The consumer packaged goods (CPG) market, including private label, has a pivotal role to play in helping the battered U.S. economy emerge from the coronavirus pandemic, former Walmart U.S. CEO Bill Simon said in a keynote at the Private Label Manufacturers Association’s virtual Private Label Week event.
About 70% of U.S. gross domestic product stems from retail sales. Consequently, shoppers — and, in turn, the brands they buy — are the primary engine for the nation’s economy, according to Simon.
“In the U.S., we have a very consumer-driven economy. It really means when retail and packaged goods do well, everybody does well. We’re going to have to lead the way through this transition and this recovery from the [COVID-19] shutdown and everything that the virus has brought,” he explained Monday in opening PLMA's Private Label Week, which runs through the end of this week.
"Take risks. It’s worth it. There will be failures, but you can survive them." — Bill Simon
With the United States now ramping up COVID-19 vaccine distribution and looking toward the post-pandemic period, Simon described the CPG sector as having a “huge and critical role” in driving the economic rebound.
“The path to economic recovery actually goes through us, and it’s a huge responsibility that we bear,” Simon said. “It’s something that, I don’t know if you’ve ever really thought about it, but your success will mean the success of our country and the success of the citizens in our country.”
Private label stands well-positioned in the CPG arena as shoppers have become less loyal to particular brands, Simon observed.
“Your industry is moving in a direction that’s reflecting consumer trends in a way that’s very important right now,” he said. “Brands are much less important than they were 20 or 30 years ago. Consumers want great products and great prices, and where they once wanted brands to use as badges, they really now want to be unique. And I think your products give them that opportunity to be unique. So you’re going to play a critical role in this next phase of our economy, as we start to re-emerge from this crazy slumber that we’ve been in.”
In reinvigorating their businesses, CPG companies shouldn’t be afraid to take risks and try new ideas, Simon emphasized, adding that the willingness to take action doesn’t only apply to when market conditions are optimal.
“I hate that phrase ‘out of an abundance of caution.’ Abundance of caution has gotten us nowhere. Risks — calculated risks, where we take chances and we understand the risks and we’re prepared for contingencies — are what move us forward,” he said. “We have the unusual opportunity to help rebuild the economy, and your industry is going to play a vital, large role in this. So if you’ve been thinking about adding capacity, do it. If you’ve got the opportunity to hire more people and build your business, do it. There’s no need to wait if you’ve got a great business model in a great segment right now. If you’ve got a good idea, move forward. Time is not your friend; it’s the enemy. I’ve never seen a perfect time for an investment. There’s always a reason not to do it, and there’s always a fear and a risk that goes with it.”
Simon joined Walmart in 2006 and served as president and CEO of Walmart U.S. and corporate executive vice president at the retail giant from 2010 to 2014. Prior to that, he held posts at Brinker International, Diageo, Cadbury-Schweppes, PepsiCo and RJR-Nabisco.
He told Private Label Week attendees that he was part of an “epic failure” while at PepsiCo — the launch of the Crystal Pepsi clear soft drink — but also a resounding success at Walmart with the introduction of its $4 generic drug program, which he termed as “really the ultimate private-label product” in helping to cut the cost of generic prescription medications.
“Take risks. It’s worth it. There will be failures, but you can survive them,” Simon said.
“And you’re all leaders in your company, or you wouldn’t be here,” he continued. “Our country and your businesses are in desperate need of ethical leadership. So please lead. It can be daunting right now. Leaders who stick their heads up sometimes get a pounding. But that’s what you signed up for.”
Politicians could assuage national tensions if they “take it down a couple of notches,” according to Simon. Businesses also shouldn’t devote much focus to backing a political party.
“If you feel like you need one party or the other to be empowered, so your business can be successful, somehow, you’re going to be really disappointed about 50% of the time,” he said. “It’s important to recognize that we’ve got to figure out how to move our business and our lives forward, regardless of what’s happening around us, whether it be politics or COVID or life in general. It’s really important for us to understand that.”
Products that consumers like and translate into more jobs are an integral goal for the CPG sector, Simon said in discussing Walmart’s efforts to invest in U.S. manufacturing.
“We can create products to sell to people and create jobs at the same time. That’s a vision that helps move things forward,” he said.
In conclusion, Simon urged industry stakeholders to “keep moving it forward.”
“It’s a daunting task. It’s a challenge, and you’re on the front lines of it. Your products are important to recovery. Courage, conviction, confidence are the first steps toward getting us moving when the way we want them get moving again,” he said. “Don’t wait on government. Don’t wait on politicians. Don’t wait on anybody else. Don’t wait on the conditions to be perfect; they’ll never be perfect. Take a chance and move. You can’t sit and wait for the cavalry to come. You’re the cavalry. Your success is our success.”