麥肯錫-私人品牌的轉(zhuǎn)折點(diǎn)：零售商如何抓住機(jī)遇 A turning point for private brands How retailers can seize the opportunity 2024

Mcsey

&company

RetailPractice

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity

Productsfromprivatebrandsareappealingtoconsumersinnewways.

Retailerscanfollowthiswell-testedrecipetoimprovetheirprivate-brandofferingsandgainmarketshare.

by

AngusMcOuat,

DymfkeKuijpers,

PatricioIbá?ez,andRyanDrassinower

November2024

In2021,

weaskedwhethertheprivate-brandtrend

wouldlast

.Atthetime,consumerswereeagerly

snappingupretailers’ownedbrands,whichwere

lower-pricedandmorereadilyavailablethansimilarproductsfrommanynationalbrands.Fast-forwardtotoday:ourresearchclearlyshowsthatconsumersarecontinuingtooptforprivatebrands.

ThetrendiscontinuinginbothEuropeandthe

UnitedStates.McKinsey’s

latestconsumer

sentimentresearch

showsthatnearly75percentofUSconsumersandalmost85percentofEuropeanconsumersindicatethattheyare“tradingdown”

whenshopping—andswitchingtoprivate-label

brandsaccountsforaquarterofthistrade-down

behavior.Furthermore,thecontinuedstrong

performanceofmassretailersandtheclubchannelintheUnitedStates,aswellasthediscount

channelinEurope,makesitclearthatcustomersarewillingtochangetheirbuyingbehaviorand

shopatdifferentretailersinsearchofvalue.

What’smore,privatebrandsareappealing

tocustomersnotjustbecauseofpriceand

affordability;thesebrandsarenowalsobecomingknownfortheirquality.Sophisticatedretailersareusingprivatebrandstodifferentiatethemselvesinthemarketandbuildcustomerloyalty,notonlytoimprovemarginsandpennyprofit.Weseethisasaturningpointinprivatebrands.

Butnotallretailerswillbenefit.Retailersthatare

intentionalabouttheirprivate-brandportfolio—byprovidingbothaffordabilityanddifferentiationwhileshiftingtheirmindsettothinkmorelikeconsumer-packaged-goods(CPG)players—willbebetter

positionedtoboostmargins,consumerloyalty,andmarketshare.

Inthisarticle,weoutlinearecipeforexcelling

inprivatebrands.Itencompassesthreecore

capabilities—namely,merchandisingandbrand

building,insights-ledproductdevelopment,and

next-generationsourcing—andtwoorganizationalenablersthatarefundamentaltosuccess.

Nolongerjustavalueplay

Historically,USretailershavepositionedprivate

brandsasaffordableconsumeroptions.Asa

result,privatebrandshavenotalwayshadan

advantageouspennyprofitpositionandhavethusbeentreatedasalow-prioritypartofthebusiness.

RetailersinEurope,bycontrast,havebeenaheadofthecurveinprivate-brandpenetration,bornoutof

theriseofdiscounters—andtheresultingfightfor

marketshareagainstthem.InEurope,private-brandpenetrationin2023was38percent,comparedwithonly19percentintheUnitedStates.1

WhileUSconsumerstypicallyoptforprivate

brandsonlywhentheirwalletsaresqueezed

(see:the2001dot-combustandthe2008global

financialcrisis),thetidesarechanging.Ourrecentresearchshowsthatmorethan80percentofUS

consumersratethequalityofprivate-brandfood

productsthesameorbetterthannationalbrands,andnearly90percentfeelthatprivatebrandsoffersimilarorbettervalue(Exhibit1).USconsumers

nowregardprivatebrandssimilarlytohowtheirEuropeancounterpartsdo;inEurope,morethan80percentofconsumersperceivethequalityofprivate-brandofferingsasequalorsuperiorto

brandedproducts.

Thisisnoaccident.Leadingretailershave

madetremendousinvestmentsinprivate-brandcapabilitiesandofferingsandhaveshownthatprivatebrandscanpropelbothmarginrateandpennyprofit,inadditiontoimprovedcustomerloyalty.Theseretailershaveborrowedbest

practicesfromtheworldofCPGmanufacturingandhavebecome“CPG-like”inhowtheythinkaboutquality,value,innovation,and,ultimately,margindelivery.

Therecipeforprivate-brandexcellence:Threeingredients

Whilethereareofcoursenuancesbetweenthe

NorthAmericanandEuropeanmarkets,retailersaroundtheworldwithsuccessfulprivatebrandstypicallydemonstratestrengthinthreecapabilityareas:merchandisingandbrandbuilding,

1PLMA’s2024PrivateLabelReport:Astatisticalguidetotoday’sstorebrands,PrivateLabelManufacturersAssociation(PLMA),2024.

CategoriestrackedbyPLMAincludebeauty,beverages,frozen,generalfood,generalmerchandise,health,homecare,liquor,refrigerated,andtobacco.

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity2

Worsequalityproducts

Samequalityproducts

Superiorqualityproducts

Exhibit1

MostUSconsumersperceiveprivatebrandsassimilarorsuperiortonationalbrandsinqualityandvalue.

Attitudetowardprivatebrandsvsnationalbrands,1%ofrespondents

QualityValueIntenttopurchase

17

77

6

Worsevalueformoney

Similarvalueformoney

Superiorvalueformoney

11

60

29

WouldswitchtonationalbrandsifIhadmoreto

spend

Wouldcontinue

buyingprivatebrandsatsamerate,evenifIhadmoretospend

Wouldstilloccasionallybuyprivatebrands,evenifIhadmoretospend

15

60

25

1Question:Wewouldliketoaskyouafewquestionsaboutprivatebrands,ie,foodproductssoldunderthelabelofthegroceryretailer.Ineachline,pleaseselectwhichstatementyouagreewiththemost.

Source:McKinseyStateofGroceryConsumerSurvey,July7–July15,2023;n=2,011;sampledweightedtomatchtheUSgeneralpopulationaged18+years

McKinsey&Company

insights-ledproductdevelopment,andnext-

generationsourcing.Thesecapabilities,whicharecorecompetenciesforCPGmanufacturers,are

redefiningretailers’private-brandofferings.

Merchandisingandbrandbuilding

Theappealofprivatebrandsusedtobeallaboutpriceandaffordability.Buttoday’sprivatebrands

playmultipleroles,fromofferingaffordable

qualitytodifferentiationtotappingnewgrowthopportunities.Creatingtherightprivate-brandofferingthusrequiresnewmerchandisingandbrandingcapabilities,linkedtotheretailer’s

valuepropositionandsupportedbyadvancedtechnologiessuchasAI.Specifically,retailersneedtobemuchmoreintentionalabouttheirprivate-brandportfolioandarchitecture.TheyneedtoensuresufficientscalebySKUto

managecomplexityandvalue,andtheyneedtoleveragedigitalchannels,loyaltyprograms,andpersonalization.

Overthepastfewdecades,EuropeandiscounterslikeAldiandLidlhaveinvestedinprivatebrands

asalower-costalternativetonationalbrands,

usinghighvolumesonalimitedSKUbaseto

lowercostsandstreamlineconsumerchoice.

PlayerssuchastheSpanishsupermarketchain

Mercadonahavecontinuallyinvestedinprivate-brandquality,communicatingboththevalueandqualityoftheirproductstoconsumers.Themixofmerchandisingstrategieshasdifferedbyplayer.

Somehavebuiltafrequentlyrotatingproductoffertospurtraffic,whileothershaveintroducedweekly

in-outnonfoodproducts(orseasonalproducts

thatarenotreplenishedoncetheysellout)at

competitiveprices.Theseactionshavehelped

thesecompanieselevatetheirprivate-brand

productsabovethoseofnationalbrandsand,overtime,rivalsupermarkets,whichhashelpedthem

winmarketshare.Inresponse,supermarketshavemovedfromathree-tiered“good,better,best”

structuretoatwo-tieredstructure(forexample,

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity3

TescoeliminatedTescoValue,andAlbertHeijndidthesamewithAHBasic)andhavemadeconsistentpriceandqualityinvestments.

Inaddition,Europeanretailershavemadebiginvestmentsinprivate-brandinnovationanddifferentiation.ConsiderMercadona,which

hasintroducedin-storecustomerfeedback

loopsandhighlyiterativetestcycles.In2023,

Mercadona’s23“co-innovationcenters”conducted11,000consumertestingsessions,whichledto

500productimprovementsand314newproducts.2Today,leadingEuropeanprivate-brandplayers

launchmorenewproductsperyearthanUS

players,includinglargeones.Andprivate-brand

successmatters:weseeacorrelationbetween

overallprivate-brandshareandmarketsharegains,withmarketleaderstypicallyhavinghighprivate-

brandpenetration.Asimilartrendisemergingin

NorthAmerica,whereleadingretailersaremore

consistentlytreatingwhatwerepreviouslyknownas“privatelabels”as“private(orowned)brands.”Thischangeinmentalityfromlabelstobrandshasbeencritical:itmeansretailersnowpurposefullydevelopprivate-brandofferingsthathaveaclearcustomer

valuepropositionandasetofdifferentiators

fromnational-brandalternatives.Forexample,AlbertsonsandWalmartrecentlylauncheda

lineofprivatebrandsthatpromisehigherquality

comparedwiththeirexistingvalue-focusedprivate-brandofferings.Target,meanwhile,hasintroducedmorethan40privatebrandsacrosscategories.

Insights-ledproductdevelopment

Withprivatebrandsplayingbothavalue-for-moneyanddifferentiationroleforretailers,advanced

productdevelopmentskillshavebecomemore

important.Productdevelopmentcanbeapowerfuldriverofbothrevenueandmargingrowthwhen

informedbydeepconsumerinsights.Today,

generatingconsumerinsightshasbecomemuch

easierandfaster,thanksinlargeparttodigitaltoolsandAI.

Theinternet,forone,isatreasuretroveofconsumerinsights.Onlineratingsandreviews,whichtookonoutsizeimportanceduringpandemiclockdowns,

stillheavilyinfluenceconsumerpurchasedecisions:

productswithstarratingsbetween3.5to5(on

afive-pointscale)capture95percentofmarket

share

.CompaniescannowquicklyanalyzeonlineconsumersentimentusingAI,web-scraping

technologies,andnatural-languageprocessing

(NLP)—whichcanaggregatereamsoffree-text

commentsandsocialmediaposts,organizethem

intothemes,andrevealvaluable,actionableinsightsthatretailerscanusetodevelopnewproductsandimproveexistingones.

Developnewproducts.Retailershavedirectcontroloverwhatproductstostockontheirshelves,whichgivesthemanadvantageoverCPGplayerswhen

itcomestonewproductreleases.Retailerscan

thereforewininthemarketplacebydeveloping“firsttomarket”products.Onewaytogenerateideasfornewproductsistoconductethnographicresearch,whichcansurfaceunmetconsumerneeds.Inthe

past,thisqualitative-researchapproachwouldhaverequiredin-personobservationsofconsumerhabitsandbehaviors.Today,thisresearchcanbedone

muchfasterandlessexpensivelyusingdigital-videodiaries,inwhichconsumersrecordthemselves

usingaproductorgoingabouttheirdailylives.

Consumer-backedinsights,incombinationwithproductexpertise(fromfoodscientists

orpackagingexperts,forinstance)andagile

processes,candramaticallyaccelerateinnovation:ingrocery,forexample,theproductdevelopmentcyclecantakeameresixto12weeks,compared

with12to18monthsattraditionalCPGplayers.

Optimizeexistingproducts.Consumercomments

andreviewscanalsohighlightthewaysinwhich

productdevelopmentcouldbetteralignwiththe

roletheproductplaysinthecategory.Basedinpartonananalysisofonlineconsumercomments,one

retaileraddedtruffleoiltooneofitsfrozen-dinner

productsandpricedtheproducthigher,puttingitinapremiumbracket,whichattractedanewconsumersegmenttothebrand.

Whetheraretailerdecidestolaunchanewprivate-

branditemorreformulateanexistingproduct,it

can’taffordtocompromiseonquality.Consumers,facedwithanabundanceofchoice,maynotgiveaprivatebrandanotherchanceiftheythinka

product’squalityissubparorhasdiminishedovertime.

22023annualreport,Mercadona,2024.

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity4

Next-generationsourcing

Thethirdingredientintherecipeforprivate-

brandexcellenceistakingsourcingtothenext

level.Gettingtotherightcostiscriticaltomakingthepennyprofitequationwork.Dependingon

thecategoryandtheroleoftheprivatebrand,

retailerscanoftenoffervaluetoconsumerswithouterodingmargins—butthisisnoeasytask,given

thatmerchantsandsourcingmanagersdeal

withthousandsofSKUs,eachofwhichrequires

component-levelcostmanagement.Onewaythat

retailerscanaddressthissignificantchallenge

isthroughadigitallyenablednext-generation

sourcingmodel.Thefollowingactionshavehelpedretailersexpandtheirprivate-brandmarginsby400to600basispoints.

Createreal-timevisibilityintoinputcosts.Overthepastfewyears,retailershavefaceddramaticincreasesinthecostsofcommoditiesandotherinputs.Usingautomatedtools,merchantsand

sourcingmanagerscannowaccessareal-time

viewofinputcosts,includingrawmaterials,the

foreignexchangemarket,andlabor,allowing

themtoidentifycostreductionopportunitiesandcost-increaserisksandequippingthemtoenternegotiationswiththeirvendorswithaclearer

pictureofthemarket.

Aleadingretaileridentifieda24percentcost

reductionopportunitybygainingtransparencyintotheimpactofcostchangesinrice,sugar,cocoa,andpackagingonthecostofitscereal.Afterdeployinganinputcostmonitoringtoolacrosshundredsof

foodSKUs,theretailerfoundthatoverthepasttwoandahalfyears,itssupplierhadincreasedpricesbyaround50percent,butrawmaterialscostsdidnotrisenearlyasmuch(Exhibit2).

Adoptanat-scale,‘shouldcost’approachto

costing.It’snotuncommonforsourcingmanagersandmerchantstousea“marginback”approachto

Exhibit2

Retailerscanidentifycostreductionopportunitiesbyfactoringininputcostsalongwiththeproductcoststructure.

Illustrativeevolutionofcosts

Inputcosts,

index(Sep2019=100)

×

Productcoststructure,%oftotalcost

=

Expected

___l---cost

Expectedcostchangesvsactualcostpaid,index(Sep2019=100)

200

Actualcost

150

100

502020·2021·2022

200

150

100

50

202020212022

Sugar

Packaging

Rice

Cocoa

Others1

CocoaSugar

Packaging

Rice

41

4

16

18

21

1Othercosts,notshownforillustrativesimplification.

McKinsey&Company

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity5

setthetargetcostofprivate-brandgoods—that

is,theyworkbackwardfromaretailpricetohita

targetmargin.Thisleavesplentyofvalueonthe

table.Retailerscancapturesignificantvalueby

switchingtoa“costforward”approach:establishingatargetcostbasedonthebestpriceasuppliercanofferwhilestillearningafairmargin.Thisapproach,usedextensivelyincontractmanufacturinginthe

automotiveandelectronicsindustries,requiresretailerstodevelopthecapabilitiesforbuildingdetailedbottom-upvaluestreammappingand

costingoftheend-to-endmanufacturingprocess(Exhibit3).

Digitaltools,suchasparametricshould-cost

software,allowaretailertoquicklybuildshould-costmodelsacrossthousandsofSKUs.One

retailerusedaparametriccleansheetapproachto

determinehowcostswouldbeaffectedbyadjustingtheformatorpapergradeofabasetoiletpaper,

whichtheninformeditsentireportfoliooftoiletpaperSKUs(Exhibit4).

Exhibit3

Usingacleansheetanalysis,retailerscanquantifythegapbetweencurrentcostand‘shouldcost.’

Illustrativeexampleofshould-costmodelforbluecorntortillachips,8.25oz

Shouldcost,%

Keyinputs

Materials

?Organicbluecornkernels(price,consumption,waste)

?Sunloweroil(price,consumption,waste)

?Salt(price,consumption,waste)

?Inboundlogistics

?Primaryandsecondarypackaging(lexiblebag,corrugate,shrink-wrap,pallet)

Processingcosts

?PPE1capitalexpendituresandmaintenance

?Directandindirectplantlabor

?Utilities

Overheadandindirectcosts

?Plantoverheard

?SG&A

?Fairpro?tbasedonROIC

?Trucking

Materials

Bluecornkernels

Sunloweroil

Otheringredients

Packaging

Totalmaterial

l3

29

12

0

8

50

5

57

3

9

5

4

78

100

–22

Processing

Laborcost

Machinecost

Totaldirectcost

Indirectandlogistics

Manufacturing

overheadandscrap

SG&A

Pro?t

Outboundlogistics

Total

Shouldcost

Currentretailercost

Note:Figuresmaynotsumtototals,becauseofrounding.1Personalprotectiveequipment.

McKinsey&Company

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity6

Exhibit4

RetailerscanuseacleansheetapproachtoidentifyproductparametersanddevelopnewSKUsmoree代ciently.

Illustrativeexampleofparametriccleansheetmodelfortoiletpaper

Fromthebasemodel,

Startwithabasemodel

parameterscanbeNewSKUsarethen

12-packsize

isolateddeveloped

Adaptpacksize

Ultrasofttoiletpaper

Softtoilet

6pack

paper,

Adaptpapergrade

Vegetablepaper(forbaking)

Adaptprocess

Note:Nonexhaustive.

McKinsey&Company

Drivesuppliercompetitionatthecostcomponentlevel.Dataanalyticsarehelpfultoretailerswhen

settingtargetcosts.However,toachievebetter

targetcostingoverthelongterm,it’scriticaltobuildnegotiationleverage.Suppliercompetitionatthe

cost-componentleveliscrucialtoclosingthegaptowhatappearsinshould-costmodels.

Digitalrequest-for-quotation(RFQ)toolsallowretailerstorunRFQprocessesandprovide

granularfeedbacktovendors,particularlyonthecomponentsthatcostmorethanexpected.

Retailerscancomparebidsfrommultiplevendorsatthecost-componentlevelandoverlayinformation

fromparametricshould-costmodelstofurthercalibratebids.

Retailerscangoastepfurthertobolstertheir

sourcingapproach:theycanfostervendor

competitionbyusing

AI-enabledtoolsthatidentify

newvendors

inbothnewerandestablished

categories.Theseadvancedsupplier-discovery

toolscanhelpretailerscastawidernetforproduct

sources,runrigorousanalysisonsupplierbids,anddiversifytheirsupplierbase,thusensuringbusinesscontinuityeveninthefaceofsupplyshocks.

Twoenablers:Centersofexcellenceandstrategicpartnerships

Howcanretailersbestoperationalizethethree

ingredientsdiscussedabove?Whereshouldthosecapabilitiesresideintheirorganizationalstructure?Forleadingretailers,acriticalsuccessfactorintheirprivate-brandjourneyhasbeenthecreationofa

centralizedteamofspecialists:theprivate-brandcenterofexcellence(COE).

Aprivate-brandCOEiscomposedofexperts

inproductdevelopment,nutrition,packaging,

sustainability,andsourcing-relatedactivitiessuchasanalyticsorvendornegotiations—andcan

performthesefunctionsfaster,morerigorously,andinamorestandardizedwaythaniftheretaileroperatedwithoutaprivate-brandCOE.Itcan

supportmerchantteams,coordinatecross-

Aturningpointforprivatebrands:Howretailerscanseizetheopportunity7

functionalcollaboration,anddisseminatebest-

in-classpracticesacrosstheorganization.On

theanalyticsfront,forexample,aprivate-brand

COEcandeploysomeofthetoolsdescribedin

thisarticle,suchasshould-costmodelsandstarratinganalysis.Itcanalsoworkwithmerchantstodevelopsupplier-specificnegotiationstrategiesincorporatinginsightsfromshould-costmodels

andelectronicRFQs.ACOE’ssizeandspecific

responsibilitieswillvaryfromoneretailerto

another,dependingonavarietyoffactorssuchas

productportfoliocomplexity,thenumberofannualcompetitivesourcingevents,andthecapabilitiesofmerchantsandsourcingmanagersoutsidetheCOE.

Anothercriticalenablerofexcellinginprivate

brands,inbothEuropeandNorthAmerica,isdeepmanufacturingexpertiseandreliableaccessto

high-qualityproductioncapacity.Someretailers,

suchasLidl,havetheirownmanufacturingfacilities;

otherretailersareforminglong-termstrategic

partnershipswithvendors.InNorthAmericain

particular,competitionforproductioncapacity

isintense,withsomecategories—suchaspet

food—havinglimitedsparecapacityforprivate

brands.SomeCPGplayersthatareexp