PLBuyer: Where’s the In-Store PL Marketing?

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Jul 19, 2011
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Through a special arrangement, what follows is an excerpt of a current article from Private Label Buyer, presented here for discussion.

Secret shoppers sent out by Private Label Buyer have found very little in-store marketing for private label. To most of the magazine’s editorial board, this isn’t so surprising, reflecting an overreliance on national brands and their promotional funds as well as a general lack of support for store brands.

"Supermarkets are walking a fine line these days between driving sales in their own brands and promoting movement in national brands," said Carl Munyon, formerly vice president of corporate purchasing for Aldi. "The national brand promotional funding is in many cases too attractive for the supermarket to give up. Therefore, the private label does not get the in-store marketing that they would like to give it. Supermarkets should be doing in-store promotions of their own brands as part of a customer loyalty strategy … using a private brands marketing manager that focuses on key metrics for circular and in-store promotions of private brands could help drive improvement."

Craig Espelien, former vice president, business development, at Crossmark, a sales and marketing firm, believes that retailers typically heighten marketing efforts around private label during in the depths of a downturn but shift back toward national brands as the recession nears its end, partly induced by funds from tertiary or fringe brands trying to stay alive. Said Mr. Espelien, "This causes a loss of focus on the retailer’s PL, and a lost opportunity to establish their brand with a meaning that embraces price but goes beyond price."

James Rushing, a partner at Symphony Consulting, Symphony IRI Group, said in-store marketing is a huge opportunity, but retailers find it tough because of bottom-line pressure to keep marketing costs to a minimum.

"Furthermore, it’s difficult for retailers to spend the resources on strategizing about marketing products at the same level as a CPG manufacturer," he added.  "I wouldn’t say it’s surprising, since it’s a bit of a foreign concept in the U.S. market. Retailers appear to struggle with measuring ROI, and, as a result, there’s less investment made. There are definitely opportunities to market, both in-store and out-of-store."

Going against the tide, Paul Osinski, senior vice president, commercial sales, with Salient Management Co., believes major retailers were adequately promoting their store brands.

"I believe the better retailers across the country support their brands in-store on a regular basis," said Mr. Osinski. "Remember that most decisions are still made at the point of purchase. If you have established your quality over time with your consumer, then your competitive pricing at the shelf is one of the strongest marketing messages you can make."

Discussion Questions: Are stores adequately supporting their private label brands with in-store marketing or are is it wiser to keep promotion spending at a minimum? What must they do to improve?

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18 Comments on "PLBuyer: Where’s the In-Store PL Marketing?"


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Dr. Stephen Needel
Guest
9 years 9 months ago

This is both a research question and a strategic question. The research question is whether increased in-store promotion improves sales and profits. Of course in-store promotion is likely to improve sales, but will promotions improve sales to a payout level? Retailers should be doing this research.

The strategic question is whether the retailer wants to market their private labels aggressively or wants to have them as less expensive options. The downside to promotions is a possible loss of a more premium positioning (“they’re the cheap store”) and a loss of focus for national brands. The upside is differentiation and value, assuming the quality is there.

Justin Time
Guest
9 years 9 months ago

Store brands got consumers through the Great Recession. Now isn’t the time to abandon them.

Promotional spending must increase on private label, not decrease. With the ever expanding landscape of private label, consumers continue to need being informed of new products and reminded of current offerings.

W. Frank Dell II
Guest
9 years 9 months ago

One reason suppliers don’t give all their promotional money to retailers at one time is that it will disappear.

My observation is, retailers are working hard to expand their private-label offering and have no time left to market and merchandise. I believe this is very short sighted. Most retailers are only doing half their job. As I proposed over 10 years ago, where is the private label frequent-shopper tie in? Where is the new private label product presentation? I predict that it will not be many years until management finds some slow-selling private-label items without answers.

Gene Hoffman
Guest
Gene Hoffman
9 years 9 months ago

To the question, “Are stores adequately supporting private label,” I tend to agree with Paul Osinski:

“If you have established your quality over time with your consumer, then your competitive pricing at the shelf is one of the strongest marketing messages you can make.” However that strong message can be further strengthened by the in-store marketing of PL and bringing on new, imaginative and ethically oriented PL products. Trader Joe’s appears to be doing that well.

Max Goldberg
Guest
9 years 9 months ago

I tend to agree with Mr. Osinski; retailers that have established the quality of their store brands can make their point through competitive pricing at the shelf. When combined with careful, selective in-store promotional programs, retailers can effectively drive additional store brand sales.

Ralph Jacobson
Guest
9 years 9 months ago

PL penetration overseas far surpasses the US’s. Promotion is not actually the driver across the pond. Culture is more the catalyst in choosing the value product. Americans are far more generous in their food spending. As the economy hopefully recovers, more and more consumers will remain “loyal” to PL items that provided quality at a better price, as they remember what is was like to be unemployed. The US consumer will be licking their economic wounds for years to come, so PL will only grow here. I don’t think promotion is required. Just awareness of it with proper planogramming is key.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 9 months ago
Private brands are a key way for a retailer to differentiate themselves from their competitors and retailers should have a strong focus on finding ways to build trial without jeopardizing National Brand funds. On an early run to my local Stop & Shop this morning I saw an end cap of Ragu (2 shelves) on deal and below it (4 shelves) was the Private Brand pasta on deal. Although these two items were not tied together, the approach of creating a meal solution was strong. What would have been better is to run the same program, but tie the national brand Ragu in this case to the private label Pasta. A collaborative approach where you tie together non competing national brands with private label brands is growing. Ahold, Roundy’s Harris-Teeter and Brookshire’s in Texas are all exploring this approach very seriously. As important, national brands are very interesting in testing this approach in store to see the effect on sales. I know Gorton’s, Campbell’s, Unilever, Kraft, Kimberly-Clark and Kellogg are all testing the concept of… Read more »
Bill Emerson
Guest
Bill Emerson
9 years 9 months ago

Whether or not to promote is entirely driven by how the retailer chooses to position their private label program. If they have put the energy and time into positioning the PL as a viable alternative to the national brand and/or adding specialty products that fit into their overall brand proposition but aren’t available from the nationals, then they should be communicating this loudly to their customers, both inside and outside of the store.

If the retailer looks at PL as simply a low cost alternative to the national brands, then they should promote, although the payout is definitely something to be considered.

Carol Spieckerman
Guest
9 years 9 months ago

It depends on how you define “promotion.” Retailers are promoting their private brands in stores simply by upgrading packaging, expanding into new categories, and generally making them more visually prominent. Walk into any Target, Walmart, Kmart…and you will find private brands such as Market Pantry, Great Value, and Smart Sense displayed on endcaps. A few years ago, they would have been buried in the aisles basking in whatever dim light was thrown off from a nearby national brand. Retailers are also dedicating online real estate to these brands for the first time in history (speaking of Smart Sense) which drives traffic to the stores and additional awareness. I would say that private brands are heavily promoted in the ways that really count.

John Karolefski
Guest
9 years 9 months ago

I agree with Mr. Orinski that “competitive pricing at the shelf is one of the strongest marketing messages you can make.” Getting into the planogram with sufficient facings is key. One category formula calls for the top two name brands and the private label. For example, how many brands of ketchup need to be on the shelf?

Anne Bieler
Guest
Anne Bieler
9 years 9 months ago

Many retailers are keeping promotion of private brand at minimal levels to keep costs in line and to maintain brand owner support in key categories. At many levels, private brands are positioned against national brands, inviting the shopper to compare and choose based on the perceived value. Only a few private brand products are well differentiated enough to stand apart and merit additional promotion; for example, some of the private brand ice creams are excellent, and invite comparison as a superior choice.

Many private brands are developed to be “equivalent to” and work with the retailer brand image as part of the overall value proposition. Retailers should think carefully on where to make the investments that will matter.

James Tenser
Guest
9 years 9 months ago

I’m a big advocate for an upgrade in PL branding and marketing support by retailers. The benefits are two-fold: Plump up category margins and reinforce banner equity.

Retailers who see PL pricing and packaging as the complete package are missing the strategic boat, in my opinion. Store brands should be part of the retailer’s core identity. A strong own-label program is an expression of loyalty by the retailer toward its shoppers. Good quality, well-priced, exclusive items provide the retailer with sharper identity.

Beyond the quality, price and packaging of the items themselves, retailers can and should use the full spectrum of marketing communications tools to support their private labels. This extends beyond circulars to include solution-oriented displays, sampling, frequent shopper rewards, and even private-label digital media at the shelf.

Some retailers may worry about pushback from the brands who lavish their trade promotion funds, but I see that glass as half-full too: The stronger the retailer’s store brand program, the greater the incentive for national brands to support their own products vigorously.

Ed Dennis
Guest
Ed Dennis
9 years 9 months ago

Gosh, all this time I thought one of the primary reasons for PL was to get the marketing cost out of the product! Marketing of PL has always entailed placement adjacent to similar products that were marketed heavily and steal sales with a lower price. If someone is going to consider marketing PL I would strongly suggest using the Publix strategy “If it isn’t as good as national brand, IT’S FREE!” This can be accomplished very cheaply and seems to work well for Publix. For others, it might require a reworking of all of their PL product due to existing quality issues.

Ana Sandoval
Guest
Ana Sandoval
9 years 9 months ago

The growth of private label has been exponential. The growth in private label branding has certainly been enabled by a change in packaging strategy. Not too long ago, the term “private label” conjured images of black print on a white background: packaging that screamed “generic” or it has been characterized by “copycat” style, which mimics the leading national brand in an effort to provide quality reassurance or perhaps to lead shoppers to mistakenly pick up the store brand.

Today, however, store brands are increasingly moving away from copycat design and are instead defining themselves through packaging that matches the quality of national brand packaging with appealing visuals, an emphasis on branding, etc. This shift has raised the bar and stepped up the challenge for national brands: Rather than simply differentiate, national brand packaging must now work harder than ever to justify a price premium.

So, to sum it up, Ralph Jacobson hit it on the head when he said, “I don’t think promotion is required. Just awareness of it with proper planogramming is key.”

Joel Rubinson
Guest
9 years 9 months ago

Private label brands ARE brands and should be treated as such.

Kai Clarke
Guest
9 years 9 months ago

The key to great private label branding is to reduce any promotional monies to a minimum. Instead, the product should be of the highest quality (to compete with major national brands at shelf level) and the lowest possible price. These offer maximum value to the consumer while driving customer and brand loyalty through repeat sales.

R Seaman
Guest
R Seaman
9 years 9 months ago

I agree that supermarkets (e.g. Kroger and Publix) have an opportunity to improve their marketing of private brands. However, I also believe, based on what I see in stores and in advertising media that department stores (e.g. Macy’s, Dillard, Belk) and chain stores (e.g. JCPenney, Sears, and Kohl’s) maintain a good balance between private brands and national brands.

Odonna Mathews
Guest
Odonna Mathews
9 years 9 months ago

Retailers should increase their efforts to market their store brands, if they have a good product to sell. Increasingly we are seeing multi-brand choices available from a particular retailer, which makes for more marketing opportunities. Consumers want to save money on store brands but also like choices in ethnicity or uniqueness.

Displaying new products prominently and putting them on sale, offering visible and eye-catching store signing, and educating staffers on store brands are key. In-store demos featuring an easy to make meal with few ingredients make so much sense for the retailer and for the consumer, who more often than not, doesn’t have a clue about “what’s for dinner” that night.

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