retail news in context, analysis with attitude

Fascinating piece in Advertising Age this morning about how some retailers are facing off with some brand marketers and re-evaluating the importance of certain brand names.

“Costco's recent decision to strip Coca-Cola products from its shelves in a pricing dispute,” Ad Age writes, “is the highest-profile sign yet that the age-old battle between marketer and retailer is escalating, due to the growing power of private label, looming package-goods deflation in the face of falling commodity prices, rising pressure on retailer margins, and softening volumes. Facing those factors and armed with data from loyalty cards, retailers are getting savvier about which brands to keep and which to lose.”

At the same time, “CVS/Caremark plans to remove most Energizer alkaline batteries from its stores by early next year ... leaving just Duracell and private label. And Walmart, which stepped up efforts to pare brands from its shelves this year, will reduce assortments even more aggressively next year, according to manufacturers and analysts ... Exacerbated by the recession, the stepped-up U.S environment is starting to more closely resemble the contentious retailer manufacturer relations of Europe, where Delhaize pulled all Unilever products from stores in Belgium earlier this year in a pricing dispute, though Delhaize ultimately relented.”
KC's View:
While the Ad Age story points to pricing as a major point of conflict, it has long been the contention here that retailer sought to be paying for attention to the brands they carry and, quite frankly, ought to be more selective. Most stores, I would argue, carry too many brands and too many sizes ... and it isn’t ultimately good for consumers, retailers or even manufacturers. There’s too much undifferentiated product out there, and retailers ought to be more hard-nosed about what they have on their shelves.