Through a special arrangement, what follows is a summary of part of the May cover story, "Spying on the Neighbors," from Private Label Buyer, presented here for discussion.
Canadian and European retailers don't just settle for the Sunday paper to promote their private label goods - they come up with clever television commercials, too. According to Tom Stephens, founder of the Canadian consulting firm Brand Strategy Consultants, this isn't something as commonly done by U.S. retailers.
"[This is] because [U.S. retailers] haven't had the penetration to throw off the money," he said. "You need the money. It's marketing 101 in terms of if you want to be in the media, you've got to have money."
Brian Sharoff, president of the Private Label Manufacturer's Association, also believes the money these retailers are making from their private label stretches a little further in Canadian television advertising than it would in the United States.
"You can buy Montreal television for a fraction of what it costs to advertise in Chicago," he said. "So it's affordable."
Mr. Sharoff also is quick to comment on how clever Canadian and European retailers' store brand advertising is.
Does this prove that it is important to get excellent marketing personnel in one's private label program? Quite possibly. According to Mr. Stephens, marketing is just as important as sourcing. And one thing European and Canadian retailers have done to position their store brands well is to bring in classically trained marketing professionals.
"You know, the [U.S.] private label buying department was not a place where you would put your highest-flying people into," Mr. Stevens said. "Private label is a combination of sourcing, quality assurance and branding and marketing. And you don't find these people at the back of a grocery store unpacking the boxes in the receiving environment."
Sainsbury's and Tesco have been very active in advertising their store brands, especially on the food side, Mr. Sharoff added. They've put a lot of money into clever advertising that even features celebrity chefs and famous actors.
Mr. Stephens believes there's no question this advertising is being driven by volume. The more you make from your store brands, the more you have to spend on advertising.
"That's why Loblaw's had an approach that said: 'We're going to market this stuff like crazy. We're going to be on television every day,'" he said. "And they built the model with an inherent marketing cost built into it. But it required volume to do it - you cannot do this without volume because you just don't have the money to spend."
This is something Mr. Stevens thinks the United States will see over the coming years as volumes build.
Discussion Questions: Are many U.S. retailers at a point where they should be more aggressively advertising their private label brands or does private label development work differently in the U.S. market than in Europe? Have you noticed any compelling private label advertising efforts in the U.S.?