The Dangers of Private Label
Could the private-label strategies many pet stores are implementing to drive their businesses forward actually end up hurting them in the long term?
That could very well be the case, if retailers let their private-label ambitions undermine their valuable relationships with key suppliers.
My eyes were opened to this potential danger recently when a top executive at one of the pet specialty channel’s top food manufacturers reached out in response to Pet Business’ May cover story. In the article, I detailed the growth of the private-label movement in the pet specialty channel and what is driving the trend, as well as the opportunities and challenges that retailers face in implementing this type of program in their stores. However, I failed to address a very important element of the private-label issue: the impact that it can have on emerging brands within the industry, and what that will ultimately mean for pet stores and the future of innovation.
This is particularly obvious when it comes to food. As the executive I spoke with pointed out, there are still quite a few pet food manufacturers out there that remain fiercely loyal to brick-and-mortar pet specialty trade—including his company. These vendors invest a lot of money, time and effort in not only developing high-quality products that advance the health of pets, but also driving customer traffic and sales in pet stores. It is a dynamic that has been vital to the ongoing success of the pet specialty channel.
Of course, in today’s tough competitive climate, it’s easy to understand why pet stores might be attracted to the idea of adding a private-label program in an effort to differentiate their product selection and proactively address the problem of channel-hopping brands. However, doing so at the expense of your loyal brand partners makes no sense at all.
After all, does it make sense for pet food companies to remain committed to retailers if those retailers ultimately try to steer customers away from channel-correct, hard-working brands and toward private-label products? I don’t think so.
Whenever a prominent “independent pet specialty” brand moves into another retail channel, such as one of the big-box pet chains or one of the high-profile online outlets, I often hear retailer after retailer lament that it was mom-and-pop pet stores that built the brand in the first place. And that is sometimes true.
But in the pet industry, brand building among retailers and pet food manufacturers is a two-way street. Loyalty should be too.