ABSTRACT
The most important difference between multiple food retailing in Britain and the United States is the relative significance in each country of the own brand. In 1992 British retailer brands accounted for 33 per cent of the market by value for packaged groceries, whereas US private brands had a market share of 18 per cent (OC&C Strategy Consultants 1992). These figures understate the importance of the most successful British supermarkets’ brands: in 1992 the two largest companies - Sainsbury’s and Tesco’s - own brand groceries had 55 per cent and 42 per cent of company market share respectively (figures from Audits of Great Britain, AGB 1992). This chapter examines the historical reasons for this discrepancy, while also analysing the social, political and structural factors which have influenced own brand development in Britain and the United States. It is surprising that the contrast is so marked: so heavily did British
retailers draw in the post-war years on US experience in importing retailing methods, technology and merchandise that one might expect a degree of similarity in their trading patterns. The post-war AngloAmerican Council on Productivity was specifically set up to promote such links. The tendency has been to ascribe the predominance of manufacturers’ brands in the United States jointly to their advertising power and to the relative post-war prosperity of US consumers (Cooke 1970; Productivity Team Report 1951: 38; 1952: 36-7). This view is limited in its historical perspective. While it is true that roundthe-clock advertising was influential in the United States, the importance of the relative prosperity of US consumers over their British counterpart has been exaggerated. In Britain the sale of Tesco’s own brand products as a proportion of total sales more than doubled between 1978 and 1992 during a period of unprecedented consumer prosperity (Powell 1992: 198). At the outset it is important to clarify the terms used to describe
own-brand products. The term ‘own brand’ is used to describe goods bearing the retailer’s name or those specifically identifiable as the retailer’s products. ‘Private label’, on the other hand, is a US term used to identify products which are not sold under the manufacturer’s (or proprietary) brand. It includes own brands, bearing the name of a packet, warehouse or co-operative, generics (‘no-name’ brands) and sub-brands which may or may not be identifiable as retailer brands. Because of the broad nature of the term ‘private label’ it is used here only in its umbrella meaning. In examining the contrasting legal and political contexts of British
and US retailing, this chapter takes as case studies the experience of J Sainsbury pic in the UK and Shaw’s in the United States. Both companies established own brand identities early in their histories (Sainsbury’s was founded in 1869 and Shaw’s in 1860). The essential difference between the two companies was that Sainsbury’s enjoyed an uninterrupted tradition of own branding which helped to determine the company’s corporate image, while Shaw’s private label was discontinued in 1944. In 1992 Sainsbury’s UK supermarket profits were £628 million, making it the UK’s most profitable retailer. The company - including its hypermarket subsidiary Savacentre - has a share of 10.4 per cent of the markets in which it operates (J Sainsbury pic 1992a). Shaw’s too is the market leader in the four states in which it operates (Maine, New Hampshire, Massachusetts and Rhode Island) with a market share of 16 per cent (figures from IRI Inc. 1992). In 1992 its sales were $1.8 billion. In addition to their significance as leaders in their respective
markets, Shaw’s and Sainsbury’s share a remarkable number of historical characteristics. Each has retained a corporate culture that reflects a long history of family ownership and both enjoy a high degree of customer loyalty. As companies they have been, regional rather than national in character and expanded less rapidly than competitors such as Lipton or Home and Colonial in Britain or the Great Atlantic and Pacific Tea Company (A & P) and Kroger in the United States. One reason for this has been that Sainsbury’s and Brockton Public Market (BPM) - the former name of Shaw’s southern region - specialized in fresh foods which were difficult to distribute effectively over long distances. This chapter begins with an analysis of the comparative retailing
structures of Britain and the United States, followed by case studies of the introduction of own brands at Sainsbury’s and Shaw’s in the late nineteenth and early twentieth centuries. The permissive nature of British Resale Price Maintenance is contrasted with the compulsion of
the US Robinson Patman Act to assess the respective fortunes of pack aged own brand groceries. The reintroduction of Shaw’s own brand, following the company’s acquisition by Sainsbury’s in 1987, is then used to challenge the view of branding as a simple marketing device.
