Trends in Retail Competition: Private Labels, Brands and
Competition Policy
A Symposium on the Role of Private Labels in Competition between Retailers and between Suppliers
The Institute of European and Comparative Law in conjunction with the Centre for Competition Law and Policy
Oxford, 9 June 2005Sponsored by Bristows CCLP (S) 05/05
Private Labels and Branded Goods:
An Economic and Competitive Comparison
by
Professor Paul DobsonLoughborough University
“Trends in Retail Competition: Private Labels, Brands and Competition Policy” Symposium,
IECL, Oxford
9 June 2005
Private Labels and Branded Goods – Oxford 9 June 2005
I. Brands v. Private Labels
“Horrors” and “Heroes” The different sides to brands and private labels
Consumers’ “Real Champions” Desirable brands and private labels
Competition Concerns Power to prevent, restrict and distort
competition
Private Labels and Branded Goods – Oxford 9 June 2005
II. Brand “Horrors” v. “Heroes” Brand “Horrors”
The “Blob” The “Giant Octopus” Consumers’ The “Virus” Nightmares
Brand “Heroes” The “Protector” The “Pioneer” Consumers’ The “Equalizer” Sweet
Dreams
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Private Labels and Branded Goods – Oxford 9 June 2005
III. Brand “Horrors” The “Blob”
Dominates a category, smothering all rivals Stops others entering and innovating
The “Giant Octopus” Tentacles everywhere to use leveraging
power to grow while restricting or killing small brands
The “Virus” Infects and takes over all shelf space in a
category by proliferating spin-off products
Private Labels and Branded Goods – Oxford 9 June 2005
IV. Brand “Heroes” The “Protector”
Provides value for money through its scale Provides consistency and quality assurance
The “Pioneer” Creates new markets through new products First to innovate when consumer tastes change
The “Equalizer” Enters markets to challenge dominant positions Offers standardisation to aid price/value
comparisons
Private Labels and Branded Goods – Oxford 9 June 2005
V. Private Label “Horrors” v. “Heroes”
Private Label “Horrors” The “Blood Sucker” The “Flesh Eater” Brands’
Nightmares The “Body Snatcher”
Private Label “Heroes” The “Underdog” The “Adventurer” Consumers’ The “Revolutionary” Sweet Dreams
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Private Labels and Branded Goods – Oxford 9 June 2005
VI. Private Label “Horrors” The “Blood Sucker”
Feeds off brands’ success in creating markets Free-rides on brand marketing, formulation,
packaging and/or reputation
The “Flesh Eater” Kills brands slowly by poor shelf positioning,
artificial price differentials, value destroying promotions, deliberate stock-outs
The “Body Snatcher” Copies then replaces brands Copycat/clone own-labels and brand de-listing
Private Labels and Branded Goods – Oxford 9 June 2005
VII. Private Label “Heroes” The “Underdog”
David takes on Goliath Real choice where previously there was
little
The “Adventurer” Boldly going where no one has gone before Innovative products and new categories
The “Revolutionary” Provides value products for the masses Budget lines and generics
Private Labels and Branded Goods – Oxford 9 June 2005
VIII. Consumers’ “Real Champions”
Brands offering: Guaranteed quality and reliability Price/value comparability Distinct variants to suit different tastes Regular improvement and innovation
Private Labels offering: Genuine value (avoiding “marketing surcharge”) Genuine choice (offering alternatives) Genuine variety (filling gaps) Genuine innovation (catering for latent demand)
Private Labels and Branded Goods – Oxford 9 June 2005
IX: Retailer Control Over Suppliers
Retailers as “Suppliers”
Control over
Suppliers
Retailers as “Competitor
s”
Retailers as “Customers
”
Private Labels and Branded Goods – Oxford 9 June 2005
X. Consumer Concerns Retailer sovereignty that permits:
Deliberate damage to brand value Deliberate restrictions on choice Deliberate cutting corners on PL quality Deliberate lack of PL price comparability Deliberate manipulation of prices and
distortion to category price architectures