Branding does work - shoppers vote with feet after Belgian supermarket removes Unilever products

The role of branded goods in tempting shoppers into supermarkets will be seriously tested this week. Delhaize, one of Belgium's leading retailers with more than 775 stores, has announced that it is taking 250 Unilever products off its shelves after a spat with the branded goods giant over pricing and merchandising.
Shoppers are deserting the chain in droves as a result, according to research by local agency Brandhome. Nearly a third of Delhaize shoppers are heading for rival chains in search of their favourite Unilever
Findings such as these bring into sharp relief a critical issue raised by the economic downturn. Yes, cash-strapped shoppers want the choice of lower-priced, own-label goods when they go to the supermarket. But many also demand their branded favourites and are prepared to abandon retailers which deny access to them. All those years of patient (and costly) brand-building are paying off. The dispute suggests that branded goods are still a powerful draw for shoppers. There is also the issue of how Delhaize will lure back those shoppers who have deserted it for rivals.
The Belgian affair raises some interesting questions about corporate motivation. Delhaize insists that it is the wronged party. It says that in the 2009 round of commercial negotiations, Unilever suddenly tried to impose new conditions demanding the retailer stock a package of goods including famous as well as less well-known brand names. Delhaize argues this restricts its ability to offer the products shopper want. Unilever threatened to scrap its buying conditions - including discounts for volume sales - if Delhaize refused to play ball. The effect would be to raise prices on those goods by up to 30%, says Delhaize. Unilever, by contrast, claims that it was looking to implement a price increase of just 2.5%, which is below Belgium's inflation rate and that Carrefour and Colruyt had accepted these terms. The Anglo-Dutch giant makes no comment on the range of brands it was asking the retailers to stock.
Targeting branded goods has been a vital weapon in the retailers' battle for shoppers. In the UK, Tesco has expanded its Discount own label range while Sainsbury's launched its Switch and Save campaign encouraging shoppers to switch away from branded goods to its own brand range. But it is hard to envisage any of the big UK chains dispensing with Unilever's brands such as Persil, Marmite, Dove, Lynx or Flora. Delhaize has been described as a Belgian version of Waitrose, so perhaps the allure of brands is stronger among better off customers. The Delhaize experience serves as a reminder that some people will go the extra mile to buy their favourite brands. For them, own label alternatives are no match for the real thing.
Findings such as these bring into sharp relief a critical issue raised by the economic downturn. Yes, cash-strapped shoppers want the choice of lower-priced, own-label goods when they go to the supermarket. But many also demand their branded favourites and are prepared to abandon retailers which deny access to them. All those years of patient (and costly) brand-building are paying off. The dispute suggests that branded goods are still a powerful draw for shoppers. There is also the issue of how Delhaize will lure back those shoppers who have deserted it for rivals.
The Belgian affair raises some interesting questions about corporate motivation. Delhaize insists that it is the wronged party. It says that in the 2009 round of commercial negotiations, Unilever suddenly tried to impose new conditions demanding the retailer stock a package of goods including famous as well as less well-known brand names. Delhaize argues this restricts its ability to offer the products shopper want. Unilever threatened to scrap its buying conditions - including discounts for volume sales - if Delhaize refused to play ball. The effect would be to raise prices on those goods by up to 30%, says Delhaize. Unilever, by contrast, claims that it was looking to implement a price increase of just 2.5%, which is below Belgium's inflation rate and that Carrefour and Colruyt had accepted these terms. The Anglo-Dutch giant makes no comment on the range of brands it was asking the retailers to stock.
Targeting branded goods has been a vital weapon in the retailers' battle for shoppers. In the UK, Tesco has expanded its Discount own label range while Sainsbury's launched its Switch and Save campaign encouraging shoppers to switch away from branded goods to its own brand range. But it is hard to envisage any of the big UK chains dispensing with Unilever's brands such as Persil, Marmite, Dove, Lynx or Flora. Delhaize has been described as a Belgian version of Waitrose, so perhaps the allure of brands is stronger among better off customers. The Delhaize experience serves as a reminder that some people will go the extra mile to buy their favourite brands. For them, own label alternatives are no match for the real thing.