Product Line Rationalization: Europe and the Tesco Example
We’ve been reading more lately about European retailers undertaking product portfolio (or “range”) rationalization, and asked Carol Best, Vice President of Brand Strategy at Schawk's Retail Practice, if it’s a significant trend. She wrote at length on U.K. retail brands emulating U.S. brands in the most recent issue of Schawk Retail Practice’s Checkout newsletter, and her comments to us reinforces how malleable the marketplace is today:
Tesco’s recent activity in developing “venture brands” – they’re so serious they’ve developed an internal name for them – is a significant departure from their typical portfolio architecture model. So yes, we are seeing portfolio architectures change. For Tesco it’s a move in a positive direction from their traditional price-tier strategy of good/better/best. I’m hoping it inspires more brand creation and brand building activities globally.
We are also seeing (and this has been a trend for a few years now) retailers developing value tier brand solutions as a defensive move to keep trips away from big-box retailers and dollar channel stores. As it relates to the U.K., Tesco recently changed its Tesco Value to Everyday Value. I think this strategy is twofold:
• Create more distance between the Tesco brand and product that may have a negative impact on the brand
• Provide efficiencies and scale to use the value brand globally, as Tesco did for its Goodness kids line of food products, originally in its U.S.-based Fresh & Easy stores and now also available at their U.K. outlets.
In addition to reading Best’s Checkout piece, watch her BrandSquare Live Session, “Why Private Brands Are Un-American and What You Can Do About It.”