Walgreens Expects Nice! Results from New Private Label

Discussion
Aug 19, 2011
George Anderson

Walgreens is serious about becoming a player in the grocery business. The drugstore chain announced this week that it was rolling out a new line of products under the Nice! private label.

According to a company release, the Nice! line will include more than 400 food and household items at prices as much as 30 percent lower than equivalent national brands. Most of the new items will be on Walgreens’ shelves by early next year.

The drugstore chain intends to retire other store brands, including Café W, Deerfield Farms, W and others, as it consolidates under the Nice! label. The chain’s Good & Delish private label line of premium snacks and beverages, originally developed by Walgreens’ Duane Reade business, will not be affected by the introduction of the Nice! brand. The chain will also continue to market over-the-counter health products under the Walgreens label.

"Store brands have always been a core part of our business. With more shoppers seeking value in this economy, we’ve been able to attract new customers across every income level to our brands and maintain their loyalty with a focus on quality and assortment," said Joe Magnacca, Walgreens’ president of daily living products and solutions, in a press release. "Now with the launch of Nice!, we are streamlining our offering to make it even easier for customers to identify high quality everyday essentials at a great value."

Walgreens intends to launch an integrated marketing campaign for Nice! touting the brand’s quality and price savings compared to "other national brands" available to consumers.

"With the consolidation of brands, and the additional products we will roll out under Nice!, we expect it will become a leading brand," said Moe Alkemade, Walgreens divisional vice president and general merchandise manager of private brands. "Our store brands are no longer just the value option, they are the smart option."

Walgreens, citing Nielsen, said 75 percent of its current customers already purchase one or more of its store brands.

"We believe we will continue to build loyalty to our stores and our brands as shoppers find favorites on our shelves that will become staples in their everyday lives," said Mr. Magnacca. "We are confident that our more refined approach will provide a new level of simplicity and choice, which is the ultimate value objective for our core customer."

Discussion Questions: Is Walgreens on the right tack with the consolidation of private label items under the Nice! label? Which retail chains do you consider among the best when it comes to the development and marketing of store brands?

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16 Comments on "Walgreens Expects Nice! Results from New Private Label"


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David Biernbaum
Guest
9 years 8 months ago

I like the Nice! private label program at Walgreens. I’m a fan in the early stages because the package design does not overstate or understate, the branding approach is well done, and Walgreens recognizes that it’s not only a drug store, but also a convenience store. The only drawback is that Walgreens has to take space away from its core front end drug store business in order to make this happen.

Dr. Stephen Needel
Guest
9 years 8 months ago

As long as the consolidation maintains or enhances product quality, it makes marketing sense–how much easier to advertise and promote and a clear presentation of the brand. Of course, if they are replacing national brands with Nice!, they may have some issues.

Trader Joe’s is easily the best at the own-label game. Great quality, great selection, great price, clever/cute marketing.

Ian Percy
Guest
9 years 8 months ago

I’m sorry, for a minute I thought you said the brand name was “Nice!”

In the late 13th century the word originally meant “foolish, stupid, senseless,” in Latin it meant “not-knowing,” from ne- “not.” In the 1700s it morphed into “agreeable” and “delightful.” In the 1800s it was “kind, thoughtful.”

Said one etymologist, “The ladies have charmed the word out of all its individuality and converted it into a mere diffuser of vague and mild agreeableness.”

Let’s face it…”That was nice” is not exactly a rave review. Walgreens could have done better.

Paula Rosenblum
Guest
9 years 8 months ago

Nice! is nice!

The packaging is very Publix-esque and pushing the quality/value equation works well.

Of course, Costco’s Kirkland brand is another very strong one, along with Trader Joe’s (mentioned above).

Private Label clearly continues to be on the rise across all segments and retailers are slowly becoming competitors to the national brands they carry.

Charles P. Walsh
Guest
Charles P. Walsh
9 years 8 months ago

Walgreens is most definitely on the right track, especially considering their smaller range of offer (pantry) and inability to compete on assortment the way that larger retailers are able.

The crisp and easily identifiable packaging brings consistency and recognizability to their private label offerings and will serve to differentiate their offer from competition and set off their National Brands very well.

Aldi, Tesco, ASDA and Walmart are all amongst the best when it comes to the development and marketing of their store brands; Walgreens is taking a page out of their playbook.

Roger Saunders
Guest
9 years 8 months ago
Smart play on Walgreens’ part. Based on the ongoing BIGresearch Consumer Intentions & Actions (CIA) monthly surveys, the leading reasons that Consumers mention for choosing a particular store for Groceries are: Price – 74.5%, Location – 71.5%, Selection – 57.3%, and Quality -47.9%. Those same Consumers point to the importance of “Trustworthy Retailer” in 21.8% of mentions. Walgreens can already outpoint any grocer in the market with meeting location needs — over 7,000+ locations. And, the CIA points out that Consumers already see Walgreens as the leading Price/Value leader among Drug Chains, as well as a highly “Trustworthy Retailer” (stronger than the overall grocery channel’s performance). By following through with an integrated marketing program to emphasize quality and price, Walgreens is going to pick up that essential element of “trips.” Grocery stores capture about 99 trips per year, while Drug stores often are content with a quarter of those types of visits. If Walgreens gets enough trial, and the quality bears up, they’ll have a winner. Kroger has to stand out as the best of… Read more »
Anne Howe
Guest
9 years 8 months ago

Has anybody tasted this Nice! brand food? I agree the packaging is well done, but let’s face it, this is food. Convenient or not, it has to have taste and not just from sodium and artificial flavoring.

I’m all for private brands, some are done very well at Meijer, Kroger, Publix and Target. But I’m looking forward to see what shoppers have to say about the taste. It ought’a be better than just nice.

Jerome Schindler
Guest
9 years 8 months ago

Walgreens is falling into the “one size fits all” trap. Reminds me of my days at Borden. Top management made the mistake of trying to brand everything and anything “Borden.” Borden Burger didn’t make it, neither did Borden Potato Chips. Walgreens is a trademark for OTC drugs; Deerfield Farms is better for dairy. Nice! would be okay for cosmetics, paper goods, etc.

David Leavitt
Guest
David Leavitt
9 years 8 months ago

Brand consolidation for marketing spend efficiency makes sense. They need to make sure the brand promise is met across all categories, and those categories are the right fit with the channel. Walmart entered food as their brand promise (low pricing) translated to other categories. What is the drug channel promise, health? It is definitely not low price or selection. WAG and CVS should keep that in mind.

Bill Emerson
Guest
Bill Emerson
9 years 8 months ago

This looks like a winner to me. With a greater investment in packaging and the consolidated focus, Nice can become competitive with the nationals. The challenge, of course, is to maintain an equivalent quality level with the nationals.

Trader Joe’s is excellent at this, as is Whole Foods and Publix. Also, Walgreens gets little competition from CVS here as the packaging screams cheap and the quality control is non-existent.

Gene Hoffman
Guest
Gene Hoffman
9 years 8 months ago

What the world needs now is more stores that sell food, nice food. That’s the only thing that there’s not plenty of. Ha.

Walgreens has a loyal customer base among a broad demographic spectrum, but mostly seniors. This is a ripe audience for increasing Walgreens sales with food products and particularly, a consolidated line of “Nice” labels. Nothing seemed so smooth like something “Nice!” Go for it Walgreens.

Ben Ball
Guest
9 years 8 months ago
Shift into convenience food as a strategy = A+ Focusing the Walgreens or “W” brand on OTC/HBA = A+ Moving to private label in food rather than focusing on well-priced national brands = B “Nice!” = C- If this were Australia, where people substitute the word “nice” for “good” when referring to food, this might make sense. But what is compelling about “nice food” to the U.S. consumer? I’m assuming they researched this brand name to death — so maybe there’s something there the average boomer doesn’t see. Certainly the phrase “nice!” is/was popular in my twenty-something’s vernacular a few years back — but I don’t think it was being used as a compliment. This is obviously a good margin play — but if Walgreens is serious about building “Nice!” into a proprietary food brand as opposed to just a higher margin PL alternative this looks like a tough road. Walgreens would be better off continuing to leverage the heck out of their OTC private label strength and letting the national brands carry their “we’re… Read more »
Michael L. Howatt
Guest
Michael L. Howatt
9 years 8 months ago

The success of the Nice! brand may come down to logistics. Can they successfully promote price/value? Will the products create repeat purchases? And will they be able to handle the potential increase in traffic? Most Walgreen stores only have 2 checkouts. If they want to compete in the grocery arena, they may want to think about a better way to handle checkouts more efficiently.

Gene Detroyer
Guest
9 years 8 months ago

I continue to be more impressed with Walgreens all the time. Here is another action that taps into a growing trend and one that builds the Walgreens brand.

Quality private label is the trend of the future. Retailers who do not provide that will default their sales to those that do. In the next ten years, retailers’ private labels will be to the consumer what traditional branded goods were 20 years ago.

Ed Rosenbaum
Guest
9 years 8 months ago

I am not one who will be going to Walgreens for grocery items. I have yet to find them price competitive; nor do I see where the customer service has improved to even come close to meeting that of either a Publix, Walmart or even Target. Walgreens has a lot of work ahead of them to draw customers for more than prescription meds.

Jonathan Asher
Guest
Jonathan Asher
9 years 8 months ago

Walgreens’ introduction of the Nice! line of products is consistent with two recent trends we’ve noted: One is retailers unifying disparate arrays of own brands that they have supported, into one cohesive offering that they can support more fully and efficiently; the other is shoppers shifting a larger portion of their grocery purchases to channels other than grocery, such as drug and mass.

We expect to see more retailers initiating broad-scale branding campaigns like this in the months ahead and, if executed effectively, anticipate shopper response will follow.

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