Kroger Looks for Beautiful Results from Store Brand

Discussion
Aug 19, 2010
George Anderson

By George Anderson

It’s no secret to anyone who knows the food, drug and mass trades that when it comes to health and beauty care, private label brands have done pretty well in the H area, but not so great on the BC end.

The general wisdom here is that consumers are comfortable buying a private label anagelsic that is the chemical equivalent of a brand such as Tylenol, for example.

In beauty care, however, retailers have suffered from the consumer perception that store brands do not meet their personal grooming needs or match the product quality of national brands across price tiers.

Kroger believes it has overcome those hurdles with its mirra line. The grocer says the brand, which was first rolled out last year, is for “family-focused women seeking effortless beauty.” Products in categories including hair care, body care and skin care use natural ingredients to meet three distinct consumer needs, according to Kroger, including: “Daily – routine personal care; Renew – a rejuvenating time out; and Inspire – quick transformations for a night out.”

The mirra line, according to an Associated Press report, has achieved double-digit sales increases since it was first introduced. Kroger has increased the number of items in the mirra line from 41 to nearly 100 in the space of three months. It is looking to further expand the line later this year and into 2011.

Susan Scherer, who manages Kroger’s corporate beauty business, told the AP that the mirra line represented “a very big leap” for the grocer.

Kroger’s CEO David Dillon sees an opportunity for the retailer to meet consumers’ needs with the mirra line and elevate its private label HBC business to a new level. On the grocery side of the business, private label represents 34 percent of units and 26 percent of revenues for Kroger.

“The kind of customer that we have comes to us for things they need on a regular basis,” Mr. Dillon told the AP. “Health and beauty items, you don’t consume them like food items, but you do use them up pretty regularly.”

The Kroger website is offering a coupon for $5 off the purchase of two mirra items.

Discussion Questions: Are consumers more willing to try private label health and beauty care items today than they have been in the past? Is Kroger the right mainstream retailer to make beauty care work?

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14 Comments on "Kroger Looks for Beautiful Results from Store Brand"


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Max Goldberg
Guest
10 years 8 months ago

Consumers seem to be more willing to try private label throughout the store, challenging the notion that they will only buy private label foods. As they have used, and liked, private label food, they have come to trust retail brands. It’s natural that retailers would rely on that trust to expand private label offerings in other sections of the store.

Gene Hoffman
Guest
Gene Hoffman
10 years 8 months ago

As new consumers enter the marketplace with their own perceptions and decision-making convictions there will be an increase in PL purchases of health and beauty care items … and Kroger will be one of the retailers leading the way.

Dr. Stephen Needel
Guest
10 years 8 months ago

The first part of the question is an empirical one; Nielsen or IRI–can you step up to the plate and tell use whether they are more willing or not than in the past?

In most HBC categories, food is way behind drug and mass in percent of sales, often as little as 10% to 15% of the market. Now you can argue that a PL initiative should fare well here because there is so much opportunity. On the other hand, if shoppers are routinely ignoring this section in grocery, a new PL line is, in and of itself, unlikely to be noticed. And there is no advertising being done by Kroger–at least not here in Atlanta, which is a huge Kroger market.

John Karolefski
Guest
10 years 8 months ago

For consumers in these tough times, a positive experience with private label goods purchased in food stores is prompting more of them to try store brands in the HBC categories. The latest sales statistics provided by The Nielsen Company for the Private Label Manufacturers Association’s 2010 Yearbook provide the evidence.

In drug chains, private label market share in units reached 16.3% as volume grew by +4.0%. National brands recorded a loss of -3.9% in units. Store brand revenue grew +8.8%, while national brands added only +1.2% in sales for the 52 weeks ending Dec. 26, 2009.

Ben Ball
Guest
10 years 8 months ago

No, consumers are no more willing to buy “private label” BC today than ever. BC is a highly involved statement of personal esteem.

What HAS changed is that retailers have stopped trying to sell “private label” BC and started inventing their own proprietary brands. You don’t see “Kroger Kosmetics” anywhere in the mirra brand.

Justin Time
Guest
10 years 8 months ago

Aldi has beaten Kroger and most of the retail food industry out of the gate several years ago with its successful Lacura Award Winning Skincare line.

There is almost a cult following for this sensibly priced skincare line. It is very reasonably priced. For instance, Lacura Hydrating Facial Cleanser is $ 2.49 each. That’s a price point that is hard to beat.

Great A&P has also rolled out a private label personal care product line called Market Spa. It focuses on hair care as well as skin care products.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 8 months ago

Even with consumers being more willing to try Private Label brands, Kroger should seek out promotions that help them build trial even if that means co-promoting with National Brands–Read more about this approach in Keith Lincoln and Lars Thomassen’s book, Private Label – Turning the retail brand threat into your biggest opportunity. Specifically chapter 21.

What is most attractive about the mirra brand is Kroger’s opportunity to create a destination brand. With cosmetics having such a tough barrier to entry, once they win a cosmetic consumer with the mirra brand, it will be hard for Walmart and other competitors to pull them away.

David Biernbaum
Guest
10 years 8 months ago

Here are the underlying reasons that supermarket private label HBC brands lack the “BC.”

1. Retailers place so much emphasis on “lowest cost” among private label suppliers (even to the extent of using reverse auctions to determine the providers) and so cost savings are often applied to the “BC.”

2. Many private label suppliers lack the personnel or the expertise to design packaging in a skillful way.

3. When blatant knock offs are the approach, it’s very difficult to make it look pretty.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 8 months ago

There seems to be a generally increased willingness to buy private label goods across the board, and I know Nielsen has done studies supporting this fact. HBC will probably never have the kind of private-label penetration as something like paper products, but now is probably the best time in history to launch a private label HBC line. Any retailer with Kroger’s deep pockets and reach is in good shape to launch private label products.

Bill Bittner
Guest
Bill Bittner
10 years 8 months ago
I believe many consumers are simply becoming smarter in their shopping. With all the news about the economy, they understand how they can get the benefits while avoiding the hype. The challenge for private label is to maintain the quality while continuing to offer a lower price point. It means there has to be good quality assurance, with product testers and consumer panels conducting evaluations on a continuous basis. I am a little surprised at the quickness Kroger was able to achieve in the assortment expansion. It makes me assume that they have gone to a large brand name and are taking advantage of their excess capacity. Which is actually another angle to this whole thing, with an otherwise slow economy and manufacturers staring at excess capacity, there is a bigger incentive for them to put that capacity to work producing private label. Beauty Care runs the same risk of cheap bags. One bad hair day caused by a poor coloring experience is like dumping your groceries in the parking lot because the bag broke.… Read more »
Gene Detroyer
Guest
10 years 8 months ago

100 SKUs? What 100 SKUs did they discontinue? I suspect it was “no-name” price brands. I also suspect that they are merely replacing those “no-name” price brands in SOM. But, since we measure PL as a separate category, it looks like spectacular growth.

That being said, it might as well be Kroger’s revenue and profit rather unbranded price oriented products.

Roy White
Guest
Roy White
10 years 8 months ago

While expectations should be that private label beauty care products would not be as popular as private label OTCs, but I think that’s only if your mindset is strictly national brand equivalents. For example, Walgreens has its “Skin Essentials” line, and other major drug store and mass merchandisers are also developing exclusive beauty care lines found only in their stores. While NBEs in all food and non-food categories have really come into their own over the past two years due to cash-strapped consumers, major retailers are going to be duking it our more and more in the future with their own exclusive products in the beauty area.

Roger Saunders
Guest
10 years 8 months ago
The “BC” side of buying at the grocery store, or other channels is not a straight line up. If anyone can pull it off in grocery, it is likely to be Kroger. They have the power to add multiple lines, as the author points out. They will need to offer multiple points, as “BC” products, while used frequently/repeatedly, are purchased on a monthly or longer buying cycle based on the July, 2010 Consumer Intentions & Actions (CIA) survey of 9,000+ adults. Further, while KROGER and its other Banners (KING SOOPER, RALPHS, FRYS, SMITHS, FOOD FOR LESS, etc) have strong loyalty while walking their stores, those same consumers are currently shopping for “BC” at the Mass Marketers of Target, Walmart, Walgreens, and CVS more often than they are at Kroger stores. Kroger is going to have to build the beauty aisle and get this cross-channel shopper first. They need to know not just what happens in their store (dunnhumby helps them there), they need to know what those customers are buying when they are away from… Read more »
Ed Rosenbaum
Guest
10 years 8 months ago

I must admit I am one who does not believe store brand labels will be a seller in the health and beauty area. Asprins, yes. Cold remedies, maybe? Shampoos, soaps, and those type items is not something I can see the consumer’s gravitating to.

Kroger is disguising their attempt to penetrate this market by using a brand name other than Kroger. This may be private labeled; but the marketing does not say Kroger.

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