Standing private label conventional wisdom on its head

Merchandising its private labels in the context of known brands is obviously a key for Tesco's success in the U.S. Here, Convenience Store Decisions looks at the topic with Jim Hertel, the senior vice president of retail consultant Willard Bishop.

Hertel noted that Tesco’s use of private label brands "turns a lot of conventional wisdom upside down. Many food retailers use two- or three-tier private label strategies to improve price image, blend out category margins, and differentiate to drive shopper loyalty. They will use a consistent approach across categories of private brand offerings and price relationships to national brands. Rarely do private brand priced exceed national brands. Tesco takes a different approach. Fresh & Easy Mac ‘n Cheese is priced 14% above the leading brand, he reports, "and in most fresh categories only private label product is available

TK: Fresh & Easy's focus on private label has even bigger implications for produce/value added produce, since "known brand" produce is less known than Kraft Mac n' Cheese, for example. Anticipating downstream implications of the Tesco approach - limited as it is right now - should keep produce marketers up at night.