The Battle of the Basket: Part One... "The Winds of War"

The past few weeks have seen a flurry of stories as the "cold war" between retailers and CPG manufacturers over the hearts and minds of consumers has been escalating and heating up. 

Getting this blog post going has been a heck-of-a-lot more challenging than I originally thought it would be. Suprisingly, it wasn't a procrastination issue (which MANY times it is for me) but one where the information I could use to draw from just keeps on coming in and I've been waiting for the right time to write. 

Last February, the buzz around private label goods started really heating up.  It's not like it was "net new", but every segment - from grocery to fashion to consumer electronics... even beer & wine - kept spinning out story after story about retailers laying new claims to brand territory. I started to consider even way back then what did this really mean - not only to the consumer, but the entire ecosystem of retail. The recession was a sobbering reality and social media a massive movement that was just beginning to hit retail. Add to that the distant thunder of the mobile phone's impact on retail and brand channel strategy and suddenly the players are all on the field and spoiling for a fight. Even the store shelves are changing... store brands are suddenly prominent at eye level, with national brands relegated to the top and bottom rows.

Fast forward.. and suddenly a few months an increasing number of articles appear about the changing relationship between retailers and CPG. As with many skirmishes, it's almost impossible to tell who fired the first shot, but clearly the bullets are flying back and forth... and each side is slowly bringing the big guns to bear for a larger battle:

• Costco refuses to restock Coca-Cola products in their warehouse clubs. The reason? "Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve."
• Kroger and P&G trade blows. Kroger refuses to accept P&G's digital coupons, deciding the idea of loading coupons from multiple sites was less useful than keeping shoppers locked on kroger.com. Then P&G launches a direct ecommerce site as a "learning lab."
• Walmart reduces its SKUs, hitting brands hard. It's not a temporary response to the recession, it's a long-term acknowledgement that for many consumers, price trumps brand loyalty.

So the battle begins, and war has been declared. The opponents: retail & CPG. The battlefield: the store shelf. What they are fighting for: the almighty shopper's basket.

These examples are but small skirmishes, but they portend a growing conflict. Over the next few weeks, stay tuned as this "war correspondent" explores the dynamics and strategies of the combatants:

Part Two: The retailer's arsenal... tools and tactics to seize shopper loyalty

Part Three: The brands strike back... shifting the field of battle away from the store shelf

Part Four: The embattled consumer... casualty or victor?

Comments

[Reflectsystems]

Great post-can't wait for the rest. I'm betting that in-store digital media will be discussed in Part Two: The Retailer's Arsenal!
http://www.reflectsystems.com