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Alex Miller, president/CEO of Daymon Worldwide, told the company’s employees this morning that Supervalu has decided to terminate its relationship with the private label giant, effective May 15.

The announcement comes just a week after Safeway made a similar announcement to its suppliers, effective May 28.

Daymon insiders say while the timing of the two announcements is unfortunate, there appears to be no connection between the two decisions. Safeway continues to put the emphasis on its more service-oriented Lifestyle stores, while Supervalu is focusing on its Save-AS-Lot limited assortment store business.

In his comments to employees, Miller emphasized that Daymon remains proud of the private brand portfolio work that it did for Safeway for five years and Supervalu for six years, and that it will continue to operate off-site satellite offices near both company’s headquarters. Insiders tell MNB that it is possible that Daymon could continue to work with suppliers that are in the private brand business, and in fact could continue to see its products on Safeway and Supervalu shelves.

“When one door closes, another one opens and we see this as an opportunity to focus more on our supplier needs in the region,” said Miller.

Daymon also maintains that while the loss of business is disappointing, it is not critical - Daymon is a diversified global company operating in 22 countries, with processes and businesses extending into packaging design, in-store activation and c consumer events. Insiders say that the Supervalu and Safeway losses amount to less than 10 percent of overall business.
KC's View:
Tough timing for Daymon, but certainly survivable.

Daymon always has struck me as a strong and well-managed company, the kind of company that will use these events to instigate diversification at one end of the business, while perhaps looking at what the Safeway and Supervalu decisions teach it about the private label brokerage biz.

The decisions by Supervalu and Safeway in all likelihood mean that both companies - as well as other retailers not changing their source of private brands - are taking the notion of branding very seriously. This says much for what Daymon has both preached and achieved...and now it has to deal with the downside of its own success - companies that want to bring these specialized functions in-house.