With the entrance of online behemoth Amazon and German discount retailer Lidl into the U.S. grocery market, its fate — and associated opportunities — were on the minds of exhibitors and attendees of the 2017 Private Label Trade Show, hosted by the Private Label Manufacturers Association (PLMA) in Rosemont, Ill. this week (Nov. 12-14).
More than 5,000 retail buyers and visitors were expected to peruse offerings and discuss capabilities of 2,800 exhibitors in the food, beverage, houseware and health and beauty industries. The show was also marked by a strong international presence, with nearly two dozen nations represented through country-specific pavilions and individual exhibitors.
And while retailers have long relied on private label manufacturers to produce quality products under store brands, two game-changing moves present new challenges and opportunities for retailers and manufacturers alike, says PLMA President Brian Sharoff. He pointed to Lidl opening U.S. stores and Amazon’s acquisition of Whole Foods for $13 billion in August.
Sharoff noted both retailers, while “strongly committed” to private label, bring new layers of complexity to the U.S. retail landscape.
“These are two very powerful entities, and they are already challenging established retail leaders across every channel to increase their commitment to private label as well, so there is plenty of reason for optimism among private label manufacturers,” he said.
Sharoff added that PLMA’s goal is to make sure the association’s members and their retail customers have the “best industry intelligence and expertise at their fingertips to make sense of these ramifications, and access to every resource they will require in order for their store brands to compete amid the changes that are certain to follow.”
Amazon’s acquisition of Whole Foods may have inspired worry in the hearts of brick-and-mortar retailers, but Judith Spires, ceo and chairman of King’s and Balducci supermarkets, said in a Monday morning keynote address that the online retailer’s purchase shows the importance of having a physical footprint.
Nonetheless, consumers are still expecting convenience, speed, high-quality service and satisfying in-store experiences. She pointed to a new service at King’s and Balducci where personal shoppers select items on the behalf of customers, even texting them photos to make sure the items are exactly what they’re looking for. The groceries are also delivered.
“It’s been really well received, and it’s growing the bottom line,” but it won’t replace the core business conducted at physical locations, she said.
Spires also noted the success of ready-to-eat options for busy families and offering shopping experiences that play up the food’s backstory and ways in which to savor it.
And while physical retail stores are shutting their doors, Spires said the growth of online shopping isn’t the only cause. Physical retail is also “overbuilt,” with square footage outpacing population growth.
“It does not mean all stores are closing,” she said. “We are experiencing a right-sizing, a market correction.”
Still, grocers and other retailers will have to continue to anticipate trends, incorporate technology and find other ways to differentiate themselves to stay competitive.
“We all need to keep moving quickly to win,” she said.