While low-priced competitors are a common threat around the world, it is only now that private label is becoming accepted outside Western Europe. The success of private label has primarily come as retailers have seized the opportunity to create strong brands of their own.
Good quality products and lower prices have been a successful recipe for European retailers such as Tesco, Carrefour, and Auchan. Today, own-label brands often comprise the majority of volume sold in many packaged goods categories.
Tesco is particularly notable for its reliance on market research to drive its business. The company relies heavily on analysis of shopper behavior — both visual and using shopper loyalty card data — conducts in-store research and intensive product testing. Other retailers are beginning to emulate Tesco's approach, eroding brand marketers advantage as the voice of the consumer.
However, growing retail power has added a new dimension to successful marketing of branded goods. Marketing today requires a win, win, win: a win for the consumer, the retailer, and the manufacturer.
The challenge for brand marketers is to stay ahead of the retailers in terms of innovation, while maintaining a strong relationship with their end-consumer. Increasingly companies like P&G and Kraft publish their own consumer magazines and maintain databases, which allow them to communicate directly with their most loyal consumers.