Supermarkets in the US are more reliant on branded products than their counterparts in Europe, which have bigger selections of private label goods. But the recession is being treated by US retailers as a chance to have another go with private label.
Wal-Mart has relaunched its Great Value private label brand and I had an interesting chat today with executives from 7-Eleven, the Japanese-owned convenience store chain, which is trying to do the same thing with its 7-Select private label brand.
I have never known whether the apparent reluctance of the US consumer to choose private label brands is due to his or her inherent preference for brands (stimulated by brand advertising) or whether something else is going on.
Interestingly, Jeff Schenck, the head of franchising for 7-Eleven in the US says it is more driven by distribution patterns. Big consumer goods companies such as Procter and Gamble have a greater influence over supermarket supply chains in the US than in Europe.
They are often allowed to stock the shelves in supermarkets, in return for incentive payments (known as slotting fees) to retailers, and to control the way products are displayed.
Mr Schenk said 7-Eleven’s steady development of its own supply chain was one reason why it was now confident in the potential of 7-Select products, such as its own line of potato crisps. “We call it taking our stores back,” he said.
As well as rolling out more private label goods, 7-Eleven is developing a new franchising model, which involves persuading owners of existng corner stores to convert to the brand in return for giving 7-11 a share of the revenues.
This is a less capital intensive model than its traditional practice of acquiring leases or building stores itself, before getting local franchisees to run them.
