PLMA’S WORLD TRAVELS TO JAPAN

BOB BAUER

CHIBA, Japan — Delegates and exhibitors at the Private Label Manufacturers Association’s upcoming World of Private Label Show in Asia show here will find a unique store-brand scenario.

Retailers there have been facing a squeeze caused by discounters entering the Japanese market. As a result, they have been forced to find a way to bring less expensive goods into the store. Their answer: private-label goods, known there as private brands.

“It’s a different set of factors,” said Brian Sharoff, president of New York-based PLMA, producer of the event, which is set for Jan. 24 and 25. “It’s not that they are no-frills. It’s that they are starting to respond to the consumer pressure in their market. To that extent we want to show them high-quality products and not have retailers get sucked into the same no-frills approach that we saw in other parts of Asia.”

This is PLMA’s third Asian trade event. Shows were held each of the past two years in Hong Kong. Sharoff said there were about 85 exhibits at last year’s show, with about 130 on tap for this year.

One reason the show has expanded is that about 10 Japanese companies are scheduled to exhibit. Sharoff said that was a key for PLMA, because the show was not meant to be just an export event.

“Another thing that’s helped the show grow is we’ve opened the show to companies with existing private-label programs in the states who want to sell their entire program. A lot of retailers outside of the U.S. are small retailers who have generally grown up with wholesalers. Therefore, they are used to dealing with total programs.”

Sharoff said that although store brands are not as developed in Japan as in other places, it’s not a question of sophistication. Recent regulatory changes are helping to pave the way for progress, he added.

“Until recently you were forced to do business through a series of locked-in wholesalers, [with] each layer of wholesaling adding 4% or 5% more in cost. If that didn’t slow you down, manufacturers and retailers were able to fix prices and lock out anyone who didn’t adhere to the price. Manufacturers were expected to charge a price that guaranteed them the profit they needed, regardless of whether the consumer was happy with the price. In that marketplace, you don’t have store brands thriving.

“But that marketplace has changed. As it has changed, some retailers are beginning to use knowledge they’ve had all along and reorganize their sources of supply.”

Sharoff cited Daiei, Japan’s leading retailer, as a trailblazer in the country’s private-brand evolution. Daiei recently expanded its Savings brand private-label line.

Isao Nakauchi, Daiei’s chairman, president and chief executive officer, is one of the scheduled speakers at the PLMA show’s opening. Nakauchi will also accept the international category award in PLMA’s Salute to Excellence, an annual competition in which companies are recognized for their private-label efforts. Also scheduled to speak is Dave Nichol, president of Cott Corp., Toronto.

Sharoff said manufacturers will find Japan to be private-label-friendly territory if these three scenarios unfold:

“If the retailers follow the Daiei approach and go with good packaging, good-quality products and strong promotion.

“If regulations, which have traditionally kept most foreign goods out of Japan, continue to be relaxed.” Tied to that, he added, are Japanese manufacturers who, in many cases, are just as kept out of product categories by Japanese restrictions as are foreign companies.

“If the consumers can be shown that the store brand is a high-quality brand just like any other brand. There’s a bit of a myth in Asia about brand-consciousness. Consumers are aware of certain brands and attach quality to it. But that’s not to say they wouldn’t buy something by Daiei or anyone else if it has high quality.”