How to solve the problem of competing with private label products?

Filed in archive Point of view on November 29, 2008

I think these days there are only few industries which re not affected by economic downturn; an especially CPG companies have a more vulnerable position here.

I read in an story by Business Week that, now many people prefer to eat less outside and that has resulted in a good market for CPG companies in food sector. But this might not be 100% positive: As the consumers are trying to save more money because of uncertainty, they might start to buy private label products and actually that's what is happening today in many categories.

So the question is how to attack this threat from operational point of view? The answer is very difficult as many of the generic tactics are already being practiced by companies, e.g.:

- Negotiation with suppliers to reduce cost
- Consolidate suppliers
- Use cheaper materials by Low Cost Country Sourcing or substituting the materials (especially for packaging)
-Attack new channels e.g. corporate uses, Vending Machines, etc.

I couldn't think of any other operational tactics for short term results. Other strategies like promotion fall into marketing areas and not operations...Any thoughts?