Private label development – food retailer Central Asia
A leading food retailer in Central Asia wanted to improve profitability. A structured study of the market was conducted and the client’s performance benchmarked against world class comparators, with results highlighting the under-management of the gross margin.
After detailed analysis of possible methods of improvement, the best strategy, both immediate and long-term, was to focus on a sales increase of private label products. A custom-made independent market research study was conceived with the client’s commercial operations to examine consumers’ current understanding of the retailer’s reputation in the private label area.
Analysis of results flagged discrepancies between the retailer’s self-image and how their products and brands were perceived by the public. There were, however, some inconsistencies in this result, with a few products achieving an appropriate or ideal standard in the public’s view. This allowed analysts to identify a number of success factors and the span between success and failure drew attention to an inconsistent strategy in the commercial operations of the retailer.
Workshops were set up to identify private label branding principles. Many important details such as quality control, detailed product specifications, labelling and branding were analysed. The next step was to benchmark current performance against best practice. As a result, new company expectations for private label branding were established and then applied to every item. This was vital in establishing a consistent and successful approach to this profitable area of business.
The result was immediate! A 10% increase in the share of private label products! Of course, a considerable improvement in the margin contribution also followed, more than had been budgeted for at the outset of the project.
The progress continues with increasingly more impressive results emerging continuously.