Brooks Brothers Strategy

“The Brooks Brothers Strategy After an especially awful experience with the promotion of some branded frozen food in 1987, I began to lose my zest for that game. I took a survey of the 1,500 SKUs in the stores and realized that, excluding wines, about 80 percent of them were continuous in supply. They were mostly private labeled, including breads and Alta Dena dairy products. They were differentiated by their qualities, yes, but from chocolate chip cookies to black tiger shrimp they were more or less continuous in supply. They could be replicated by our competitors, but our competitors either weren’t aware of their volume potential (maple syrup) or were too engaged in other competitive battles to try to match us. Jarlsberg was a good example. The supermarkets knew perfectly well the sales potential of Jarlsberg if they matched our price, which they did once in a blue moon for a weekend, but they were too tied up in their own knots to follow us. In November 1987, I outlined to the buyers where I thought we should go: “We want continuous products. Any sane person does. The trick is to have continuous products which are profitable without creating a high-price image.” To create such products, they needed to be differentiated at least in order to avoid direct price comparison. Of course there was no price comparison for almond butter (it was our exclusive) except vs. peanut butter. Products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. I was willing to continue to indulge in the spectacular “closeout” sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label. In other words, I wanted those branded promotions to be as big in absolute dollars but a smaller percentage of our sales.”

“Summary As the private label program grew, its growth was given additional stimulus by a hysteresis or feedback loop among the private label products. Confidence in one product led to purchases of another. As you will find in the next chapter, From “Discrete to Indiscretions,” I wound up wishing we sold nothing else, the “Brooks Bros.” strategy. But that was with the value of hindsight in 1987, after having built the Trader Joe’s brand for twenty years.”