Why new GMO regulations could be a blessing for US retailers
Pending new labelling, legislation that requires brands to disclose GMOs on their products is already causing major headaches for American retailers. The new rules are set to be announced at any time but it’s clear much work must be done to ensure private brand retailers, in particular, are ready. Here, Steven Howell, solutions consultant at Solutions for Retail Brands (S4RB Inc.) explains why these new rules should be embraced by private brand retailers and discusses the increasing importance of brand transparency and the influence of Millennials on shopping habits.
A recent announcement from the United States Department of Agriculture (USDA) requiring brands to disclose bioengineered food on its products is already causing major headaches for many American retailers.
Reviews are currently underway to identify which foods will be considered ‘bioengineered’ and therefore subjected to the labelling requirements, and also specific ways a company or brand can disclose this information on its packaging.
The USDA is in the process of taking comments and concerns from the industry, but whatever the outcome, it will certainly affect a large portion of their food portfolio. The US private label industry are therefore primed to understand the impact this may have, and how they can take advantage of renovating existing products to comply with the new regulations.
While the official date for this legislation coming into place remains unclear, it has become apparent that much of the work must be done to ensure private brand retailers, in particular, are ready for this change. For those retailers which fall short, they will potentially have the expenditure of having to remove all non-compliant products from the shelves, resulting in loss of sales across the board. Also, perhaps more damaging, this will have a negative impact on brand equity too.
However, rather than fearing the new ruling, retailers should see this as another opportunity to connect with its customer base. Millennials in particular now demand transparency regarding the origins of products they consume, including exact ingredients and how these were sourced. Coupled with the growing trend of vegetarian, vegan and flexitarian diets, this demand for greater insight shows little sign of slowing down anytime soon.
It goes without saying that retailers have a responsibility to pay close attention and adhere to any new legislation, but it’s those that also adapt their offerings according to shifts in customer shopping habits who will really feel the benefit. The new legislation and the impact on existing labels will certainly be high on the agenda in the boardroom, but I predict those that implement and embrace this sooner rather than later will see a viable return in the form of increased sales.
The millennial market is vital to any retail success. I urge operators to listen to this customer base, after all, according to research from global PR agency Edelman, once they find a brand or product they like, 80 per cent will remain loyal to it.
Today’s supermarkets do not build loyalty on the national brands they stock, but rather on the quality of its portfolio of private brand products. With an increase in transparency – in line with the new legislation – there’s little doubt that brand loyalty will be harnessed, especially with the sought-after millennial cohort.
About the author
Steven Howell is solutions consultant at Solutions for Retail Brands (S4RB Inc.)