2020 has already brought profound change to retail. The global economic crash, coronavirus pandemic, homebound consumers’ seismic shift to online shopping, as well as Brexit, tariffs and trade wars, have all added immeasurable complexity. From start-up brands to established retailers, companies have had to drastically revise their 2020 business strategies to ensure they survive this unexpected start to the new decade.
Despite this chaotic landscape, there remains a sense of hope, as new opportunities reinvigorate retail and manufacturing. For instance, the pandemic has fuelled demand for grocery and pharmacy products as consumers seek the security of essential goods. Consumers are also cooking at home more often, boosting demand for food staples.
To navigate this unprecedented period in retail history, more retailers and manufacturers now recognize the status quo is no longer an option. Companies now see collaboration as a pragmatic way to overcome today’s obstacles and adapt to consumers’ needs.
1. Boost efficiency by going digital
In the past, the product development process often involved redundancy, errors and inefficiencies that wasted time and resources. Traditionally, the product development leader would manage hundreds of paper-based product specifications manually, and each specification required several audits and updates per year. Making even minor changes to specifications meant scouring reams of documents, which slowed new products’ speed to market and took resources away from managing existing ranges. In our recent survey, “12 Truths about Private Label Success”, 75% of retailers and suppliers said they still use an array of generic tools like email and spreadsheets to exchange information.
In recent years, technology has helped retailers and manufacturers resolve these communication and organization issues by helping internal teams and external trading partners collaborate more effectively. For instance, storing and sharing information digitally allowed manufacturers and retailers to promptly track and share product information without the need to search through reams of paper-based records.
Coronavirus has forced consumers online; now supply chains need a digital approach to keep up with this global trend
Since manufacturers often use similar specifications across their product lines, online systems also make it easy and efficient to replicate product information to save time and effort. Automating this information helps manufacturers free up time to develop more products for more retailers simultaneously and reduces the risk of human error by minimizing manual data entry.
As the coronavirus pandemic has forced more consumers and businesses to go online, it only makes sense that product development teams choose digital solutions for efficiency to keep up with the widespread technology adoption. For instance, the pandemic led to a 59% increase in new online customers for Carrefour and Carrefour Brasil’s e-commerce sales more than tripled within a month as consumers turned to e-commerce to meet their needs.1 2
2. Smash silos to improve team communication
Managing a Private Label portfolio can involve hundreds of products and boost complexity, as each item requires its own verified product specification. That’s why more product development teams are choosing to collaborate by using online solutions to modify or add to product ranges by simply updating the product specification, which the entire team can quickly access. Faster communication can accelerate new Private Label products’ speed to market.
Digital tools can even enhance conflict resolution. In the past, disagreements between retailers and manufacturers could halt production and slow down product development. Since manufacturers often simultaneously work with multiple retailers across multiple product ranges, communicating and negotiating product changes could affect productivity within many retail companies.
As cloud computing has grown in popularity, retailers, manufacturers, printers and designers can now work from the same product specification simultaneously and keep track of all changes, boosting a team’s visibility, accountability and communication effectiveness. Adopting online systems has helped retail companies transform from fragmented functional silos to teams united by a single source of product information.
3. Give consumers what they crave
To delight consumers with innovative products, more retailers have invested in their Private Label strategies to capitalize on their brand reputation, differentiate their offerings, and earn greater consumer loyalty and profit margins. That’s because Private Labels have matured into desirable brands in their own right. Research proves that, across generations and income groups, consumers are buying private label, with 99.9% of shoppers buying private brands today.3
As they develop new Private Label products, retailers and manufacturers also need to connect with consumers to understand and adapt to their increasingly diverse tastes and dietary requirements. Such responsiveness helps retailers and their supply chains stay relevant, especially in the competitive grocery sector.
For instance, Tesco and Sainsbury’s launched their own lines of vegan products to give UK consumers more choice, especially as sales of meat-free alternatives rose by 25%.4 Spanish supermarket chain Mercadona added two new beer brands to its assortment in Portugal to reflect Portuguese consumers’ taste for products that are 100% natural and free from additives.5
4. Protect consumers – and brand integrity
Improving collaboration across the supply chain can also directly benefit consumers’ well-being and mitigate companies’ risk. For example, the food industry as a whole has faced trust-eroding scandals like undeclared allergens6 and food recalls.7 A poorly managed recall can have serious implications, ranging from the loss of sales to the loss of life. To protect consumers, both retailers and manufacturers must ensure they can promptly manage product recalls and remove affected products from store shelves and e-commerce orders within a matter of hours, not days.
To mitigate the risk of similar scenarios involving potentially harmful products, collaboration tools can help. Let’s consider an example in which a particular food ingredient was subject to a recall. If manufacturers adds that ingredient to multiple products, their product teams could use an online system to gain full visibility into exactly which products contain that ingredient and exactly which retailers sell those products. As a result of their collaborative, informed approach, retailers and manufacturers can quickly share information, identify affected products and recall those items faster to keep consumers safe, and protect retail companies’ brand reputation and trust.
5. Drive waste out of retail processes
Collaboration across product teams can boost efficiencies by streamlining processes to save time and reduce costs. Cost-effectiveness is more important than ever due to today’s harsh economic landscape across global markets. This year’s dramatic economic restructuring includes soaring unemployment around the world, which translates into less disposable income for consumers to spend.
According to Nielsen, economic declines mean “private-label brands have several avenues for future growth around the globe.8
The 2008 recession proved that economic downturns prompt consumers to buy more value products. That recession “erased decades of improvements in material well-being,” especially among vulnerable groups like the elderly.9 Demand for affordable products represents a massive opportunity for retailers to focus on value tier Private Label lines.
Private Labels give retailers greater control over the efficiency of their operational processes and costs, and allows companies to pass savings along to consumers. Helping consumers stretch every dollar can pay off, as German discounter Aldi has won hundreds of awards for its Private Label innovations, including its value tier products, ranging from cheese to whiskey.10 11
Rewriting the Recipe: It’s time for retail & manufacturing to thrive
As 2020 has abruptly upended the lives of consumers and businesses alike, more retail companies now acknowledge that change is no longer optional. A genuine willingness to collaborate within an organization and across its supply chain can help companies stay resilient and relevant. Working together can help retailers and manufacturers improve their process efficiency, responsiveness and speed to market to deliver innovative products that successfully satisfy consumers’ diverse needs.
1-Coronavirus: Carrefour reveals almost 60% increase in online customers. Ecovadis. March 23, 2020.
2-Mello, Gabriela. Carrefour Brasil’s e-commerce surges, but coronavirus costs curb gains. Financial Post. April 13, 2020.
3-IRI Finds Consumers Turn to Private Brands for Better Value, Not Just Better Price. IRI. November 5, 2019.
4-Michail, Niamh. ‘Democratising the option’: Tesco & Sainsbury’s launch vegan private label range. FoodNavigator.com. January 9, 2018.
5-Mercadona Launches Two New Beer Brands In Portugal. European Supermarket Magazine. August 27, 2019.
6-Undeclared Allergens Top Cause of FDA and USDA Food Recalls. Foods Safety Tech. December 10, 2020.
7-Perrett, Michelle. Top label causes of food recalls. Food Manufacture. April 14, 2020.
8-The Rise and Rise Again of Private Label. Nielsen. 2018.
9-Probasco, Jim. 10 Years Later: How the Financial Crisis Affected Seniors. Investopedia. September 14, 2018.
10-Aldi Celebrates More Than 400 Product Awards In 2018. The Shelby Report. December 3, 2018.
11-Schrieberg, Felipe. Inexpensive Whiskies From Supermarket Aldi Win Gold at 2018 Scotch Whisky Masters. Forbes. June 15, 2018.