There is a new boy on the block to match Colgate, P&G, and other international brand owners, but one who does not play fair, one who controls access to consumers, removing their options of choice. Tesco. A retailer with the clout of Tesco that comes from its scale, with its ability to determine which products consumers will see on shelf, is aiming to develop international housebrands in competition with its suppliers.
Some will see this as just commercial common sense, Tesco leveraging their hard won position with consumers, whilst others will see it as the death-nell of brands, something to be opposed by any means.
I suggest it is neither, but neither is it something in the middle, there are other dimensions to the decision that will determine the outcome:
- Will a retailer be able to develop the deep consumer understanding that feeds a sustainable marketing, brand and product development effort necessary to build a real brand as distinct from labels on shelf?
- When a consumer has a problem with a Tesco branded product, and Tesco fails to manage that problem in a satisfactory manner, will the consumer just move to an alternative product, or move to an alternative retailer?
- Will the presence of Tesco branded products on shelf in a category further remove the incentive for proprietary brands to invest in category growth, and will the further removal of that support damage category profitability for Tesco? This profitability squeeze appears to be happening currently in many categories being demolished by retailer housebrands, will it just get worse?
This development is a logical evolution of the path retailers have been travelling for some time, the only real question is weather evolution accepts the change in the model, or will the model, having evolved past the point of sustainability, now wither and die in the face of more effective competitive models.
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