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Ad Week reports that “store brands are fighting big brands in several key ways: a new sensitivity to consumers' changing lifestyles; quick-response times (a result of their ability to collect data at point-of-purchase); stylish packaging; and higher-quality ingredients. One new development: U.S. retailers are offering an increasing number of tiered private-label options, a strategy well entrenched in the more sophisticated U.K. private-label market.

“ National manufacturers, slow to respond to private-label practices, are finally waking up to the changing world order, with some fighting back and, in some instances, even joining the enemy camp. ,” recognizing that private label sales growth, according to some Nielsen numbers, is stronger than that for national brands. “And as those retail brands seek to grab more share,” Ad Week writes, “management consulting firm McKinsey estimates that as much as $55 billion in sales of national brands may be at stake over the next decade.”

And, Ad Week goes on, “Another measure of the growing credibility of store brands will be on view next month at the Private Label Manufacturers Association trade show in Chicago. For the first time the event will play host to a number of big-ticket store expenditures like financial services and vacations. While retailers like Wal-Mart and Costco already offer those options to customers, the PLMA says that to meet popular demand, regional retailers are also jumping on the trend, from Wakefern Food Corp. in the mid-Atlantic states (offering a ShopRite private-label credit card) to the largest supermarket chain in Texas, H-E-B, which is marketing life and auto insurance with stores inside H-E-B locations.”
KC's View:
While I don't want to become too Tesco-centric here, I couldn’t help but think while reading the Ad Week story that much of what is being described has been Tesco’s strategy in the UK for more than a decade.

Private label has always been more prominent in places like Europe, and foreign companies that have tried to bring that approach to their US stores have generally not been successful, as many Americans have preferred the comfort of the national brands with which they grew up. But that clearly is changing, driven by companies that range from Trader Joe’s to Costco; there even is an argument that the enormous success enjoyed by companies like Starbucks and Dunkin’ Donuts has somehow gotten people more used to the notion of own-brand products, even though this isn’t a direct corollary.

It may be that Tesco has perfectly timed its entrance to the US, if indeed its new Fresh & Easy Neighborhood Markets have anything approaching the differentiated own-label approach to product that Tesco uses elsewhere. Would anybody be surprised if Tesco had a study somewhere suggesting that the time is absolutely right for its private labels to have a very public impact?