Europe, Migros, Aldi and Tesco all built successful retail empires based solelyon the development and proliferation of their own brands.
There are three fundamental reasons for the development andgrowth of store brands:1. The shift of power from national brand marketers to nationalretailers.
Prior to the days of modern distribution capabilities and multi-market promotional capabilities, national brand marketers had the edge andthe muscle to divide and conquer retailers who were not able to amass largeamounts of purchasing power to demand lower prices. In the U.S., evenleading retail chains such as Kroger and Safeway were mostly unable tomount successful corporate purchasing efforts due to their lack of nationalpresence and their local, ground-up organization.In the U.S., Wal-Mart (in fact, following the Sears model) forever altered thelandscape by leveraging massive buying power through a single point of purchasing. The same phenomenon occurred even earlier in Europe whenCarrefour opened Supercenters in France and Migros in Switzerland, leadingthe drive for national, rather than local, dominance.
2. The ready availability of high quality, low priced private labelproduction capacity.
Most of the early private label sales did not come atthe expense of nationally branded, highly marketed products. Private Labelfed on regional or under promoted price brands. As “own brands”increasingly encroached upon these businesses, company owners quicklyoffered up their manufacturing capacity for private label products (such asRoyal Crown Cola switching its capacity to President’s Choice). Once retailersfound they could usurp the placement of third, fourth and fifth brands – not