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Safeway announced late last week that it will take a more hands-on position in dealing with its private brands portfolio, saying that it will create a new program called Safeway Direct Connect that is designed to enhance the ability of private brand suppliers to work with the retailer.

In a confidential letter to suppliers, Joe Ennen, senior vice president of consumer brands for Safeway, said that the company is focused on “improved execution” that will “come from a significantly expanded retail support organization for suppliers”; improved access to Safeway decision makers and Safeway sales data; and a support system that will be made up of executives better positioned to deliver resources to suppliers.

As part of the decision, Safeway said it would be ending its relationship with Daymon Worldwide , effective May 28, and will no longer outsource any of its private brand building responsibilities to outside companies.
KC's View:
There have been some suggestions - including a story in the Wall Street Journal - that with the recession receding, private brands will be less important than they were when people were counting every penny.

As always, such speculation is overly simplistic. In some cases, people will return to national brands that have a certain resonance for them, but in other cases - because so many people still have a recessionary mindset - they will stay with private brands that they have found to be either equivalent or differentiated enough to be preferred.

It seems to me that the retailers that continue to focus on private brands and put marketing muscle behind them will be successful ... and those that are complacent will be less so.