Ali Dibadj's presentation at the Private Label Trade Show included a look at how challenger brands and private label are earning more shelf space in stores
The fight for shelf space between national brands and retailers' private brands is underway, and the jousting is only going to heat up, with digital becoming a prime space for product positioning. Speaking at the Private Label Trade Show in Chicago last week, Wall Street analyst Ali Dibadj detailed three key areas to keep an eye on:
Retailers becoming a major player in advertising and owning the shopper’s shopping list
Private label expansion online
How national brands are investing in digital to get their products ahead in the consumer’s search
Looking at an in-store category layout, Dibadj said that the old version was made up of four tiers of brands, with the top tier being dedicated to a top CPG brand, the leading challenger brand, and then the second-leading major brand. After that, the third-, fourth-, fifth- and sixth-ranked traditional brands would be positioned, followed by the top two private brands. In that last tier, the eighth- and ninth-ranked national brands would sit with other challenger brands.
The new layout, according to research from New York-based AllianceBernstein, sees the same brands leading the top tier, but on that second level the top-ranked private brand and the second-leading challenger brand have moved up, while the fourth-, fifth- and sixth-ranked traditional brands move down. Say goodbye to any traditional brand after that, and welcome another store brand and two more additional challenger brands, Dibadj added.
He went on to note that all of this brand movement is adding to too much proliferation, comparing a time when Walmart carried 120,000 SKUs in-store to its now managing 75 million SKUs on Walmart.com. But it’s the control of that ecommerce channel that gives retailers tremendous power to control the “stream space,” Dibadj added. Retailers know that shoppers typically purchase products that appear on that first page online; brands -- including private brands -- that fall beyond the fifth page are dead, according to a Bernstein consumer survey.
“The future of food retail is advertising,” he said, adding that the new slotting fee is top space in the ecommerce stream. An added bonus for retailers working with brands to get onto their ecommerce sites is that they collect further consumer insights from how shoppers are shopping brands and the category online.