Chain drives private label sales with local angle

Local sourcing has come a long way. A RetailWire poll conducted way back in Dec. 2007 asked how consumer purchasing decisions are influenced by where a product was made. At the time, 31 percent said it didn’t matter at all while 59 percent said it was a small factor.

Today, locally produced products are a big deal in retail marketing. One chain, Seattle-based Bartell Drugs, has used its 125-year history in the Puget Sound region and its relationship with local suppliers in the promotion of a successful new private label.

The line, Emerald and Spruce, has given the 63-store drugstore chain a point of difference in the marketplace. The idea behind the line was to feature high quality products at a good price that were tied to the chain’s Puget Sound marketing area. Jean Barber Bartell, the chain’s vice chairman and treasurer, compared the line to Trader Joe’s products in an interview with The Seattle Times.

Bartell Drugs

Photo: Bartell Drugs

At this point, Emerald and Spruce remains a small line for Bartell’s, featuring dog treats, ice cream made by Snoqualmie Ice Cream, and vitamins. The chain plans to roll out a coffee line at a future date. Ms. Barber Bartell said the company was limited in the number of items it could add to the line based on its size.

Last month, Bartell Drug hired a former REI exec, Brian Unmacht, as the fourth CEO and first non-family member in the company’s history.

BrainTrust

"Having a well-priced and differentiated private label is always a good strategy, and tying it to "local" is even stronger. So I think Bartell Drug is right on target. But as they say, size of the chain limits how much you can do — cost of goods, packaging, processing and logistics can put a damper on this, price-wise. As with any tightrope, balance is important."

Warren Thayer

Editor Emeritus & Co-Founder, Frozen & Refrigerated Buyer


"This strategy could be especially effective in attracting Millennial shoppers to the chain. Their demonstrated preferences for things local/organic/natural should make them prime candidates for Bartell to target. And the lifetime value of being a Millennial’s preferred drug outlet is a worthy prize indeed."

Ben Ball

Senior Vice President, Dechert-Hampe (retired)


Discussion Questions

Is local sourcing an effective means for regional retailers to differentiate their private label from national chains? How important is a local sourcing for retailers looking to create a clear point of difference in a local market?

Poll

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Frank Riso
Frank Riso
8 years ago

Local sourcing could be an effective means for regional retailers to differentiate them from their competition. It depends a lot on their customer base and knowing their customer. If the competition is a low-price leader it may not work since that is how the customer is shopping — based on price and not the real quality of the product. Bartell Drugs may be fine since they are based on the West Coast and not the East Coast where price may be the higher priority of the customers.

I do think local sourcing is important to create a difference as long as it meets the expectations of the customer base. Quality and price together would have a real impact on the success of the retailer over the competition.

Warren Thayer
Warren Thayer
8 years ago

Having a well-priced and differentiated private label is always a good strategy, and tying it to “local” is even stronger. So I think Bartell Drug is right on target. But as they say, size of the chain limits how much you can do — cost of goods, packaging, processing and logistics can put a damper on this, price-wise. As with any tightrope, balance is important.

Steve Montgomery
Steve Montgomery
8 years ago

Local sourcing can provide a point of differentiation for private label but it has to be done right. In Bartell’s case they are doing it right by using images that invoke thoughts of the market and including names that their customers are familiar with for their Emerald and Spruce brand. As noted in the article, size does matter and this will likely restrict the number and types of items Bartell can develop.

Ben Ball
Ben Ball
8 years ago

This strategy could be especially effective in attracting Millennial shoppers to the chain. Their demonstrated preferences for things local/organic/natural should make them prime candidates for Bartell to target. And the lifetime value of being a Millennial’s preferred drug outlet is a worthy prize indeed.

Mark Heckman
Mark Heckman
8 years ago

The bigger the retailer and the more markets it operates within, the more difficult it becomes to leverage local suppliers. In general, however, it is almost always a good idea to favor and tout local suppliers. This is particularly true with perishable and specialty items.

As other panelists have suggested, the importance to the shopper of local sourcing depends a great deal on the geographic area, the market positioning of the retailer and the ability to be able to find the right local partners who have the scale, quality and consistency worthy to include in the retailer’s offerings.

Regional chains in grocery have done a really nice job of tagging items on the shelf as “locally sourced.” In states like Texas, where state pride is clearly a priority, HEB has created a very comprehensive program called “Primo Picks.” One example of differentiating a retailer’s private label with a local distinction is the “Primo Pick” HEB Bravo Laundry Detergent … “The Only One Made for Texas Hard Water”

These are the types of opportunities that can truly build shopper loyalty if the market, the shopper and the store positioning are all in alignment.

Laura Davis-Taylor
Laura Davis-Taylor
8 years ago

If you break down the growth of local sourcing, it points to a much bigger trend. Personally, I feel that the driver is indeed rooted in both ethics and trust.

Globally, trust in big brands has continued to decline as transparency regarding manufacturer impact on local communities, health, the environment and general public welfare has opened up. With it comes a desire to support those less influenced by profit at any cost and this is best achieved by supporting the small guys.

When you buy small or local, you know you are positively impacting both real families and your community. This feels good, and it also makes many people feel in control of the impact of their purchases. It’s a rising trend, and it will be interesting to see how the big CPGs respond. It may not be a threat now, but my bet is that it will be.

We are working with Chef Linton Hopkins and coming to know the amazing things that he is doing to bring farm-to-tray food to Delta travelers, all items sourced locally. He is helping to change how food is sourced and served in the travel industry, and the incredible impact it will have on many. It’s another shining light example of this trend in action — kudos to all of these brave change agents.

Christopher P. Ramey
Christopher P. Ramey
8 years ago

Building and supporting community is a proven strategy. No easy task or easily scalable. Matching customers’ values always produces sales.

Dave Wendland
Dave Wendland
8 years ago

Bartell Drugs is a testimony to the fact that being tied to the community works. This may be the most impressive competitive weapon in a small independent or regional retailer’s arsenal. And as discussed here, Millennials will respond favorably while the retailer distances itself from the bland, undifferentiated national chains.