My gut is growing, I’m sick of my colleagues at Wilson Everard making pathetic ‘middle-aged spread’ jokes and the last thing I needed was a rubber chicken meal and a prone afternoon at a conference but the AFR Retail Future Forum seemed to be something I shouldn’t miss and I’m glad I didn’t.

Sue Morphet, CEO of Pacific Brands, spoke about middle brands being pushed from the market, big retailers turning their stores into brands and only supporting big guns who are putting serious resources behind their brand – and that really struck a chord with me.

We’ve all seen a lot of suppliers getting caught in the middle, most spectacularly in the current Coles and Woolworths price war. Retailer clients of ours are doing the same thing – they have to because they expect a team effort to get the increasingly-reluctant populace to part with their hard-earned.

Private labels are gaining increasing consumer acceptance (now almost 25% of the $85 billion retail grocery market), and retailers are running with a simpler mix of private label and the big ‘supported’ brands, with middle-market brands facing deletion. But you can’t blame the retailers – things are the toughest for a generation and they’ve got shareholders!

As a result, some of Australia’s best-known, everyday brands are becoming extinct in the name of competition and profit forecasts. Large portions or, in some cases, whole brands like McCormick spices, Greenseas tuna, Murray Goulburn’s Devondale cheese, Tetley tea and many more have simply disappeared from shelves and quite possibly will never return.

Coles CEO Ian McLeod was quoted in The Age as saying, “We’re not taking favored brands off the shelves,” instead maintaining it was shunning brands that had ‘not invested in innovation or engendered loyalty’.

Hmmm… sounds like a well-known Prime Minister saying ‘the GST is dead’ and a more recent one saying ‘there will be no carbon tax’.

When you talk to the sales and marketing teams of delisted brands they all talk about a lack of shelf space created by the private label. They’ll tell you their brand was ditched because it wasn’t the number one in the market, because they wouldn’t cop the margin pressure, or because they refused to pay to retain their shelf space. With something like 50 ‘confidential complaints’ from grocery manufacturers to the ACCC, I guess the consumer and competition watchdog will be the final judge on what has really happened.

But if Coles and Woolies are going one way, Silvestro Morabito, Metcash Food and Grocery’s COO, wants us to know he’s going another route: promising support to Australian brands. He was quoted as saying, “We have to continue to support Australian brands and Australian manufacturing to make sure private label doesn’t dominate in the way it does in continental Europe”.

Good on Silvestro, what a top bloke!

But hey, what about the Metcash price-based TV campaign called ‘Locked Down Low Prices’? Well, don’t worry. According to Metcash it was only meant to improve consumer perceptions that its prices are competitive… phew.

But what has helped drive this uncomfortable situation over the last couple of years is the greatest consumer hangover since the oil crisis in the early seventies. The Global Financial Crisis has scared the living shit out of the Australian population. When our government had to guarantee our banks, Australians shut up shop and pulled down the shutters and they’re still locked tight – ask any retailer.

We’re not in a recession but we have a recession mentality that is driving private label sales growth. It is allowing many brands to quietly retire and die. So what options do brands have?

Well, of course, you can go over to the Dark Side and produce a private label for the chains to keep the factory running and prop up the branded product if it is suffering in the new environment. It also keeps you in contact with the good folks at Coles and Woolies, keeping the door open for when you are ready to talk branded product with them again. Or you can take the Coles CEO’s advice and innovate!

That maybe not such an easy task when the market leader is a multinational with more innovation technicians around the globe than you’ve got employees. And multinational market leaders with the brightest minds on earth can still stuff up – remember New Coke and Vegemite iSnack2.0?

But let’s say you were to focus on innovation, remember it has to start with the consumer. Understanding their engagement with your brand and product types and what might actually go beyond meeting their needs to really ‘surprise and delight’ them. So a bit of consumer research wouldn’t go astray! Innovation directions that appear to be gaining traction in the current environment are those that fit into one of two camps:

1. Cost lowering or value adding innovations

These are product formats that show the consumer that the brand appreciates their current mind state and is refining product to meet their needs with demonstrated value.

Coon cheese slices offered 750 gram packs containing three inner packs each containing 12 slices to keep the product fresh over weeks of use. Great for health conscious mums making nourishing school lunches; not exactly a rocket science innovation but if you’re the only one doing it your sales will fire up.

Woolies have been forcing suppliers down this path for ten years with their signature 20% Extra Value over a range of grocery items.

2. Innovation that provides ‘bright spots’ in consumers’ days by giving them affordable luxuries

Just last week I was wasting time at Coles when I noticed a pack of three, bite-sized Ferrero Rocher chocolates at the checkout. Who could resist that? And yes, I know I should but I didn’t. A quick tip for when you bring these innovations to range review: make them stand out by looking different from the brands that did get to stay on the shelf. It helps the retailers look like they have variety and gives you a bit more ‘stand out’ in the category.

But innovation shouldn’t begin and end with your product. You must look at how you encourage your brand loyalists to become brand ambassadors. Huggies Nappies engage young mums with online forums, information sharing, Facebook programs, parenting advice, promotions, sampling, book clubs, baby care, baby names etc. Just have a look at huggies.com.au to see a fabulous engagement program in action!

Then there is the old Avis ‘We try harder’ model, where you get in the retailer’s ear about how good your brand would be at keeping the number one brand on its toes.

Present an innovative price promotion strategy that differs from theirs and ‘work with the retailer’ to make sure the number one brand doesn’t get to big for its boots. Ultimately retailers want a hot range, loyal customers and growing sales (and a little bit of margin of course) and they’ll talk to anyone who can help them achieve that.

But if you’re getting squeezed out maybe you should be looking at other distribution and sales avenues – the world. Metcash is obvious given their desire to support brands -so give Silvestro Morabito a bell.

And what about Aussie Farmers Direct? It’s a great business model supporting local produce and you might introduce your products to them to include in their range.

The one light at the end of the manufacturer tunnel is the internet, which is shifting the power from retailers to consumers. And social media has given consumers a vehicle to communicate and marshal a united front. Brands can leverage this with retailers. There’s the not-so-urban-myth of the paper products brand that leveraged their strong consumer following in one category to maintain ranging in another! So it can be done.

How could your business use this to the benefit of your brand? Can you use consumer power to maintain ranging, develop innovation and brand loyalty or drive sales into other channels? We know that retailers track customer loyalty on products so if you can marshal your consumer army you can keep your goods on the shelf – if you get my drift. The most important thing is to get off your arse and do something, before the retailers wield the axe.

Big grocers might be trying to drive a stake through the hearts of middle brands, but if middle brands get moving on innovating the product and engaging the consumer now, they’ll have products that big grocer can’t afford to delete.

Where do you start?

Call a halt and get some help.

Get your sales and marketing people together, get your ad agency to give you their boardroom and their best people for a day, get a facilitator and come up with a plan. The longer you spend blaming the big supermarkets the more likely it is that your brand will end up as dead as Ned Kelly.