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How AI Will Transform Private Label Retail in APAC · The Retail Podcast

• 0:00
  Hi, I'm Ruth Quayle. I'm Managing Director of NRF
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  AIPAC and this is Five Things Friday, AIPAC Edition.
• 0:18
  Hello. Hello, Hello.
• 0:22
  We've got 5 things awesome. Oh, we've got four things.
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  We're gonna, we're gonna hit the ground now.
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  You're not having AI could think of an extra thing.
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  No, that's right. Never mind four thing are we
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  doing 4 things Friday is that. What you're doing?
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  No, I've got stuff to talk about.
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  We'll we'll measure the time. Alright, let's get into it.
• 0:37
  Hey, so it's Ewan. No.
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  Reef. It's me.
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  Oh, it's reef. Oh, it must be late there, Alex,
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  right. Here we go.
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  I'm all over the place. It's morning.
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  It's not it's early morning. Go on.
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  OK, we. OK.
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  All right. So today I'm going to talk a
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  little bit about private label. Now private label is pretty much
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  what we see is a product made by a manufacturer, but it's branded
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  and sold as a retailer's own product.
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  That means it allows them to control pricing, product
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  positioning within their own stores and quite often that's
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  priced lower than national brands, although some are are
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  premium. So in APAC it's private labels
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  quite lumpy. You know there's, there's some
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  real growth going on, but it's compared with Western markets
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  it's relatively low and it really only accounts for 6.1% of
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  FMCG growth in 2022 versus 20 to 40% in Europe in the same time.
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  But what we're seeing here is that AIPAC is largely under
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  penetrated, but it is high growth.
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  It's we're seeing around 6% compound annual growth rates.
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  You are near consumer adoption is varied too.
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  So in markets like Australia and New Zealand, for example,
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  private label is 100% household penetration in every household
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  that someone has some sort of private label and that is mainly
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  in grocery. However, in Australia, for
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  example, in New Zealand, Kmart has their Anko Lat brand and
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  that has been incredibly successful.
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  It is probably Australia's retail success to over the last
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  decade and that is that Anko brand has driven Kmart success.
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  It then we look at the the the smaller markets, the other
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  markets in the region, we're talking about Thailand, not
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  smaller for sure, not smaller, but other markets you're talking
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  about penetration, other markets like Thailand, India, China,
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  Indonesia, we're seeing that only about 50 to 60% of their
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  consumers are likely to buy private labels.
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  So it's, it's, it's still it's still developing in terms of the
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  the core drivers we're seeing with consumers.
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  It's really about value conscious consumers.
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  So when pressure comes on consumers switch to value for
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  money as a sweet spot. And we're seeing it expanding.
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  Obviously it really private labels Heartland is in
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  groceries, but we're seeing it expand out of those out of those
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  categories. As I said before, Anko in Kmart,
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  you know, we're looking at, you know, private label clothing
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  brands as well. So there's lots of stuff
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  happening on the high growth markets we're seeing is really
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  Indonesia, Thailand and Vietnam and they're really starting to
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  have rapid adoption. But the mature markets where
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  where we're seeing slower growth is is but stronger premium
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  position is places like Japan and South Korea.
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  But overall APEC still lags behind the West.
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  So if it's a good time to get into private label in AIPAC
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  because you're up, you're pretty much on the ground floor I've.
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  Got you. OK.
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  It's true. And for me, I've always enjoyed
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  working on private label. So we are now aiming for like a
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  really a way stronger market share for private label.
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  But I, I also want to say this from what I've been learning and
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  understanding and really testing the ground for with AI is that
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  in the future, just to note the strongest private labels will
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  not be the one with the lowest cost.
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  So it's not about, oh, I am actually bit cheaper than the
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  national brand that is not going to hold water anymore.
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  What is going to hold water, what is going to be strong is
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  that if your house brand is the closest to what the customers
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  data want, what the customers habit want, what the identity of
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  the customer really is, then you are actually going to be
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  replacing what their needs are. So AI driven shopping is
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  reshaping how we're looking at private labels competition
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  because AI doesn't care about branding.
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  It is really looking optimising value.
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  Is it fit? Is it available?
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  Which means chances are if you do it right, private labels will
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  get recommended so much more often and therefore very helpful
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  for profitability of the retailer.
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  And for me also the local relevance, the Wellness
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  conversation, the sustainability, the lifestyle
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  aspiration and how we build emotional connection.
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  Along with the fact that before this is really difficult trying
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  to fight the national brands because you're a no brand.
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  But today with AI, this is going to change.
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  And now the way we produce private labels can be looked at
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  as how do we want to be a little bit more intelligent?
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  How, how are we evolving? How can we be powered by how
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  close we are to the customer's life.
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  And I think this is so exciting. And, and I just on that, if we,
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  if we come back to that conversation before, if the
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  retailer controls the product pricing and positioning and they
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  know their customer better than the manufacturer, which is
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  likely because they're a retailer, then they, they can
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  then set the brief for the manufacturer to deliver the
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  product, which is much, much more on point.
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  And all they can do is wrap the content of ground to articulate
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  the value equation so that AI goes, you know what, that
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  product over that product and they can win the day.
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  Yes, and you will also reduce so much waste, which is the beauty
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  of it all. Yeah, I love it, absolutely.
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  OK, cool. Ewan is that is that blend into
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  your to your one then is that your one there or so?
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  I was actually going to talk about AI driving private labels.
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  So so that was my piece. And then because Reef also has a
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  conversation on private label, it looks like I'm just replying
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  to his piece. Yeah.
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  But but it's actually a really good point because we're seeing
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  technology that's permeating our retail existence.
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  It's actually driving, driving a retail concept, which is proven
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  in mature markets. But we'll literally switch on
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  like a light switch over light Asia Pacific because of the the
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  prevalence of AI now at the coalface for the retail, which
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  is OK, which is really cool. That's really cool.
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  Yeah. Did we come back to you then,
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  Sir? Yeah, we do, We do.
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  Well, it's all about me. So happy to have that.
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  So as well as equipped as I am, I'm going to talk about the
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  beauty category in Australia. So don't not exhibit A.
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  OK Now, so the beauty category in Australia is a really
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  interesting category. But what's been what's caught my
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  attention in recent times is Myer.
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  So my everybody knows Myer as a big department tour in Australia
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  and they've just recently signed an agreement with News Limited
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  on their glamour platform. So the glamour platform is
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  obviously you heard of Gamma magazine and this whole
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  partnership is, is a content and commerce integration.
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  That's the core idea. So we they build editorial
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  content and then you can leaked through e-commerce and shopping
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  straight into content to cart sort of funnel that leads to
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  shopping on the from Meyer online.
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  But I feel like a dinosaurs tried to evolve an existing
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  content where they actually aren't listening to their
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  customers. And Australia is a cluttered
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  beauty market and a very competitive one.
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  So in Australia, Mecca, which is the local homegrown brand has
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  not, has not succumbed to Sephora.
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  It holds Sephora out. So for Sephora's in the market,
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  but Mecca is much, much stronger and has a much more dominant
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  market share. But Mecca's approach and why
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  it's a leader as when we've talked about Mecca before is
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  it's, it has its beautiful content discovery piece tick.
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  But in Melbourne and Sydney, particularly in Melbourne, but
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  in both markets, but Melbourne, it has the largest beauty retail
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  experience in the world, right? And then it has this amazing
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  transactional website that allows the consumer to go and
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  have these amazing experiences on store and then continue to
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  buy ad infinitum online. And it's connected all together
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  and Sephora not dissimilar, but there as a bit bit of a smaller
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  start and do experience. However, Maya has re entered the
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  beauty game and formed a partnership with News Limited,
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  built content, built e-commerce, but had not actually recognised
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  any physical retail. So it feels like it feels like a
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  partnership done in the 2000s, you know, in 2000 and 10s where
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  it's, you know, Click to buy on a media site where it's where
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  where there's no recognition of the physical retail.
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  And right now we know that millennial and Gen Z shoppers
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  are are just physical retail is so important.
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  So to not acknowledge that in that partnership is a really
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  strange thing given the level of investment and the and the PR
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  they put around it. So easy said, have they signed
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  an agreement which is out of date?
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  Yeah, you know, OK. It's interesting, or maybe it's
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  something that's going to combat hasn't yet matured because it's
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  really not so easy, you know, to to drive the ecosystem of
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  something to work. It's really not so simple.
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  I'm still at it. OK, OK.
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  You will see some part of it coming through at the NRF.
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  Couple. I will be beginning stuff, but I
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  also want to talk a little bit about about beauty actually and
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  and magazine editorial. It's really so happened that
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  today Reef and I are very much aligned.
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  So I want to talk about Devil Wears Prada too.
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  Yes. And there is a picture of a
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  sweater I want to show everyone. Yes, that's the one, the famous
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  one in the 2006. That's right. 20 years ago, when
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  Meryl Streep, Miranda Priestly, the editor, was explaining about
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  this sweater, the cerulean sweater to Anne Hathaway's.
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  And beside, she talked about one of the most important retail
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  truth, right? What you think is your choice is
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  actually a long chain of decisions, right?
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  So she's talking about back then, she's talking about
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  editorial gatekeeping. So Miranda Priestly decide
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  what's in magazine the philtre or the touch points with the
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  customers and consumers show that this is the colour down and
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  this is it and also talk a little bit about scarcity of
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  influence a lot that and then the customers want it and then
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  the retailers distributed and then the customers think they're
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  choosing it. So the power actually set at
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  with editors like Miranda. That's how she said it.
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  But today in the 2026 version, she did not repeat this spiel
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  and she did not really talk about AI.
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  There was an AI meme of her which is drawn by artist, but
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  that's besides the point. The the the power.
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  I just wanted to say despite watching the show and not
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  related to what I was going to say, is that the power, the new
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  power is algorithmic and distribution of data.
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  So I am inclined to think in that 2006 conversation that
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  Meryl Streep had with Anne Hathaway, she's actually really
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  talking about herself as AI. She is the trainer of models and
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  Andy doesn't just run errands really.
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  He's like the manager of data flows of greater signals and,
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  and trend velocity dashboards. So it's, it's really not no
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  longer about how the trend comes from a single person of power,
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  but the trend comes from in the future.
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  Right now comes from 2.3 million signals in certain amount of
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  hours. So I think the way we're looking
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  at retail really, really need to shift.
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  And while I I do like some part of the second part of the film,
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  but, you know, I think the relevance of what we're talking
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  about in AI that's like, hello, you missed it.
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  Come on. How are sits with platforms, sit
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  with ecosystems, sit with people who really understand what to do
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  with data sets? Really.
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  Yeah. I think it's really interesting
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  in the sense that last week I was in Berlin at World Retail
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  Congress. That's predominantly a CEO event
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  where it's a smaller event, but there was a couple of CEOs on
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  stage who had the question of AI and they, he sort of responded
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  in what you're saying, like the tandem CEO.
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  That's like a multi billion dollar set of retail brands.
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  He was like, look, he, he, he, he viewed it as, and then this
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  is the example he gave. He says, I, I have my wife, like
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  I have my ideal customer. I know who my ideal customer is.
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  I don't need signals on people who are not my ideals customer.
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  So tell me, what more will AI bring to my business above and
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  beyond what I'm doing today? Yes, we can go a bit faster,
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  right? Yes, maybe we, we can serve the
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  customers a little bit better, but what else will AI actually
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  do for me? And so he was sort of challenged
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  because everyone's like AI is going to transform everything.
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  It was like, my business is super simple.
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  I sell ladies. It was, he has an underwear
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  brand in Europe. I sell underwear to to females.
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  Yeah, maybe, maybe, maybe some men want to wear it, but that's
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  not my, that's not, that's not where I'm going to go.
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  And AI is not going to help me serve the people that I'm
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  serving any better. It's not that it was anti AI, it
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  was just saying I know my customers, I know what I'm
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  doing. And so therefore.
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  But in deciding the trend, in deciding the trend, AI is
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  really, actually really important.
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  The signals that change the trigger before something
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  happens, yeah. And so Miranda, Miranda, 25
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  years ago, we're setting that time.
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  She was the trend setter. She was a trendsetter.
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  Now she was. We're seeing, we're seeing,
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  we're seeing these trends being democratised by technology.
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  Yeah, that's what we're seeing here.
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  So when by the time that the punter gets the store changed?
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  And I do really want to stress that technology is just merely
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  looking at signals. They don't decide on things.
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  It's really still signals from the customers.
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  But before this, we weren't able to even, you know, even begin
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  to, to, to understand the customers.
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  We can't, we don't have a tool today.
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  We do. That's what it is.
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  And and, and retailers who say that they completely understand
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  their customers, I want to say sure, but you know, so that's
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  actually really not what your customers want.
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  They just didn't have a place to say it, that's all.
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  OK, well, what a wonderful note to finish on.
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  Our time is up. Time goes quickly.
• 13:56
  Thank you so much. And until next week.