NEW YORK - If you're No. 2, you try harder. But what if you're No. 3, 4 or 5? If y" />
NEW YORK - If you're No. 2, you try harder. But what if you're No. 3, 4 or 5? If y" /> Retailers Put The Squeeze On: Downsizing by Stores, Rise in Private Labels Hurts Grocery Manufacturers <b>By Jon Berry and John Sinis</b><br clear="none"/><br clear="none"/>NEW YORK - If you're No. 2, you try harder. But what if you're No. 3, 4 or 5? If y | Adweek
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Retailers Put The Squeeze On: Downsizing by Stores, Rise in Private Labels Hurts Grocery Manufacturers By Jon Berry and John Sinis

NEW YORK - If you're No. 2, you try harder. But what if you're No. 3, 4 or 5? If y

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For a microcosm, check the cereal aisle. Nabisco officially abandoned the category last week with the sale of Shredded Wheat and the rest of its ready-to-eat cereal brands to Kraft General Foods. Nabisco, No. 7 in the category, had been getting the squeeze for some time (its sales slipped 3% for the 52 weeks ended Oct. 3, according to Nielsen).
But the more interesting story is the No. 6 player: Private label. Its share has almost doubled, to 4.8%, in the past five years. Industry sources say Ralston Purina, No. 5 by just 0.2 points, has been putting an increasing amount of resources behind its private-label business. Ralston is already the No. 1 private-label manufacturer. 'I hear from Ralston's private-label people every month,' says one grocery buyer. By comparison, he adds, Ralston's branded sales reps come 'twice a year, tops.' (Ralston declined to comment.)
Not surprisingly, private-labels are acting more brand-like. Ralston has shrink-wrapped watch premiums onto its Magic Stars store brand and sold trial-size versions of Corn Flakes and Crispy Rice. Sovex, another private-label manufacturer, had store-brand knockoffs of Low-fat Special K on the shelf within three weeks of the product's release.
It's unlikely this pattern will change. Retailers are learning that pruning losers - the essence of category management - can boost profits even as the rise of club stores mitigates traditional advantages of national brands.
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