Private label foods need work
Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.
Outside of chains like Trader Joe’s, most retailers remain fairly risk-averse with their private label food offerings. Most are more comfortable following — albeit faster than in the past — than leading, contends Bob Shaw, president of Concentric Marketing.
In addition, too many simply accept “private label just doesn’t do well” in certain categories instead of working to figure out why and how to fix it. Mr. Shaw’s advice: “Break the rules; don’t demure to them.”
For those still hesitant to lead, Mr. Shaw suggests partnering with emerging companies to incubate “captive brands” that offer a period of exclusivity. “Products like that can be a win-win for both sides,” says Mr. Shaw.
Improvements can also be made in how own brand products are marketed. “I think retailers view private label as more profit- versus growth-driver, so you don’t see marketing around specific store brand products.”
As a result, they’re missing opportunities to cultivate “signature items” that can have an outsized impact on store sales. For example, a new study from market intelligence firm Numerator found customers who buy Costco’s Kirkland Signature rotisserie chicken and Trader Joe’s much-ballyhooed cauliflower gnocchi shop more frequently and spend more at each retailer. An example of a grocer leveraging an internal hit is Publix, which just introduced a full line of merchandise around its famous Pub Subs.
Mr. Shaw adds that there are also opportunities to better market private label products to individual shoppers using transactional data to nudge them toward items likely to be a good fit (via apps or e-mail).
Another area that could still use a little work is pricing, says Jim Hertel, SVP at
Inmar Analytics. “We still see too many retailers that don’t take a disciplined, thoughtful approach to pricing private label relative to national brand products, across value tiers and across sizes within tiers,” he reports, citing problems in categories throughout the supermarket. As a result, the strategic impact of private label can be lessened with millions of dollars left on the table. “Getting pricing right can lead to rapid improvement in profitability and more intensive shopping of the entire store,” he says.
DISCUSSION QUESTIONS: Where do you see the biggest opportunities for grocers to elevate their food private-label offerings? Does product innovation, quality, marketing, pricing or some other aspect stand out as the biggest shortcoming?