As Tesco prepared to celebrate the fifth birthday of its Finest sub-brand with a major revamp of the range, delegates at the IGD convention were hearing from one major marketer how UK retailers were in danger of destroying value in the grocery market. Two separate events. But they are not entirely unconnected.
What Finest has demonstrated is that mass market retailers can sell products which are unashamedly posh and which carry a suitable premium. Such products also have mass appeal. That's why Finest is a £600m range enjoying 30% year-on-year growth. And that's why other retailers have been able to follow Tesco's lead.
The undoubted success of these ranges show that if retailers offer consumers products that excite them, they will pay for that innovation.
This is where Procter & Gamble's Paul Polman comes in. At the IGD shindig this week, he put forward a forceful argument that as British retailers focused on cutting prices and slashing costs, they were in danger of stifling the innovation that allowed suppliers of branded goods to invest in new ways of, as he put it, delighting consumers. Polman is not alone: many senior suppliers have raised similar concerns privately with me during the course of this year as the deflationary pressures have really started to bite.
But as Tesco's Finest demonstrates, retailers are interested in developing added-value ideas that generate real growth in their businesses. The problem for suppliers is that it is the retailers who are now driving much of the really successful innovation being seen in the UK grocery market  all of it in areas where better margins can be earned. And there appear to be few boundaries. After all, with this week's launch of a range of homeware products under the Finest label, we may have witnessed the birth of the first supermarket "lifestyle" brand!
Here, then, is the real challenge for suppliers of branded goods: can they cope with operating in a deflationary environment while coming up with ideas that will ensure it is they  and not the retailers  who delight consumers? For some, sadly, the answer is no'.
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What Finest has demonstrated is that mass market retailers can sell products which are unashamedly posh and which carry a suitable premium. Such products also have mass appeal. That's why Finest is a £600m range enjoying 30% year-on-year growth. And that's why other retailers have been able to follow Tesco's lead.
The undoubted success of these ranges show that if retailers offer consumers products that excite them, they will pay for that innovation.
This is where Procter & Gamble's Paul Polman comes in. At the IGD shindig this week, he put forward a forceful argument that as British retailers focused on cutting prices and slashing costs, they were in danger of stifling the innovation that allowed suppliers of branded goods to invest in new ways of, as he put it, delighting consumers. Polman is not alone: many senior suppliers have raised similar concerns privately with me during the course of this year as the deflationary pressures have really started to bite.
But as Tesco's Finest demonstrates, retailers are interested in developing added-value ideas that generate real growth in their businesses. The problem for suppliers is that it is the retailers who are now driving much of the really successful innovation being seen in the UK grocery market  all of it in areas where better margins can be earned. And there appear to be few boundaries. After all, with this week's launch of a range of homeware products under the Finest label, we may have witnessed the birth of the first supermarket "lifestyle" brand!
Here, then, is the real challenge for suppliers of branded goods: can they cope with operating in a deflationary environment while coming up with ideas that will ensure it is they  and not the retailers  who delight consumers? For some, sadly, the answer is no'.
{{COMMENT & LETTERS }}
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