Promo Watch: Creating a balanced approach to store brands
The growth of store brands continues to outpace national brands. However, there is a role for both national brands and store brands at retail. Today, many retailers and manufacturers are struggling to understand what is the right combination of national brands and store brands, what should the price gap be between the two and how do the various national brand and store brand strategies impact the retailers’ total gross margin, market share and category growth.
DSN has partnered with Competitive Promotion Report and IRI to create a series of exclusive reports. This month the analysis explores national brands and store brand optimization to better understand how the retailer can create a “balanced” approach to national brands and store brands that drives overall business results. In this analysis, we looked at the major national brands and store brands in the drug channel for the laxatives tablets category over the past two years. The following are just a few of the key findings from this study:
- The average price gap percentage between store brand and national brands for the category at a little more than 10% is lower than expected, but has been trending up over the past two years;
- In most cases, as the average price gap between store brand and national brands increases, total gross margin decreases and the overall category growth rate declines;
- Additional store brand SKUs did not drive proportional increases in margin dollars;
- As might be expected, average retailer margin percentage was highest for store brands at 58%, followed by the national brands at 45.2% (Colace), 41.4% (Dulcolax), 40.2% (Ex-Lax), 39.1% (Phillips) and 21.9% (Metamucil).
- The retailer margin generated by store brands in this category ($186 million) is more than double the retailer margin of the top five national brands combined, yet there are opportunities for growth in the category with the national brands;
- Store brand average percentage of promoted units consistently is higher than national brands, with the gap between the two widening over the past year;
- Although Phillips has the lowest overall market share of the five leading national brands at 2.9%, store brand dominates the category at 46.8%;
- Phillips, Colace and Dulcolax have shown the greatest average annual market share growth at 6.7%, 3.9% and 3.6% respectively, while store brand is at 1.4%; and
- The average percentage of units on promotion by brand for store brand at 38.5% is almost double that of Dulcolax, the highest national brand at 20.9%.
Coty partners with Chalhoub Group, Jashanmal to expand UAE presence
NEW YORK — Cosmetics maker Coty has entered a new joint venture that it said would expand its footprint in the United Arab Emirates.
Coty announced a deal with U.A.E.-based luxury goods distributors Chalhoub Group and Jashanmal to form Coty Distribution Emirates. Coty said the joint venture, developed in connection with its longstanding partnership with the Chalhoub Group, would expand its go-to-market capabilities in the United Arab Emirates and provide consumers in the region with better access to its brand portfolio, in addition to allowing it to consolidate the distribution of its products and ensure a cohesive market strategy there.
"The United Arab Emirates has enjoyed steady growth over the past decade and is a key emerging market for Coty and the beauty industry," Coty CEO Michele Scannavini said. "Both Chalhoub and Jashanmal have proven to be exceptional partners to Coty in the Middle East and through our new joint venture. We look forward to further growing our business in this important market."
Beauty company Kao announces executive moves
CINCINNATI — Kao — whose brands include Jergens, Biore and John Frieda — has announced several executive appointments, including the appointment of Paul Nunnari as president of Kao Canada, effective Jan. 1.
Succeeding Nunnari is John Sullivan, who has been named VP sales for Kao USA, effective Jan. 1.
Nunnari suceeds Simon Bureau, who recently passed away after a long illness. Nunnari’s responsibilities will include leading and growing both the mass and salon businesses in Canada with the salon brands Goldwell and KMS California and for the mass hair care brand John Frieda and skin care, Jergens, Curel and Biore.
Nunnari has been with Kao USA for the past four years as VP of sales for the mass business. He also has been an integral member of the U.S. senior management team responsible for the development and growth of the U.S. market, one of the largest markets within the Kao Group.
Nunnari’s prior experience includes a variety of management board positions at Johnson & Johnson. He served as VP sales at McNeil, Johnson & Johnson Merck and the Johnson & Johnson Consumer Cos. He began his career in sales at Proctor & Gamble.
”Paul’s vision and leadership qualities will play a significant role in the future growth and ongoing success of our Canadian business. His understanding of the business needs and brands, as well as his contagious enthusiasm, positions him well to lead the business forward. On behalf of the company, I wish to congratulate Paul on his new role,” said Joe Workman, Kao Americas president.
In his new role, Sullivan’s responsibilities will include managing the mass business sector’s sales organization, which include field sales, customer marketing, shopper insights and sales operations. Sullivan will report directly to John Nosek, Kao USA President. Sullivan has been with Kao USA since 2004 and has held a variety of roles with an increasing level of responsibility. In his latest role as senior director, sales strategies and effectiveness, he led both the trade marketing and sales operations departments.
In addition, Sullivan will become a member of the Kao USA Management Committee.
“We are excited to have John assume his new role here at Kao USA," Nosek said. "Since joining Kao, he has had a significant impact on our business. We are fortunate to have someone with John’s experience, track record of success and leadership to head our mass sales team."