PRIVATE LABEL ENRICHES  RETAILERS WHILE  KILLS RETAIL

We are all aware of the vital role that private label plays in the assortment strategies of modern retailers and, more or less, we all know data and experiences that clearly show that the development of a good PL is strongly related to the competitiveness and profitability of the best retailers.

But private label, that is the picture of health, is actually contributing to paint a bleak landscape of splendid and very sad mono-branded stores.

I am so convinced of the power of PL, that I’ve always recommended my clients to pay great attention to this issue, and I even had the chance to conceive a business project based on a new concept of Private Label.
But even the most effective medicines, if taken in excessive doses or by wrong subjects, hurt and can lead to death. This trite metaphor actually explains very well what I think might happen (... and perhaps is already happening) in consumer goods.

This is obviously a conviction based on "weak signals" (in a context where Pl now covers almost 50% of products  sold in European supermarkets and is expected to grow by 4% per year in the US), better perceived if we manage to not get dazzled by the rays of the "sun shining at noon" and we try to foresee the implications and the development of the idolized present best practices.

On one hand, producers, anxious to ensure their products an adequate market access and greedy to control further segments of the value chain, become new retailers.
This, for example,  is now the standard in the luxury segment, but also the factory outlets and even many coffee shops are the children of such a strategic orientation.
On the other hand,  retailers keep on trying  to do without producers or at least their brands. A few months ago I went to a well-known clothing store in central Rome, traditionally appreciated for the variety and good taste of its range. But even there the panacea of Private Label had hit hard. Seeing that in some categories (eg clothes for men) the offer was substantially limited to the store brand was a very bleak experience: the beautiful woodwork of the hall suddenly appeared as the useless tinsel of a squalid Soviet style shop, where you could buy  what you happened to find, ... if you found something .

Probably less distressing experiences (at least in aesthetic terms) can be lived by visiting shops of those retailers who, like Aldi and Tesco, have a real PL oriented strategy, because, as I already mentioned, even the best medicine is not the right medicine for each patient. The same applies to those stores where the actual share of the PL is masked by the use of fantasy brands (a recent study shows for example that most of the customers of Kroger and Target are not aware that Simple Truth and Archer Farms are the respective PL), or where, this is for example the case of Eataly, dozens and dozens of brands in stock are actually owned by the retailer itself.

But, regardless of the forms and of the diverse PL know-how, the fundamental  problem remains: on the one hand, we see a process of progressive "crowding out" of the real producers and independent brands, resulting in a dramatic desertification of suppliers; on the other hand we stare at the slow death of the retailers, intended as subjects capable of producing value by the careful selection of products and addition of true useful services for end consumers.

Luckily it's just a scenario based on "weak signals", overwhelmed by the clamor of the best practices and silenced by laziness and homologation.