Sam's Club put Orion products on its shelves, got criticized on social media, and finally removed them—sounds unbelievable, but it really happened!

What is truly being 'rejected' is not Sam's Club but a group of mass-market brands. Consumers' subtext is: 'I pay for membership to experience better choices, not to buy products I'm already tired of!' This incident, on the surface, is Sam's Club's 'mistake,' but it actually reflects that consumers are changing, perceptions are changing, and the logic of product appeal is changing too. In response, more and more retailers are increasing their focus on private labels. This is an 'open conspiracy' that brands know is against their interests but cannot refuse, and even must participate in. Why do I want to discuss this topic through the Sam's Club incident? Because it reveals a sharp reality: the traditional moat of brands is being quietly hollowed out.

The Emotional Turn of Consumers

Sam's Club has always had mass-market brands, and they are also customized versions. Why did people flock to them in the past, but now they can't accept them and start criticizing? You need to see a key emotional turn in consumers here: In the past: 'Wow, this brand has transformed inside Sam's Club!' Now: 'Oh, isn't it just a change of packaging?' Why is there such a change?

First, the brand illusion system has been shattered. In the past, customized versions of mass-market brands were more 'immersive' in visual presentation, naming, packaging, and shelf arrangement, making people not perceive that 'this is the product you can buy at that XX supermarket.' But this time it was more 'conspicuous,' and for the first time, users saw 'the shadow they were familiar with' under 'the light of Sam's Club'—so I pay a membership fee, and I'm just entering a high-end version of a big supermarket. What does this mean? It's not that you can't sell mass-market products, but you can't let me realize that you also sell mass-market products.

Second, the differentiation threshold has been raised. Now, a large number of retail systems, both online and offline, regard Sam's Club as a benchmark. Sam's Club's same products can be seen everywhere. In many product categories, you can find similar or even identical products at Hema, Seven Fresh, and Xiaoxiang Supermarket. The problem is that Sam's Club charges a membership fee. The scarcity of Sam's Club's products themselves is declining. Now you are so conspicuously offering me mass-market brands, and I can't accept it.

Third, social networks accelerate emotional spillover. In the past, users' trust in Sam's Club was 'I am willing to pay for your judgment.' This incident brings about the concept that 'I thought you were membership-exclusive, but it turns out to be Orion next to the traffic light,' which is easily spread on the internet. Users feel deceived and tricked, and finally it turns into an emotional trial: 'Sam's Club, you've changed!' I can't judge whether Sam's Club has changed, but consumers have changed, that's for sure. In the past, when people entered Sam's Club, besides products, there was also the experience and feeling of 'selected,' 'what others don't have,' and 'a bit better.' Once this experience is normalized, users' sense of gap will instantly explode. What does this subtle psychological gap reflect? Consumers' threshold for feeling 'different' is constantly rising! In fact, not only Sam's Club members, but whether online or offline, when consumers have infinitely rich choices, attention and patience become scarcer, and their requirements for product differentiation and freshness are getting higher and higher. As a result, the more common mass-market products are, the less they can arouse consumers' interest.

Private Labels: Retailers' 'Open Conspiracy'

In fact, in recent years, in retail cases that have grown against the trend, we can also clearly see such changes: Hema NB, through customized private label combinations, grasps the needs of precise target groups and wins loyal customers with cost-effectiveness; Aldi, with more than 90% private label products, makes customers feel the charm of 'exclusive' and 'selected.' Their success, on the surface, relies on low prices and discounts, but in fact, this is just the presentation of results. From the bottom, they win by using differentiated products to control user mindset. Pangdonglai goes without saying. With its fine private label product structure, it firmly locks in the consumption preferences of loyal customers, and the DL brand is even exported nationwide. Users no longer blindly follow the brand itself, but tend to choose products or channels that can precisely meet their needs. This shift in demand is profoundly changing the relationship between retail and brands. Retailers doing private labels is not a new trend, but it is becoming more and more obvious and threatening now. From tissues, melon seeds, milk, to biscuits and beverages—retailers directly find OEM factories, put products next to branded products, and price them 30% or even half cheaper, clearly telling consumers: 'I have higher cost performance.' For brands, the terrible thing about this competition is:

  1. The price is directly lowered by one-third or even half, and it is placed right next to your brand, so you have nowhere to hide;
  2. If you leave in anger, you will hand over channel sales to competitors;
  3. If you swallow your anger, you can only watch private labels gradually erode your share. This is the retailer's 'open conspiracy': you know it, but you are powerless to fight back. On the surface, you still have a choice, but in fact, you are already in a passive position. The rise of private labels is not a 'backstab' to brands by retailers, but an upgrade of business logic. Retailers reverse-customize products based on scenarios, data, and user insights, which is essentially the victory of consumer demand sovereignty. In contrast, traditional brands are still based on the push logic of 'I make what you buy,' so they naturally gradually lose ground. But this 'open conspiracy' is becoming more and more common, and many brand owners are on tenterhooks.

Traditional Brand Models Face Challenges

Of course, it needs to be clear that not every retailer can do private labels well. It requires extremely high supply chain capabilities, product development capabilities, and user insight capabilities. Sam's Club, Aldi, and Pangdonglai can succeed because they truly have strong product development and supply chain systems, while most retail enterprises do not have such capabilities. At present, the 'private labels' made by most retail enterprises can only be called 'private label products,' far from reaching the connotation of 'brands.' But this does not prevent these products from eroding the share of traditional brands.

First, the maturity of China's manufacturing industry has greatly reduced the difficulty for many retailers to develop 'private label products.'

Second, consumers show a tendency to disenchant brands, and 'private label products' in specific channels have good sales.

A brand executive told me: In the past, we chose distributors in the region; now distributors choose us. Why? 'Because the scale is not enough, we can't continue, leading to more and more brands concentrating in the hands of a few distributors. Moreover, in the past, supermarkets had to carry our brand because consumers recognized it; now it doesn't matter if you are not there, so in many places we have no choice.' This is the current situation. The rise of retail's initiative means that the traditional model on which brands rely for survival is facing challenges:

In the past, advertising drove awareness; now users are increasingly difficult to move;

In the past, channels were used for massive distribution; now SKUs are being removed one after another;

In the past, they relied on the distributor system; now the channel network is becoming more and more fragile.

Are brands becoming weaker? Compared with the past, there is such a trend. But does that mean brands are no longer important? Of course not!

Using Consumer Awareness to Command Channels

Facing the rise of retail private labels, brands have several choices. The first path is to become the 'infrastructure' of the manufacturing side. If you have solid manufacturing capabilities, you can deeply cooperate with retailers, customize and OEM for their private labels, and become an indispensable part of their supply system. But the problem is: the manufacturing side has thin profits, lacks pricing power, is in the low-value link of the industrial chain, and naturally depends on channels for survival. The second path is to strengthen brand mindset and take the initiative. If you can not only produce but also build a brand that penetrates user mindset, you may be able to 'use consumer awareness to command channels' in turn. Truly brand-strong enterprises are not easily replaced by retailers—because they represent consumers' stable preferences and emotional anchors. But this path is extremely difficult, with extremely demanding requirements for product strength, communication strength, and user operation strength. The most competitive path is to take the 'manufacturing + brand' composite model. It's not about simply choosing sides, but building a systematic capability of 'upstream manufacturing capability + downstream brand operation capability.' Because future competition is no longer between products, but between systems. In this sense, in the past, brands relied on: product strength, brand strength, and channel strength. In the future, these three strengths will extend and change:

  • Product strength → Manufacturing strength: not simple processing, but the overall solution capability with R&D, rapid iteration, and flexible customization;
  • Channel strength → Scenario strength: not relying on simple distribution, but precise matching and adaptation according to different channels, scenarios, and target groups;
  • Brand strength → Brand strength (strengthened): unchanged, but its role is more prominent, and it must form a strong and clear anchoring effect in user mindset. Manufacturing strength lets you enter the retail system, scenario strength helps you precisely touch users, and brand strength gives you the initiative and bargaining power. I don't think brands are no longer important. On the contrary, in this new pattern, the role of brands is more prominent than in the past—after all, not every channel is Sam's Club. In today's world where channel dominance is rising and products are highly homogeneous, a true brand is not the logo on the packaging, but the trust in the user's mind. Users buy snacks not because they are cheap, but because they think 'this brand is delicious'; users buy daily necessities not because the price is the lowest, but because they 'trust it and are used to it.' The true value of a brand is to enable consumers to form stable preferences amid massive information and infinite choices. When the shelves are full of products and the differences are getting smaller and smaller, true brands actually play an important role: decision anchors. To a certain extent, being able to 'use consumer awareness to command channels' is the true value of a brand.

How to Respond? This Roundtable Dialogue Is Worth Looking Forward To

Finally, I want to say: Regarding the Sam's Club incident, what brands really need to pay attention to is not 'what exactly has changed at Sam's Club,' but how your brand can win its position under the trend of retailers doing private labels. Stop asking 'Why doesn't Sam's Club sell Orion?' Instead, ask: If retailers start not selling your brand next year, are you ready? On August 20, the '5th China FMCG Retail Innovation Conference' will be held in Shanghai. With discount expansion, adjustment and reform, and instant retail acceleration, the huge waves in the retail sector over the past two years are having a huge impact on the traditional FMCG industry order. How should we view these changes? We have invited more than 10 heavyweight guests to explain the current changes in FMCG retail from different perspectives. When everyone is saying 'business is difficult,' we need to answer 'what exactly is happening?' and 'what should we do?' At this conference, we have specially set up a roundtable dialogue: 'Retailers Doing Private Labels: What Should Brands Do?' We have invited multiple frontline experts from brand, retail, and supply chain fields to jointly discuss this important topic related to the future of the industry chain. How can brands coexist with retail private labels? How to defend user mindset in the face of the 'open conspiracy'? How can brands and retail build a win-win relationship? This is not an anxious complaint session, but an in-depth dialogue about future survival strategies.

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