1. Trends in Retail Competition: Private Labels, Brands and Competition Policy A Symposium on the Role of Private Labels in Competition between Retailers and between Suppliers The Institute of European and Comparative Law in conjunction with the Centre for Competition Law and Policy Oxford, 9 June 2005 Sponsored by Bristows CCLP (S) 04/05 (III)

2. Private Label Their Role for Retailers & Their Impact Upon Competition Part II

3. Source of Own Label Growth - UK 16.4 30.0 14.7 8.8 19.4 15.6 15.3 13.7 34.2 31.8 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 19751997 Brand Leader No 2Brand Brands over 2% Brands under 2% Own Label

4. Share of UK Crisp Market 23 9 11 3 17 15 22 23 10 11 2 14 26 23 9 12 2 15 13 26 22 10 11 3 15 12 27 25 8 15 2 9 12 29 26 6 14 3 9 12 30 6 12 3 10 9 30 31 6 11 2 7 32 7 11 3 5 31 6 10 1 12 5 35 33 6 8 11 2 40 35 4 4 8 2 47 35 5 3 7 2 48 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1984198519861987198819891990199119921993199419951996 Private LabelOther BrandsKPSoonerGolden WonderSmithsWalkers MTD

5. Changing the Focus of Competition From Relevance based on –Consumer Research –Product Development –Perceived Value To Price

6. Category Management For a Retailer it is the means for determining pricing, merchandising, promotions and product mix based on category goals, the competitive environment, and consumer behaviour Centre for Retail Management Northwestern University (1993)

7. Category Management: The Annual Plan Retail Complexity –Thousands of SKU’s –Hundreds of Categories –Frequent Promotions – Price Change & Gondola Ends –Numerous New Product Introductions: Recipe change, Pack Size, New Brands Branded Suppliers Submit Advance Plans of Promotions, Price Changes & New Line Introductions Year End Rebates Linked to Planned Activities

10. Category Management: The Annual Plan Retail Complexity –Thousands of SKU’s –Hundreds of Categories –Frequent Promotions – Price Change & Gondola Ends –Numerous New Product Introductions: Recipe change, Pack Size, New Brands Branded Suppliers Submit Advance Plans of Promotions, Price Changes & New Line Introductions Year End Rebates Linked to Planned Activities

11. The Retailer as A Double Agent Agent For Their Own Label Products Agent for Manufacturer Brands Controls the Pricing, Listing, Space Allocation and Promotion of ALL Brands Has Advance Notice of Planned Activities of Manufacturer Brands Has a Margin Incentive to Promote Own Brands

12. Summary UK grocery retailing is characterised by vertically integrated oligopolists Control of the supply chain has facilitated the expansion of private label Private label facilitates differentiation and higher retail margins Retailers act as agents for their products and their suppliers brands Retailers control all of the in-store marketing variables and have advance notice of the brand plans of their suppliers Most product innovation is initiated by producer brands

13. Retail Integration The linking of hitherto individual processes of distribution (customer dialogue; merchandising; shelf replenishment; inventory control; depot management and delivery; procurement; buying; supplier operations) by information technology to provide total transparency and instant communication, thereby reversing the Supply Chain. “CONNECTIVITY”“CONNECTIVITY” From Producer Push to Consumer Pull

14. Category Management What is it? Partnership with Suppliers? Managing the In-Store Marketing levers? –Space –Promotion –Range –Price Part of efficient consumer response? Measured performance? A new business process?