A combination of consumer trends is driving unprecedented disruption in the retail space. One thing remains clear: consumers are now more powerful, and their expectations are higher. Companies trying to deliver the products consumers want – when they want them – face tightening margins while working to make the supply chain faster, more predictable, and cheaper.
In the last several years, retailers have doubled down on store brands to meet consumer demands for high value, low-cost products. One out of every four products sold in the United States is now a private label or store brand, according to the Private Label Manufacturers Association (PLMA). That translates into private-label brand sales of $128.6 billion in 2018, according to data compiled by Nielsen. Sales growth of private-label products is now three times higher than branded products, according to research firm CB Insights. Even with growth in retail, the industry faces challenges.
There’s no question that the palettes, values, and demands of food and beverage consumers are changing faster—and more disparately—than ever before. Consumers now make purchase decisions based on things like clean labels, Non-GMO, organic, local, fair business practices, and the list keeps growing.
Globalization has made it harder to identify bad actors in the supply chain and assure food safety, quality, and traceability. Economic adulteration, fraud, and incidents like pesticides and heavy metals can occur without warning causing delays and hefty penalties. These issues can cause permanent brand damage.
The perception of private label brands as a low cost and basic alternative to national brands still exists among a large number of consumers. With increased complexity in the global supply chain including tariffs and trade wars among other issues, ingredient costs are rising which makes it harder to compete on price.
Retailers Have a Choice
"Before Supplier Management, we had about four people spending a combined 100 hours a week qualifying and onboarding suppliers. Now, we have one person spending about 20 hours a week on it.”
- Jared Keefer, Director of Safety and Regulatory Compliance
