PL Buyer: Publix’s Private Label Followers

Discussion
Jan 18, 2011
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Through a special arrangement, what follows is a summary
of part of a current article from Private Label Buyer, presented here
for discussion.

Publix, one of the first supermarket chains in the Southeast, is changing
the way people feel about private label goods. In fact, it’s been said that
some Floridians have even been spotted shopping at Walmart with their reusable
Publix shopping bags because they want to be known as Publix shoppers — it’s
considered a status symbol of sorts.

Publix first launched its redesigned Publix brand private label packaging
in 2003, offering a clean, simple and predominately white design system across
all the products within the Publix brand category. The previous design was
very similar to other retailers’ private brands; the products looked very similar
to the national brand equivalent and blended in with other items on the shelf.

"The primary goal of the redesign was to improve our private label sales," said
Maria Brous, director of media and community relations for Publix. "The
new design made our products easier to see on the shelf and, in many cases,
customers noticed our store brand products for the first time. The natural
response was that we were adding more private label items and discontinuing
other items. We were expanding our lineup from about 1,200 items to over 3,000
items over a six-year period, but it was surprising to see how many calls we
had related to private label items that we had on the shelf for years before
the conversion."

The program also employs a two-tier private label approach that include its
basic Publix brand and its Publix Premium label. Plus, it has launched a specialty
private label brand, GreenWise, which appeals to shoppers seeking natural and
organic options, and also is targeting Hispanic shoppers with offerings within
its Publix brand. The result has been private label sales that account for
20 percent of all Publix sales.

"Publix has a good, better, best approach which allows customers to trade
up while also realizing improved value," says Kevin Sterneckert, research
director for Gartner Inc. "So a customer, who used to buy a leading brand
can of beans, can now buy the Publix brand can of beans and receive the same
or better quality at a better price. I think that consumers who were forced
to seek out lower-priced alternatives have been pleasantly surprised at the
quality that Publix has been delivering for a long time."

Publix also has been much quicker and bolder than its competitors in terms
of promoting its private label products, says Natalie Berg, global research
director of London-based research firm Planet Retail. "A great example
of this is its Publix store brand challenge which gave away a private label
product for free when shoppers bought a national brand product. This was the
ultimate testament to quality and shoppers had nothing to lose since the private
label products were free."

The program was launched four years ago and is still in place today.

Discussion Questions: What do you think has been the key to Publix’s success in private label? What lessons does Publix offer others pursuing success with private label products?

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17 Comments on "PL Buyer: Publix’s Private Label Followers"


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David Biernbaum
Guest
10 years 3 months ago

Most of what Publix has improved about private label is related to package design and branding. They are careful not to understate, nor to overstate their brand, and not to directly knock off and confuse consumers about private label look-alikes vs. national brands. The packaging is clean, consistent, and easy for consumers to understand, particularly relative to value.

Dr. Stephen Needel
Guest
10 years 3 months ago

As a Publix shopper and a buyer of their private label products, I think the key is that their products are good. While the white/generic packaging scheme certainly makes their PL stand out, at the end of the day their products often taste as good as the branded equivalents.

We need to remember that after we’ve done everything we can with pricing, packaging, assortments, and shelf sets, the product still has to perform to be a success.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 3 months ago

Publix has done a very good job at growing their Private Label brand. Attention to product quality as well as stand out packaging has really helped. When you tour a Publix store it is clear Private Label plays a big role in the store (20% of sales). Publix knows that if a consumer loves their Private Label canned beans for example; they will be sure and continue to shop their store for that item as well as others.

The store brand challenge program that Publix runs has been very successful, but other retailers are picking up on the idea of promoting their Private Label items to build trial. Just look at HEB’s “Combo Loco” program or Ahold’s new program “Buy This Get that Free” that gives away Private Label items when you buy a complementary National Brand. The importance of Private Label has not gone unnoticed and retailers will continue to innovate and find ways to drive trial of their Private Label items.

David Livingston
Guest
10 years 3 months ago

I’m not a big fan of two tier private labels with one having better quality than the other. But who am I to disagree with Publix? To me, taking a Publix bag into Walmart means nothing. Today seems we all have a trunk full of reusable shopping bags. Do people really care what logo is on the bag when they pull one out of the trunk? If Publix is having success with their private label, I think it has more to do with the overall success of Publix in general. Perhaps Publix’s private label would be successful regardless of the design, simply because it’s Publix.

Paula Rosenblum
Guest
10 years 3 months ago

We must not forget the promotion Publix ran through the recession–which in my view was one of the most brilliant in supermarket history–buy a national brand and get the Publix brand version free.

The company rotated about 6 items a week for several months. To me, this demonstrated unwavering belief in its private label product quality. A taste test is insignificant compared to the investment it takes to give away whole boxes or cans. Whether or not you took advantage of the promotion, its sheer existence gave the private label brand more credibility.

I don’t know so much about the good, better, best strategy (I honestly haven’t even noticed it) and I actually don’t like the packaging so much–it’s distinctive but boring–but that promotion? Priceless in brand-building.

Al McClain
Guest
Al McClain
10 years 3 months ago

Publix’s private label packaging certainly is consistent and stands out, so customers are able to easily see that private label is an option throughout the store, and in pretty much every category.

The other thing that helps a lot is the overall reputation that Publix has. Shoppers see that their stores are clean and well merchandised, experience their solid customer service, and trust them to provide PL brands that are on par with national brands.

Bill Bittner
Guest
Bill Bittner
10 years 3 months ago

The whole goal of national brand advertising is to build a product image that exudes greater quality. Publix success in private label is due in no small part to their larger-than-life corporate image. As a consumer service oriented, employee owned corporation, they have an extraordinary retail reputation. That they have been able to leverage their corporate image to increase the penetration of their private label brands should be of no surprise. It would have been a greater surprise if they hadn’t. They seem to have been smart, working to make their private label brands more visible so that they could bask in the limelight of their retail banner.

But this increase also comes at the time of a struggling economy, with Florida suffering most significantly. It will be interesting to see how an improving economy impacts the consumer decision process.

Gene Hoffman
Guest
Gene Hoffman
10 years 3 months ago

In reflecting upon this question I wondered whatever happened to the former great and widely accepted PL brands of A&P when A&P nationally ruled the “roost.” They seem to have gone the way of their parent … downhill.

For several decades, Publix has been creating itself as a special quality brand. That built a foundation for its private label assortments, which have continued in that quality Publix image. In other words, the sustainable success of private label is complemented–and preceded–by a consistent and reliable quality reputation of the parent. Publix has succeeded in that regard.

Bill Emerson
Guest
Bill Emerson
10 years 3 months ago

Publix has, in my view, had such great success with their PL primarily because they show such respect for their private label program. They do not, as many do, look at private label as a margin-builder and/or promotional device. They treat it as well or better than national brands along several axes–packaging, pricing, and quality.

They have also done something relatively unique among large retailers. They demonstrate curiosity about the success of their competitors, learn from them, and then capitalize on these lessons. When confronted with the intrusion of Whole Foods in Palm Beach county, they opened the GreenWise stores, which are basically WF without the organic obsession. From this experience, they began to feed the mainline stores with successful PL products with the GreenWise label, often as the “best” alternative in the category. Absolutely brilliant.

Who knows, maybe Publix will become the first vertical grocer. Wouldn’t that be interesting.

Gene Detroyer
Guest
10 years 3 months ago
“It’s been said that some Floridians have even been spotted shopping at Walmart with their reusable Publix shopping bags because they want to be known as Publix shoppers.” Let’s hope that nobody at Publix really believes this. They should be much concerned that the people are shopping at Walmart. This is hardly good news. With regard to private label, the move has been going on for years. Once retailers realized that it was quality that drove product sales, not price, all private label sales have increased. The one quote that tells the story is, “So a customer, who used to buy a leading brand can of beans, can now buy the Publix brand can of beans and receive the same or better quality at a better price.” Pundits can write all they want about the psycho-social reasons that shoppers buy brands, but over the long run, quality wins. Any retailer that produces a Private Label line equal to or better than the branded products will win in the long run.
Carol Spieckerman
Guest
10 years 3 months ago

Publix has been ahead of the curve on a number of fronts and I would go so far as to say that the big(er) guys seem to be borrowing from them rather than the other way around. When Walmart launched its Tastes and Tips demo program, I instantly thought of Publix’s Apron’s Cooking School and in-store demo stations. Ditto for the ongoing private brand food revamps, packaging upgrades, and category expansions that have kept Walmart, Target, Kmart, Family Dollar and others busy over the last couple of years. Publix set a standard for localization, loyalty, and private brand marketing which just so happen to be the three pillars of grocery success nowadays.

James Tenser
Guest
10 years 3 months ago

The anecdotes about bag-toting brand loyalists are fun to read. Store brand penetration of 20 percent, as at Publix, is roughly on par with the national rates reported by the Private Label Manufacturers Association last year – 23.7% of units; 18.7% of sales.

This is solid, but not breakthrough, performance for a chain with a impressive track record across multiple dimensions. The good reviews for its PL lines appear deserved, however. They can be an important component of quality perception and shopper loyalty.

Warren Thayer
Guest
10 years 3 months ago

I agree with the basic thread, but have just one thing to add: Publix buyers are known for integrity and honesty within the trade. I profile retailers in my magazine all the time, and regularly hear horror stories from suppliers about many retailers. Not so with Publix. There can be disagreements from time to time, but the respect is rock-solid. That goes a long way when it comes to effective partnering.

Anne Bieler
Guest
Anne Bieler
10 years 3 months ago

Publix has built a great retail business by helping their customers across many touch points with consistent execution. Building their Private Brand with distinctive packaging created powerful shelf impact and underscored the strong value message. The product positioning is solid, easy to understand and delivered across the range of SKUs.

Publix is leveraging their Private Brands very well to differentiate and create loyal shoppers whose expectations are consistently met.

Phil Rubin
Guest
10 years 3 months ago

One of the consistent themes of Publix marketing over the years is to continually build its brand, predominantly via television spots. Unlike Kroger and others, they establish and sustain their brand in TV and other media without taking a promotional-forward message, with the exception of their ROP efforts.

Good packaging helps along with quality but without equity in the Publix brand, the whole effort would be less successful.

Jeff Hall
Guest
10 years 3 months ago

Publix has achieved private label success because they are a deeply trustworthy company. Across the Publix touchpoints of store environment, associate friendliness, and product quality and assortment, this company consistently delivers a solid experience. The Publix private label program is a well-executed extension of the brand authenticity Publix has carefully developed and nurtured.

Joel Warady
Guest
Joel Warady
10 years 3 months ago

Not only did Publix use design as a point of differentiation, but they also served up whimsy in their packaging. Many of their private label offerings had unique points of difference that in essence communicated a strategic personality for the chain.

“We don’t take ourselves too seriously, but at the same time we are serious about our business.”

It is a great message, and one that is communicated across their line of private label products. Couple this with the fact that the design is eye-catching, and you have a product line that will sell off the shelves.

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