Railing against the march of the private labels is an exercise in futility. Brands must view the tightening conditions as an opportunity to innovate or face de-listing, come the warnings.
Speaking at a breakfast event this morning to announce a partnership with innovation agency Northandsouth, Landor Sydney managing director Dom Walsh said there was a "healthy dose of fear" from clients around innovation.
"But the challenge is to think about what the consequences will be if we don't innovate, if we don't take on that challenge," he said. "You only need to look at companies like Kodak, which went from 150,000 employees in the '80s to a mere 8,000 people last year."
Mike Staniford, Landor Sydney executive creative director, said his experience working on Tesco in the UK as it began to expand its private label offering showed that mainstream brands often became stronger as a result.
"Currently about 18%-20% of a shopper's basket [in Australia] is own label. Well at Tesco it's 40%-45%. I imagine Coles and Woolworths are going to drive this so much further, but it's not something you should be afraid of," he said.
"In the UK, as Tesco became stronger and stronger, mainstream brands had to look to themselves to dig deep into their authenticity, their stories, their past, their heritage, to in some respects reinvent themselves in order to stay competitive, and what led the heart of that was innovation.
"Own label will continue to grow, and it will become more diverse, and many FMCG brands will be challenged by that or face de-listing. A lot of our clients talk to us about this, getting their house in order. That's not going to change, but I would strongly urge, don't be afraid of it – embrace it and actually think about what strengths your product's got, your brand's got, and put money into fresh, innovative thinking."
And the key to successful innovation? According to Giles Day, founding partner of Northandsouth: "Fail early, fail often. That means bringing things to life early, showing them to people, maybe making a fool of yourself because it's not very good yet. But you've got to do some rubbish so you can go round and round in that circle."
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