Jul 2, 2007

Over-reliance on Private Label Backfires

Speaking at the recent CIES World Food Business Summit, the chief executive of Carrefour, José Luis Duran, admitted that the retailer made a mistake when it culled its supermarket ranges.

Mr Duran said the company was now undoing the damage, expanding its range by 15% annually, with an even balance of branded and private label products.

Between 2000 and 2004 the company significantly reduced the number of SKUs on its shelves and also rolled out its own house brand lines. But Mr Duran said customers had responded negatively to that policy and Carrefour now understood and recognised that choice was a major expectation of its customers.

Mr Duran said Carrefour respected three core consumer rules today: Just for me, right now and at my price.

"We’re moving to (an era) where to a certain extent the price is dictated by the customer. Adjusting costs and margins is the retailer’s problem. Will we change or are we going to die? There are those retailers who are not able to change and they are going to become a part of the (current) consolidation process country by country.”

Source: 'CARREFOUR boss admits mistake in reducing product ranges', http://www.planetretail.net; DailyNews, July 5, 2007

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