FDBuyer: Fire the Nerds! Is there hope for those secondary brands after all?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
Recently I had long chats with a couple of frozen food buyers at major chains about how brands are becoming commoditized. No rocket science here -- the recession has turned many branded manufacturers into cowards, afraid to innovate. More and more, from the shopper's point of view, the only real differentiation between brands is "what's on sale?"
But cripes, if there were ever a time for innovation, it's now. Private label already had a strong head of steam before the economy went to hell, and so did the move toward SKU rationalization.
Both these factors can get branded items delisted in a heartbeat. Brands know they need differentiation to stay viable, but they seem stuck in analysis paralysis. And the worst offenders seem to be the biggest brands.
No sooner had I hung up with my retailer pals than I read a magnificent piece online from Advertising Age magazine, "Our Biggest Brands Can No Longer Be Managed by Nerds." Written by Tom Hinkes, principal consultant at OutBranding, the article explores the challenges bigger brands have adapting to the marketplace and driving innovation. My favorite line in the piece was "Fluency with buzz words and expertise with spreadsheets do not guarantee brand-marketing competence." A close second: "If Edison had done market research, he would have invented bigger candles."
I don't see this changing quickly with the big brands. What's it take, something like 60 miles to turn a cruise ship? Besides, I've always mistrusted guys with suspenders unless they're genuine, bona fide farmers, or younger than six.
But I do see increasing opportunity for the smaller brands that I so unabashedly root for. Retailers seem in the mood to buy local and seek out real innovation, and that's where these smaller players fit in so well.
I have to wonder where all this is headed, since Walmart is the champion of the big brands. It's easy for shoppers to see Walmart is cheaper when comparisons on the same big brand are so readily available.
This has more than a few retailers I've spoken with tentatively rethinking their commitment to the big brands. After all, there's no favorable differentiation available to them in carrying the same product Walmart does, but at a higher price.
Will this result in a weakening of the big brands, and new opportunity for the little guys? Or will the nerds rule? Hmm….
Discussion Questions: What's the opportunity for smaller brands within the movement toward SKU rationalization at the bigger boxes? How should smaller brands position themselves? What's the likelihood that SKU rationalization turns out to be positive for smaller brands in the long run?