Private Label Crunch: Retailers Get Savvier

Brand Giants Weakened as Retailers Get Savvier

Ad Age says: As Media Dollars, Talent Shift to Stores, Can CPG Players Preserve Margins?

For nearly a decade, retailers have been raiding the marketing talent of the package-goods industry.

 

It and others in private label are leaders in food innovation.
Trader Joe’s: It and others in private label are leaders in food innovation.

Most major retailers now have a CPG-trained chief marketing officer and several more CPG-trained managers running their private-label programs. Now retailers are making an increasingly convincing grab for the consumer-media dollars of their branded suppliers. 

A recent survey by Deloitte Consulting and the Grocery Manufacturers Association, in fact, gives shopper marketing higher marks for return on investment than most conventional media. It also found that big package-goods marketers are jumping on the shopper-marketing bandwagon fast, and players who had lingered on the sidelines are ramping up quickly. But retailers are ramping up their own shopper-marketing departments even faster, the survey found — creating a crush for the same relatively small pool of experienced talent. 

The disturbing question for package-goods players is: If the marketing talent and media budgets are flowing toward retailers, will the profit margins follow? After all, the brand power and marketing savvy of package goods have long been key justifications for higher prices that result in at least double the margins retailers that sell their goods get

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