Editor's blog: Kroger-Lidl dispute a good sign for private brands

Brand expert Todd Maute says the lawsuit that The Kroger Co. filed against Lidl, which goes to trial in January, is a good sign for the private brands industry.

In July, Cincinnati-based Kroger filed a federal lawsuit against Arlington, Va.-based Lidl claiming that the German retailer, which at the time had just opened its first U.S. stores, was infringing on Kroger’s well-known “Private Selection” store brand with its “Preferred Selection” store brand. Last week, a U.S. district judge denied Kroger's request for an injunction that would have forced Lidl to stop selling Preferred Selection. The judge noted that "private" and "preferred" have different definitions and set a Jan. 11 date for a bench trial.

The lawsuit has created much attention and drama in the private brands industry. It is the new kid on the block (Lidl) taking on the veteran and venerated grocer (Kroger).

Maute, a partner at New York-based CBX, a brand agency and retail consultant, says the lawsuit reminds him of years ago when the owners of top consumer product brands always went after what they saw as trademark infringement on the part of private brand emulators. But this lawsuit is also different — “A twist on the prevailing dynamic,” Maute says —because one of the top owners and creators of private brands is taking a fellow private brands competitor to court.

Maute says the lawsuit shows just how far private brands have come.

“Here we have one major grocer suing another over private label trademarks,” he says. “I see it as an indication of how far private label has come, at least with respect to those retailers that truly understand its power and potential.”

Maute is spot on. Although the timing of the lawsuit was interesting — Lidl says Kroger wanted to throw water on its coming-out party — nobody can fault Kroger for trying to protect a very successful 20-year-old store brand. Credit Lidl as well for not backing down and wanting to protect its own store brand as it continues to open stores in the U.S.

Kroger, the second-largest food retailer in the country, has been a private brands pacesetter. Lidl, which operates more than 10,000 stores across Europe, will also be a private brands leader in the U.S., considering that 90 percent of its assortment comes from private brands and that it will eventually open hundreds of stores.

Maute says he remembers reading a story several years ago about how Disney lawyers forced a small Florida daycare center to whitewash an image of Mickey Mouse that the center had had painted on the side of its building.

“Is that aggressive? Sure,” Maute says. “However, nobody could accuse Disney of trademark apathy. Without commenting on the merits of the Kroger-Lidl case, I say kudos to those retailers that fully embrace their store brands — up to and including protecting them in court.”