The importance of being the category leader
There's interesting insight in a Wall Street Journal interview with outgoing Unilever co-CEO Niall Fitzgerald ("Stocking a Global Pantry". 5/23/2004). Fitzgerald supervised has in recent years sold or eliminated about 1,200 brands, leaving it with forty, mostly multinational brands.
When asked about the dominance of Wal-Mart and other chains, Fitzgerald professed hat those with the leading brand in a category have little to fear from that power.
They're a positive opportunity for the relatively small number of people that have the big brands….What the Wal-Marts, Tescos, and Carrefours need are big brands that drive traffic. What they don't need are the secondary brands -- the No. 3, 4, 5 and 6. They'll have them, but only if they can get them at a price so competitive you can't refuse. But you're not going to make a great deal of return on that. You have to be positioned with the leading brands in each category the consumers are going to come in and demand. You have to have big, must-have brands in big categories or dominant brands in a niche category.
In other words, only the oligopolies can stand up to the demands of the oligonomy retailers. Fortune favors the big, and being #1 or #2 is increasingly the only way of succeeding.
