Branded consumer goods players fail to hold off competition from private labels

Despite competing with private labels for more than two decades, branded fast-moving consumer-goods makers have failed to hold off the competition from private labels, in spite of their technical superiority, creative marketing, and, more recently, efforts to differentiate at the point of sale.

A new report by The Boston Consulting Group points to one remaining sustainable advantage - rapid time to market. The report, Speed to Win: How Fast-Moving Consumer-Goods Companies Use Speed as a Competitive Weapon,was released yesterday.

''Private labels have learned to match branded products in every important way,'' said Ivan Bascle, a partner in the firm's Munich office and a coauthor of the report. ''But their business model limits their ability to bring out real innovations fast. That's where the branded companies can thrive - if they move faster.'' That speed can also give them the flexibility to thrive under the spotlight of social media, enabling them to respond quickly to consumer demands.

Bascle and his colleagues have seen a recent uptick in consumer brand projects around speeding up product development. The team found a dozen ''speed champions'' representing each major product sector. These champions typically got new products from the creative idea to the to the shelf  at the marketplace about 30 per cent faster than the average company in their sector - in fewer than 15 months versus 22 months and 30 months for laggards. This capability not only gave them an edge over private labels but also helped them compete against rival brands.

The differences were sizable whether the industry as a whole was quick in getting products to market, such as fashion (Zara, for example, requires only three weeks), or slower, such as alcoholic beverages and tobacco. ''Companies in every kind of industry can become speed champions for their context,'' said Bascle.

Time Is money
How did they do it? ''The biggest step was simply making the organisation aware that time is a major cost,'' said Andreas Rainer, a consultant in BCG's Vienna office and a coauthor of the report.