Steenkamp has produced a breakthrough book on the history and current, ascending threats of private label goods. Anyone who sells private label goods or is selling brands ( against private-label clones) needs to thoroughly digest this book.
What's a hard discounter (HD)? Traditionally its been grocery stores like - Aldi, Lidl and Trader Joe's - that stock 2000 SKUs v 45K+ for mainstream grocery stores. Most of the HD's SKUs are private, store labels designed to be as good or better quality than #1 brands. These clones are sold for up to 50% less than brands at mainstream grocery stores. By getting huge volume and turns per SKU with less complex replenishment systems, these competitors are growing faster and more profitably than mainline brands and stores. Steenkamp offers the first (that I've seen and an excellent) overview of the hard discounters' business model. And, he then offers a thorough prescription for how mainstream competitors can best mute the damage that these invaders are doing.
Why is this a must read now? In mid-2017, three big announcements/plans were announced:
1. Lidl (an Aldi clone competitor from Germany) announced a huge US invasion.
2. Aldi (which has been in the US for some time, but growing slowly due to alternative investing in their fast-growing subsidiary: Trader Joe's), then announced a $5B investment plan for more and upgraded Aldi stores.
3. And, Amazon bought Whole Foods. How will they take private-label, food-clones into both the stores and the cloud?
The grocery industry is now in a frenzy of innovation and price cutting.
B2B distribution channel players need to read this book too! Why? First, do some google research on:
1. "Amazon brand accelerator program".
2. Then, check out Wyze Lab cameras and Arcadia Group "Choice" medical devices. These are two examples in which startups have created SKU clones of B2B goods that are as good or better for dramatically less with 5 star reviews. These startups are virtual companies that use AMZ's end-to-end supply chain to create the goods and AMZ marketplace and fulfillment to sell and deliver. No need to create distribution channels. Imagine having a killer line with only 2-4 SKUs sold in massive volume taking off in weeks not years!
Cyber-marketing will ruthlessly attack over-extended, brand lines. Big Brands are typically guilty of two things:
1. Offering overwhelmingly and confusing choice. (Research fact: 6 most-popular SKU flavors of jam sell more total sales than a full-line of 24 flavors)
2. And, charging the same mark-ups on all 24 flavors when the #1 flavor is 40% of the volume. Whenever Brands over-price their #1 SKU to subsidize long-tail items, the HD clones will attack.
Get the book! (And, the cost-analytics to know what your biggest, net-profit SKUs are that will get eaten by HD clones)
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Top reviews from other countries
Rasmiranjan nayak
It's a great read . Any one in consumer businesses
Reviewed in India on February 22, 2020Tim
Content is good and deserves a recommendation, but the print is awful
Reviewed in Germany on April 9, 2019