The Marketing Book 5th Edition

Reta

iler

S

upp

lier

Traditionalretailer/supplier relationship

B

uy

er

Acco

unt

Manager

Marketing

Technologists

Qualitycontrol

Supplychain

Marketing

Design

Production

Logistics

Reta

iler

S

upp

lier

Cross-functionalcategorymanagement

Buyer

Marketing

CategoryManager

Technologists

Qualitycontrol

Supplychain

Account Manager

Marketing

CategoryManager

Design

Production

Logistics

Adapted from ManagementHorizons (1999)

792 The Marketing Book

Retail brand products

A significant manifestation of retailer power
has been the ability of major retailers to
develop their own brand product ranges. An
‘own brand’ has been defined as a brand name
owned by the retailer (or a wholesaler) for a
line or variety of items under exclusive or
controlled distribution (Koskinen, 1999). The
name may be that of the retailer, for example
Tesco, or a name closely linked with the
company, such as Marks & Spencer’s St
Michael brand. From time to time, grocery
retailers have also launched ranges of ‘gen-
erics’, a low-priced, plain label variant upon the
own brand concept.
Retailer brands have been especially
important within grocery retailing. The three
leading grocers in the UK, Tesco, J. Sainsbury

and Asda (Wal-Mart) derived 55, 61 and 58 per

cent of their turnover respectively from their

own brands (KPMG, 2000). Table 30.9 compares

own brand shares in the food sectors of eight

countries: as own brand prices are usually

lower than those of manufacturer brands,

volume shares are greater than shares of sales.

Such brands are not restricted to grocery

sectors; with 100 per cent own brands, Marks &

Spencer has been described as ‘a manufacturer

without factories’. This company is very closely

involved in the specification, design and qual-

ity control processes.

The primary driver of own-brand develop-

ment has been to produce better margins, often

around 10 per cent better, while simultaneously

increasing pressure upon manufacturers. As

retailers have become more accomplished and

confident in their brand building, other motives

have played an increasing role. The potential

contribution of own brands to store image and

maintaining store loyalty has been recognized,

as own brands have evolved from ‘copycat’ to

differentiation status. Indeed, retailers such as

Marks & Spencer and the Body Shop can claim

impressive records of product innovation, to

the extent that own brands can trade in a

Figure 30.7 Widening the retailer–supplier
interface

Table 30.9 Retailer brand

shares in Europe

Country Shares of food sector (%)

Volume Sales

Switzerland 59.6 50.7

UK 42.0 34.0

Belgium 34.5 23.9

The Netherlands 25.3 20.9

Spain 24.1 17.9

France 20.0 16.5

Germany 18.5 12.2

Finland 9.7 8.0

Source: KPMG (2000), based on Nielsen data.