Views from the Hills by R. E. Stevens, GENESIS II (The Second Beginning) E-Mail views@aol.com

Competition - Maintaining the Winning Edge

Now that I am retired, I find I spend much more time in the supermarket.  I have more time on my hands and can take my time looking at the changes taking place.  Actually I should have spent much more time in the store when I was employed than what I did.  I was in the business of selling those non-durable consumer products.  I should have been more interested in both the customer and the consumer but like most people in the business, I did not appreciate the advantages of in-store observations.   Today in the supermarket, is tomorrow in the business and my attention was focused on today in business and not tomorrow.  Really, not all my time was spent on today's problems.  On occasions I would look to the future.  I can remember spending weeks in Sam's Stores in Dallas, Texas, studying the emergence of super stores.  I can also remember a Biweekly Report I wrote in the 1970s about our competition.  Specifically, I expressed the thought that our competitors were not the Colgate and Lever Brothers of today, but the supermarkets of tomorrow.  If the chain stores ever learned to merchandise their House Brands, we would be dead in the water with the types of products we were selling at the time.  The supermarket controls the location, shelf space and the prices.  With this control and brands of reasonable quality, they could control the sales.  After all, the brands of major manufacturers were of the "New and Improved" quality which meant that in most cases, the consumer could not really see a difference between their brands and the store brands.  Improvements usually involved a change in the level of character of an aesthetic or a minor change in the formulation that could only be seen in a controlled laboratory study.

During the 1970s we were involved in what we fondly called cost cutting.  Cost reductions not only involved the product itself but the packaging, promotion and distribution.  It wasn't until the 1980s when staffing was reduced.  I recently wrote about what I consider the fatal move of sales force reduction (see The Two Eyes of Sales May 29, 2001).  During these times, we actually helped our Supermarket competitors by producing brands that could be easily duplicated by custom packers.  All the Supermarkets needed to do was create an image through in-store presence.  This basically involved a quality package.  But during the 1970s and 1980s, the trade was involved in Generic Product sales.  This was actually to the manufacturers' advantage.  The store brand, generic product looked cheap and was cheap.

What I am seeing now are store brands with quality packaging that communicates a quality product at a lower cost than the national brands.  The trade does not have to build in the cost of advertising, promotional activities, sales forces and slotting fees into their product costs.  What an advantage!

What is the solution for the manufacturer, maintain demand through historical image as long as possible, give up in the categories where a performance advantage is not likely or create superior brands?  Actually, it will probably be all of the above.  Now if a manufacturer wants to become very progressive, they ought to purchase a major chain store as a subsidiary.  Wouldn't that shake up the business!  (While I'm dreaming, I might as well dream big.)

On a more serious note, I have given a talk (Keeping the Pipeline Full - Because Change is Inevitable), addressing the action required to prosper in business in today's world.  Three presentations were as Keynote Speaker, ASTM 1997 - San Diego, Kraft Innovation 1997 - Chicago, and the Institute of Food Technologies 1998 - Atlanta.  The talk focused on:  The Organization, the Culture and the System where good companies react quickly to change and great companies create change.  It's all about creating an environment that leads to products with consumer-distinguishable differences that are difficult or legally cannot be copied.


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