Digital reintermediation: A strategic response to mitigate the proliferation of private labels in FMCG manufacturing sector

Abstract

This research explores the use of a digital reintermediation approach as a response to the increasing challenge faced by national brand manufacturers in the fast-moving consumer goods market due to the growth and spread of private label brands. The study is based on the resource-based view theory, which acknowledges that the ongoing expansion of retailer-owned private label brands is gradually bypassing manufacturers at the point of sale. This requires a deliberate reaction to preserve a competitive edge. This research explores the impact of digital reintermediation, specifically through the growing e-commerce channel, on enabling manufacturers to directly interact with consumers in order to address the issues presented by private label businesses. The study examines different mechanisms of e-commerce adoption that firms might use to develop a direct-to-consumer presence. The research adopted a qualitative technique, utilising semi-structured interviews done through purposive sampling. Additionally, an embedded case study was integrated. The data analysis employed an inductive approach, yielding a thorough comprehension of the dynamics associated with the digital reintermediation technique. The findings highlight the difficulties manufacturers encounter when trying to utilise their current resources and talents to navigate the changing market environment. The study indicates that producers should strategically integrate resources by implementing an e-commerce strategy and deciding between a 'build' or 'buy' approach. This research provides significant information for national brand manufacturers that are seeking effective tactics to combat the increasing impact of private label brands and maintain their competitive advantage in the market.