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Unit 13: Private Label Brands

where it has been imperative for retailers to create a persuasive consumer connection. In order Notes
to accomplish this objective, retailers have had to elevate themselves above competitive retail
outlets by having a comprehensive offer. They would develop their portfolios and provide
proprietary products in categories where national brand manufacturers’ offerings did not suffice.
Perhaps the strongest success story in this regard was that of the Marks & Spencer brand in the
late 1980s and early 1990s. This was a clothing retailer known for good basics that complemented
its offering with proprietary branded food products. Quality was the cornerstone of the food
product range and the only brand provided was its proprietary label. Mainstream retailers
could neither emulate Marks & Spencer’s premium quality, nor its price.

Did u know? In 1998, Marks & Spencer became the first British retailer to make a pre-tax
profit of over £1 billion.
A key learning from this retailer’s situation is that it grew its private label brand according to
the industry’s traditional approach and failed to build proprietary products on the platform of
a real consumer need. As a result, it has been forced to look elsewhere to fill these needs. It has
reversed its limited value private label strategy to invite Starbucks to run its coffee shop, Yo
Sushi (a well-known High Street sushi brand) to provide ready-meal sushi. The retailer has a
licensing relationship with popular chef, Jamie Oliver, borrowing from his expertise and charisma
in food and cooking to increase sales volume and interest. While this overall strategy is far more
consumer driven, it has abdicated the advantage to the competition who, through their successful
customer-focused private label brand development, have much more profitable relationships
with manufacturers.

It is conceivable that retailers who reached this point were taking private label success for
granted and not being fully cognizant of the resounding long-term impact of their private label
brand development. The fact that they were providing branded products that emulated
manufacturers’ product in terms of quality and price and at the same time were delivering much
better margins fueled their portfolio expansion. Yet, for some this heralded the beginning of the
end of the traditionally branded good. There was, it seemed, nothing that could not be privately
labeled. A proprietary branding phenomenon that had started in limited product categories like
fresh produce had expanded out to cake mixes, cookies, pet food, pharmacies, coffee shops, and
even, financial services.
Meanwhile, Tesco, Sainsbury’s nearest rival had been developing its offer using a different tack:
carefully segmented private label echelons and ranges. Tesco has a value selection for cheaper
commodities categories. Yet, this value brand was not manifested as the generic, store brand of
the past. The critical point of difference with these products is that they are defined less by which
manufacturer gave the retailer an opportunity in a certain product category and more by what
a working class family on a tight budget would need to get by.

Concurrently, Tesco created an organics line, a kid’s line and, perhaps most impressively, the
Tesco Finest sub-brand. Tesco Finest started in ready meals and chilled foods, where the retailer
has a natural advantage (these products are difficult to prepare and distribute). Integral to its
success was its very high premiumness. The exceptional price and quality were well received by
the higher end consumer. It was also evident that Tesco Finest was an encompassing proposition
and could stretch into other categories. But rather than trying to rule the world, Tesco selectively
ventured into those specific areas where it could add value.
High-end cookie tins, which are popular Christmas gifts, are a good example. Tesco was smart
to recognize that manufacturers were struggling to add value in this seasonal, yet, premium
playing field because branded products deemed suitable for everyday consumption dominated
the category. Tesco Finest was able to compete here because, as a brand, it had more permission

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