the temptation to stock SKU’s that did not add to the positioning of Dux as a retailer on whom you could rely on to deliver quality and differentiated specialist food products along with a level of service well beyond the usual expectation. This confuses and devalues the brand. Thomas Dux is like any other brand in a development phase, it requires absolute focus on what makes you different and better. So why can I buy Kelloggs Corn flakes and Blend 43 coffee there?

It takes time.

Dux has been around for a while now, perhaps 10 years? That should have been enough time to establish a defensible place in consumers minds when it is clear there is a segment looking for an alternative to the mass market supermarkets. I suspect that the financial pressure has increased markedly over the last few years as Woolies excursion into hardware drained group profitability. The net result was that the quarterly numbers mattered more than the long term, so savings were made by management, the sort of savings that delivered me the rubbish grapes the other day. If the grapes were not good enough to justify the price, they should not have been on the shelf. That sort of challenging culture requires time and continual effort to reinforce, and a reversion to a quarterly focus removes the management incentive to not sell grapes this week because they are not good enough, they need the margin today at the expense of tomorrow.

 

Meanwhile  Harris Farm, the original target of Dux appears to be powering along. Perhaps Woolies will rue the day they did not buy Harris Farm when they were still young and vulnerable. I understand they tried, but were given the finger by the venerable Mr Harris.  Perhaps they should have tried again, it would have been less costly to both their coffers and their reputation.

What do you think?

 

 

What is the difference between Mark-up and Margin?

What is the difference between Mark-up and Margin?

Jan 13, 2016 | Customers, retail, Sales

Words are wonderful things, they allow us to communicate meaning.

However, some words are easily interpreted in differing ways, making the shared  understanding challenging, and sometimes the differences are exploited in a selling situation.

One of the common “pea & thimbles” I see when small FMCG (CPG to my American friends) businesses are negotiating with chain retailers is the variable use of mark-up  and margin, particularly by retail buyers in a high pressure sales situation where the supplier is being put through the wringer.

Following is a quick explanation of the generally accepted meaning of the two terms.

Mark-up reflects the number, absolute or more generally percentage that an item sells above its cost.

If an item costs you $1.00, and you sell if for $1.50, the mark-up is 50%

Mark-up = profit/Cost

Margin is the profit made as a proportion of the sale price. Using the simple example above, profit is .50 cents, the selling price is 1.50, so the margin is 33%.

Margin = gross profit/revenue.

Imagine you are negotiating a promotional deal with a buyer, a discount for a period of time against an agreed  purchase  volume by the retailer.  The buyer uses the terms interchangeably, referring to his margin as only 33%, when his minimum allowable is 45%, conveniently forgetting that one is margin, the other mark-up. He uses that as a means to persuade you to dip deeper into your pocket to fund the promotion based on the significant orders you will be receiving, and might even do a ‘once-only, just between us’, deal where he accepts 40%.

markup Vs margin tableHe has not done you a favour, but he has enhanced his margins, which is generally the retails KPI, considerably.

 

 

Small business beating the barriers of FMCG category management

Small business beating the barriers of FMCG category management

Dec 2, 2015 | Customers, retail, Small business

Small business beating the barriers of FMCG category management

One of the core challenges in category management is simply the way the term has been interpreted operationally.

Let me explain.

Category management is a data intensive game, the numbers count for everything, and the depth that can be plumbed nowadays with the combination of scan data, loyalty cards and increasingly social data is astonishing.

However, this can lead to a sort of blindness.

If it is not in the data, by definition it does not exist.

Right?

Wrong.

Think about where all  the great innovations have come from.

“Left field” is the usual term. Few genuine  innovations have come from the established orthodoxy of any category, they involve things that currently do not exist or exist in another, unconnected category in a different form.

The disciplines of Category Management, weather we like it or not tend to eliminate these outliers, thus limiting category innovation.

Not the desired outcome.

The challenge of running the data intensive margin maximisation regime by leveraging existing category variables while minimising risk stifles true innovation while encouraging range extension behaviour.

Innovation by its nature is both risky and outside the accepted parameters of category consideration. Successful innovation  requires both leadership and  wisdom to be displayed before a guernesy is given for the investment required to get a new SKU on shelf, even if it is a replacement for a tired item.

Neither management quality is in great supply.

It is in this space that SME’s can build a competitive position against their larger competitors who may have the advantage of scale as well as  category captain status, but are failing to be genuinely innovative. By building a history of innovation in outlier and niche retailers, independents, and direct to customers, smaller suppliers can build the  “attraction  quotient”  with the supermarkets, and have the chance to retain some control.

Become successful in those outliers and the mass retailers will follow, that is their nature, they are followers.

Somehow you have to find a way to manage by both the data, and a product benefit /brand narrative that is entirely from the perspective of the consumer.

Barriers and opportunities for small business innovation in supermarkets.

Oct 13, 2015 | Customers, Marketing, retail, Sales, Small business

supermarket innovation

Innovation in supermarkets

 

Small business suppliers to supermarket chains are substantially compromised by the lack of resources to innovate.

Peter Drucker stated 50 years ago that innovation is the only really sustainable competitive advantage, and the passage of events have proved him correct.

Commercial survival requires that you are able to continually innovate, or you rapidly find yourself left behind, simply because everybody else is.

Knowing this does not however, make the challenge any less daunting, especially in an environment like FMCG where the retail gorillas stamp on variation as a source of transaction costs, and are actively seeking to reduce SKU numbers by pushing housebrands.

Lets define what we mean by innovation for the purposes of this post.

It does not include business model and process innovation. Both are terrific ways towards commercial sustainability, are paths every business must follow, but have little to do with innovation from the customer perspective, at least in the short to medium term.

By contrast, product innovation is concerned with new stuff that adds value to consumers.

Pretty simple definition, that precludes line extensions, which are just a fact of life, and product changes, which are again a fact of life.  We are seeking  to talk about the things that really make a difference, and how and why that happens.

 

Following are some thoughts on the nature of the strategic environment we find ourselves competing.

Innovation Paradox. Big businesses get big by being able to reproduce things without variation, their processes ensure consistency, and reject the outliers. This goes as much for people as it does products, so generally large businesses have more difficulty seeing and acting on something new than small ones. There are obvious exceptions, and large businesses everywhere are seeking ways to overcome the innovative inconvenience of their scale, with greatly differing levels of success. Nevertheless, the generality holds, but the small business end of the  FMCG supply chain has been decimated, perhaps almost eradicated  by the scale of the supermarkets and the power of their business model. Where is the innovation going to come from I  wonder.

 

Risk. The risk profile of every business is different, but as a generality small businesses have a greater capacity to take risky decisions, but a less capacity to absorb them when they  go pear-shaped. Large businesses survive on consistency as noted, and success for individuals in a large business is usually counted by their successes, failures are frowned upon, so the tendency to take risks is reduced, hence, their inability to innovate. Again there are notable exceptions, but they always occur when there is a leader who mandates and lives risk tolerance.

 

Wide view. Any organisation, no matter how big, only has a small proportion of the people thinking about the categories they compete in, so why do you think you will come up with the great ideas? Those using what I have always called “Environmental Research” always do better. This has nothing to do with hugging trees, and everything to do with understanding the context in which the behaviour of your consumers happens. When you understand the context, and see shifts, the opportunities suddenly become more easily identified.

 

Habit. Consumers are driven by their own habits, and once formed, it takes a lot of effort to break them. Habits work because they make our lives easier, and we are loathe to risk what we know works, for that for which there may be a question.

 

Boundaries. Innovation efforts need boundaries, or they tend to wander off into irrelevancy. I have found it far better to provide those boundaries in the pre-workshop, if that is what you are doing, material. It is necessary to encourage people to as the cliché goes, “think outside the box” but it is counter productive to have people thinking outside the municipality. Far better to ground the process in a context that is familiar, where there is market and customer knowledge available to feed the process. Without such grounding you tend to get uncertainty and irrelevancy, and ideas and conversation that skates across the surface rather than digging deep to where the problems and opportunities that provide the fodder of successful  innovation are buried. I love the metaphor of Classical music and Jazz in the context of innovation, the score provides the boundaries. To be a good classical music player, you need to be a master of your instrument, and be able to reproduce note perfectly what the composer has written, the allowable variation is very small, the emphasis is on technique. Jazz by contrast requires that you are a master of the instrument, as well as the music to the extent that you can take what a composer has written and innovate around the base rhythm and melody, so you need to be not just a master technician, but a master of the music. Great innovation in a commercial environment   has exactly the same characteristics.

 

Think different. The great 1997 Apple advertisement  said it all, but how many corporate entities will tolerate the crazy ones? Very few. If you are to truly be an innovator, somehow you have to accommodate some crazy ones. Generally they  are tough going, irreverent, unconcerned with status and the status quo, constantly irritating the nice smooth flow of processes that deliver the consistency that corporates thrive on.

 

Problem definition. Innovation occurs when a problem is solved. Often it is an old problem solved in a new way, sometimes it is a problem unrecognised until the solution comes along, the classic example being the post-it-note. A huge part of the challenge of innovation is the identification of the problem. Rarely does a problem emerge with a fully-fledged solution, but as Einstein, in my  view one of the greatest marketing thinkers who never receives any credit at all once said, “if I had an hour to solve a live changing problem, I would spend the first 55 minutes defining the problem, the rest is just maths.”

 

Margin maintenance. This is tangled up with risk profile, but is separate. Over the years I have done many proposals for new products killed at  the gate by the margin problem. “If we launch this, it will erode our margins” often true, but the standard response I give is “better us than someone else”, but it is often a futile response when the ultimate decision maker is compensated by short term considerations. After all, Kodak managed to survive for 40 years after they invented the digital camera in1975, several generations of CEO had passed through in that time, all taking their packet, it was just  the last in the line who had a problem.

 

Value not just price. Consumers look for “value”, but way too often that is translated by suppliers and the retailer into “price”. Price is just one way of reflecting value, but it is the most obvious, and easiest to articulate.

 

Barriers. Every industry has its own set of barriers to innovation in addition to the more general ones above. In the case of the Australian packaged goods industry, they are several, all associated with the concentration of power in the retail trade.

Margin squeeze

Speed of house brand copying the successful products

Timing of distribution and advertising

On shelf management of facings, cut in, position, promotional programs  and stock weight

13 week “live or die” time

On shelf upfront costs

Category management if you are not the category captain, and few small businesses are,  you are at a significant disadvantage

Risk averse retailers

Habit. Everyone is used to doing business in a certain way, so that is the way it is done.

 

Opportunities for suppliers.

Similarly to barriers, every industry has its own unique set of opportunities that when seen are open for businesses to chase.

Social media. FMCG suppliers have not yet solved the problems of how to best use social media to market their process in supermarkets.

Mobility. Engagement with the web and its tools is now mobile, a majority of net interactions are mobile, and most people have their smart phones with them all  the time. Using this capability and the geo-location capability to foster a direct relationship between the brand owner and the consumer with the supermarket playing the distributor role is a real opportunity currently under-recognised and utilised.

Food service and ingredient. These are fragmented markets, where innovation, service and brand can still play a real role, and getting a return on your investment is still up to the quality of your business, not the whim of a buyer in a gorilla suit. Depending on whose numbers you use, sales outside the major chains of ingredient and to food service outlets from fine dining to fast food, is north of 60 $billion.

Digital coupons. Retailers in Australia have ensured that the redeemable coupon, so prevalent in the US does not get a start here, too much transaction cost, but a digital coupon? Why not? There have been several tries of various types, Groupon being the most obvious, but smartphones make it so much easier to collect coupons and redeem them  in some way, not necessarily even associated with the retailer.

Range optimisation. Category management as it has evolved has always been data intensive, and from a retailers perspective, the objective has been margin optimisation. The next step I suspect will be range optimisation which is really just margin optimisation with a far greater understanding of consumer behaviour thrown into the mix. We have all operated with the view that our various research tools and their data gave us enough to work with, and they did,  but suddenly there is the “big data” behaviour mining opportunity offered by  social media and geo location, in addition to the fragmentation of times we shop, and how we place and receive orders. Range optimisation to accommodate all these changes just became in my humble view, the FMCG marketing challenge of the decade.

Innovation from the waste. Until very recently, produce that was outside the specs for appearance was consigned to the waste bin, juicing, and other marginal uses, it was not deemed good enough by retailers to sell, not because it was nutritionally or organolepticly deficient, but because it looked crook. Along came the idea of highlighting the products visual imperfections,  “Imperfect pick” is the term Harris Farm have used, Canadian chain Loblaws has successfully  rolled out “ugly fruit”  in Canada, and both Woolies and Coles appear to be tinkering with the idea currently. There are a myriad of opportunities to utilise undervalued product to build a category, for example, shin bones are the foundation of Osso Bucco, many of us will sample great Osso Bucco at an Italian restaurant, but never cook it at home, when it is an easy, tasty  meal with a very low meat cost. Pretty simple marketing I would have thought.

 

Innovation is tough, but it is also fun and makes the future. Those who just wait for the future to happen will be overwhelmed by it, those who take a role in shaping it will at least have the chance to do well.

 

This post is the 8th in the series examining the means by which small businesses can deal with the retail gorillas.

The one that started it, back in October 2014, is a summary of the 10 ways to beat the gorillas at their own game, a summary post that generated a lot of interest, so I expanded the individual points in subsequent posts.

The first expanded post was the 3 essential pieces of the business model

The second, 5 ways to compete with data

Third, 6 category management ideas for small business at Christmas

Fourth, 9 imperatives for small businesses to build a brand

Fifth deals with the reality for all supermarket suppliers, that they have two customer types, requiring different approaches.

Sixth, deals with the least understood large cost impact on small businesses: Transaction costs.

Seventh suggested ways for small businesses to collaborate for scale,

 

15 rules for dealing with supermarket buyers

Sep 9, 2015 | Category, Customers, Marketing, retail, Small business

 

supermarket buyers hold the power

supermarket buyers hold the power

Respected Australian Food industry journal Australian Food News published a terrific rewrite of a presentation I gave some weeks ago to a group of food industry CEO’s reflecting on the years I have spent in the industry.

After 40 years, I thought there may be something of value to pass on those following, and it was a great opportunity to have some fun.

A copy of the original presentation has been put up on Slideshare. AFN changed the order around,  improving what was in effect a brain-dump set of slides accompanying a casual presentation.

 

Know your business and theirs

 

  1. Know more about your business than the buyer does. This seems pretty obvious now, but in an early (late 70’s I guess) encounter with one of the doyens of the industry, Eric Bender of Franklins, he demonstrated what can happen if you are underprepared. Eric took pity, and let me off lightly that day, and I never forgot the lesson.

 

  1. In a power imbalance, negotiation is challenging. Whether we like it or not, the buyer has all the power, even the biggest companies have little power to influence them in any way that is inconsistent with their best interests. I remember many years ago Coke had a blue with Coles (I think) believing that Coles needed them on shelf, so they hung tough, for a while. After a period which was a golden age for Pepsi, Coke relented.

 

  1. Don’t put your eggs in their basket. People often say that you should never put all your eggs in the one basket, but from time to time, when you control destiny of the basket, it is OK. However, putting all your eggs in the buyers basket has proved fatal for many, particularly small businesses that simply do not have the wherewithal to service the relationship at the margins on offer. Besides, depending on whose numbers you believe, there is somewhere north of $45 billion of sales outside supermarkets, so why do you need to covet the buyers basket.

 

Know your customer and control your message

 

  1. Buyers are lousy at marketing. Over the 40 years this has been proved over and over again. They are good at being retailers, they understand the dynamics of their floor and shelf space, customer traffic, negotiation, and copying quickly, but very little about customer behaviour outside their stores, and the importance of branding and communication that contains a promise other than price, then delivering on it.

 

  1. Know the rules well enough to play in the grey areas. There are the written rules, there are the unwritten rules, and between them is a grey area of interpretation. Knowing the rules well enough, and knowing the administrator of the rules well enough to identify the grey areas and play to them is a rare skill learnt over time, with deep experience. I used to work with a field sales manager affectionately known as “Cookie”. She was the best I ever saw in a store, had the planograms in her head, knew all the personnel, what they were like, what they wanted, and how to turn them inside out. She and her team destroyed all our opposition in NSW.

 

Experience counts

 

  1. Dealing with Buyers is a job for your “A Players” The smart people in your businesses should be the ones taking up  the challenge of dealing with buyers, as it can be a make or break activity. Many seem to think it is a place to train future product managers, or hide the boss’s nephew. Wrong, nobody should be a product manager without having had the chance to be mauled a few times, but that should not mean buyer training is a pathway. Only allow your smartest, best, most motivated people in front of your biggest customers, who also is paid to extract the maximum from the piece of real estate you covet. I always found professionally trained introverts were best. They instinctively over prepared, and had data driven logical and sequential minds, and were generally smarter than the buyers they faced. Ask yourself “what is someone who looks after 40% of my sales really worth?” and pay them appropriately.

 

  1. Corporate memory is absolutely invaluable. Don’t re-learn from your new experience, it is really, really expensive, learn from the past. Learn from others, learn from the experience that the business has had in the past so you avoid repeating mistakes.

 

  1. Beware new buyer syndrome. We have all been faced with a new buyer, recently promoted from the baked beans aisle of the store in West Bullamakanka, who is suddenly given the power of “No” over you, and found the feeling seductive. You have little choice but to work with them, so put your best people on them, and there is a chance that when a bit older and wiser, they will remember the effort, and it will pay dividends.

 

When it’s over it’s over               

 

  1. Let the horse die. No amount of flogging will get a dead horse to move, no matter how encouraging the vet may be, and you know he has a vested interest to keep you flogging. You must know when to give up and walk. In this case, the Vet needs your promotional money, so keeps encouraging you to stick at it, but you know the product has eroded so it only sells on price discount, which is below your floor, and the buyers keep buying it from promo period to the next, never at full tote. In the end it costs less to lead the horse out to a humane death while it still walks, rather than leave it to suffer, keeping up the strong and expensive medication, then suddenly finding it has died, and you have a warehouse full of horse food to write off.

 

  1. Innovation is more than changing the pack colour. Innovation is when you do something that makes the pie bigger, not just add something similar and slice it up in a different way. Besides, flagging “new and improved” leads consumers to conclude you have been selling them second rate stuff up to now. What retailers are selling to you is shelf space, and as such are going to get as much for it as they can, and they do not care if they sell your product or somebody else’s from it. You go in with your whizz bang new pack colour, they will take the promo money, and line fees, and all the rest, their business is selling you retail real estate, and if you offer a good enough price, you get the chocolates, this week.

 

Work with them not against them

 

  1. Be nice to buyers. There is little value in annoying buyers unnecessarily, although it is sometimes pretty easy to do. Remember that buyers like to be liked, just like anyone else, so get them to like you, store up the brownie points when you can, you may need them some day.

 

  1. Ensure the Buyer knows you are not afraid. You need to be serious, informed, appropriately acknowledging the power imbalance by being creative, but never afraid. Even when the buyer beats up on you, if you are prepared to push back, they will respect you in the morning, but if you cower and beg, well, there will never be any respect, and there will be no coming back.

 

  1. Buyers do not care about you. Retailers are in business to satisfy shareholders, and the individuals buyers have targets to meet that do not have anything to do with you. They care about themselves, and the challenges they are facing, so getting them to do something you want them to do revolves around you solving their problems, not them yours.

 

  1. Buyers need you or someone like you. When it comes down to it the shelf space needs to be filled. So if you can articulate the need, they will give you back a bit of the power imbalance that exists.

 

  1. Beware the armchair experts. Many of those who claim expertise haven’t actually got any. So listen to all the sensible advice you can find, but make up your own mind, and implement with focus, agility and passion. There really is no better way of knowing about buyer behaviour than by working with them.

 

So, there it is, almost 40 years of pain and experience in the time it took you to read this article.

Bargain.

 

 

Is FMCG Private label able to continue to grow?

Aug 24, 2015 | Category, Marketing, retail, Small business

private label

Australia’s Grocery retailers continue the march towards private label range dominance, basing their strategic decision making on two foundations, it would seem to me.

  1. By controlling a large section of their sales via PL, they manage to both increase their margins at the same time they reduce their transaction costs. Good trick if you can get away with it, and in the short term they certainly can, but in the long term?? Who knows.
  2. What works in Europe, and particularly the UK will work here. Over 40 years in this industry, this has certainly held true, what works there generally becomes translated here at some point, in some form.

However, when considering the future of PL as a part of the landscape in Australia there are a few other considerations not present in the UK, and elsewhere in Europe.

  • We have large distances, and  a smaller population, making the economies of scale in manufacturing  and distribution that much more elusive, and less attractive. In western Europe you have 350 million, or thereabouts living is far less space than Australia occupies, with a multiplicity of manufacturing options. Just the UK has 65 million in about the space as Victoria.
  • Over the last decade, the number of middle sized  Australian owned FMCG manufactures has been decimated by a combination of the high $A, the GFC, and the power of the two major retailers, so there is little left. Now the $A is lower, and the opportunities emerging, they are not coming back. Imported private label products now have to carry the added cost burden as well as the substantial costs and risks of the extended supply chain.
  • Where is the innovation going to come from? Medium sized suppliers have been the source of much of  the innovation that has driven category growth over the last 25 years. While it is relatively easy these days to pick new stuff off the shelves in Europe and set out to copy  it, the retailers still need to have the products manufactured, and often massaged to suit local tastes, not so easy any more.
  • Retailers in taking their ideas from European retailers, seem hell-bent on  segmenting the PL share. No longer the cheap and cheerful substitute, European PL now  offers under a range of house brand labels that cover the market from ‘top’ to ‘bottom’ as well as emerging segments like organic and halal are being pushed, further eroding the power of the proprietary brand. As a marketer I ask “for whose benefit?” certainly not the consumer.
  • The Private label business model that demands minimum transaction costs on both sides does not sit comfortably with the proprietary model, with its complex trading terms. In most cases, suppliers of PL also supply proprietary products, adding to the complexity of the paperwork and relationships.
  • Produce is a bit of an anomaly, as there are almost no proprietary brands. Producers and their representatives have comprehensively failed over 30 years to do any sort of branding job, so consumers do not miss what  they never had. However, increasingly consumers seem to be reluctant to buy anything much beyond robust commodity products from supermarkets, believing after 25 years of cricket balls masquerading as peaches, that the specialists do a much better job.
  • This last point is really anecdotal. There appears to me to be a backlash coming from consumers. A typical comment made  to me last week was ‘if I do not want any choice, I will go to Aldi, but when Woolies denies me a choice, I wonder why I pay the premium over Aldi’. The two majors had better be careful, they do not ‘own’ consumers, who will make their choices independent of a retailers profit considerations.

Private label is now irrevocably a part of our lives, but  I doubt if there is too much more room in dry goods for share growth without  compromising retailer margins, but I guess they will be very wise with hindsight.  Meanwhile, the pressure on the few medium sized manufacturers left intensifies.