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Happy holidays for store brands No matter what Santa leaves under the tree, this will certainly be one of the happiest holiday seasons ever for store brands. Retailers are adding more creative, high quality store brand products on their shelves and shoppers across the country are putting them into their shopping carts. The results are reflected clearly in the latest Nielsen data, which shows store brand’s market share climbing to all-time highs across retail channels.
Big private label gains at Costco, says CFO
There’s been a dramatic increase in store brand penetration at the country’s largest wholesale club chain. Richard Galanti, Chief Financial Officer, told analysts that the share of Kirkland Signature goods sold at Costco had increased at triple the typical rate, climbing about 3 percentage points over the past six months, compared with a usual annual growth rate of about 1 percentage point.
Kroger brands post double-digit increases
The nation’s largest supermarket chain reports that its store brand sales continue to grow, with unit market share accounting for 35% of grocery sales for five consecutive quarters.
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National brands face shelf space squeeze |
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The battle for shelf space is likely to heat up next year, Ad Age magazine is warning its national brand readers. An important sign of coming conflicts, the publication writes, is the recent public dispute between Costco and Coca-Cola.
“Costco’s recent decision to strip Coca-Cola products from its shelves in a pricing dispute is the highest-profile sign yet that the age-old battle between marketer and retailer is escalating, due to the growing power of private label, looming package-goods deflation in the face of falling commodity prices, rising pressure on retailer margins, and softening volumes. Facing those factors and armed with data from loyalty cards, retailers are getting savvier about which brands to keep and which to lose,” Ad Age says. The rising market share of store brands is contributing to the more aggressive marketing strategies of retailers, the magazine writes, citing recent experience in Europe. “Higher private label shares in Europe have gone hand-in-hand with tougher tactics, and rapid growth of private label in the U.S. appears to be tempting retailers to flex their muscles more, too. Exacerbated by the recession, the stepped-up U.S environment is starting to more closely resemble the contentious retailer-manufacturer relations of Europe.”
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FDA considers Nutrition Facts panel changes |
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The Food & Drug Administration is seriously considering make some changes in the Nutrition Facts panel on food packaging. The agency has requested comments on a study examining consumer reaction to possible modification of Nutrition Facts labeling. The FDA issued advance notices of proposed rulemaking in response to the recommendations from its Obesity Working Group.
The study is intended to answer whether and how to emphasize calorie counts on Nutrition Facts panels; whether and how to amend the agency’s serving size regulations; and whether certain nutrients should be added or removed from the Nutrition Facts label. The FDA said that calorie count emphasis could entail using a larger font for total calorie information, adding a ‘percentage of daily calories’ declaration or eliminating the ‘calories from fat’ declaration. The ‘serving size’ or ‘servings per container’ declaration could also see increased font size. The obesity issue is also under scrutiny by the Federal Trade Commission, which held a public meeting this month to discuss food marketing to children. The forum featured the presentation of new research and analysis of “statutory and constitutional issues surrounding governmental regulation of food marketing.”
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Court awards store brand supplier $13.5 million |
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PBM Products, LLC, which supplies store brand infant formulas to Walmart, Target, Kroger, Walgreens, and other retailers, has received a favorable jury verdict and a $13.5 million damages award in its false advertising lawsuit against Mead Johnson & Co., a maker of Enfamil Lipil Infant Formula.
PBM’s lawsuit claimed that Mead Johnson engaged in false and misleading campaigns against PBM’s competing store brand of infant formulas, suggesting they do not provide the same nutrition as Mead Johnson’s brands. The $13.5 million in damages awarded by the jury in the United States District Court for the Eastern District of Virginia is one of the largest damages awards ever for a false advertising case. U.S. District Court Judge James R. Spencer permanently enjoined Mead Johnson from making any false statements concerning PBM’s infant formula, including the claims Mead Johnson previously made in Enfamil advertising that “It may be tempting to try a less expensive store brand, but only Enfamil Lipil is clinically proven to improve brain and eye development.”
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Target to add 100 Up & Up products |
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Target is planning to on add 100 more items to its Up & Up brand next year, which now encompasses 800 products across 40 categories. Kathryn Tesija, Executive Vice President, Marketing, told financial analysts that the “brand’s unique design, high quality, and low prices are resonating with guests and we are experiencing increases in both penetration and sales compared to last year.”
A big increase in food offerings is also in the works, as the retailer expands in P-Fresh store format. The majority of the SKU increase will be in the dry grocery area, along with dairy and frozen products. |
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Meijer goes for the Gold |
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Meijer has revamped its Meijer Gold premium brand, featuring “singular products that all have a unique story to tell.” The line, which includes 80 SKUs, offers a collection of original recipe items that are either made by a company in Meijer’s trading area, or by a family-owned business.
Ralph Fischer, Group Vice President, said the retailer wants to offer shoppers foods “they won’t find anywhere else.” He added that “we’ve traveled the globe and looked in small towns to source premium products that have a distinctive history, heritage or story.” The packaging features a gold seal and tells the story of the product’s origin, “allowing consumers to feel as if they are sharing in someone’s family tradition.”
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Metro forms venture with dunnhumby |
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Metro in Canada has formed a joint venture with dunnhumby, the well-known marketing company that has helped develop successful consumer loyalty programs for Kroger in the U.S. and Tesco in the U.K. Many analysts cite dunnhummby’s work as an important factor in the rising private label share at both these retailers. Metro says the joint venture will provide the retailer with opportunities “to be even more relevant to customers, to be more targeted in our efforts and to be more efficient in our marketing.”
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Whole Foods promotes 365 brand with P-O-P |
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Whole Foods Market promoted its 365 brand with a point-of-purchase campaign that encouraged shoppers to “build a better lunch box” with its store brand products.
The campaign featured large banners on store exteriors and indoor ceiling signs that promoted categories such as juice boxes and organic foods. Other ceiling signs invited shoppers to “Join the school lunch revolution!” by donating to “The Lunchbox Project” at checkout, and directed shoppers to a microsite for details. The project offers online recipes and will soon feature videos on food safety and manuals to help school lunch providers make healthy, affordable meals.
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Store brands are gaining in Brazil |
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Brazil may be one of the next big growth opportunities for private label. The latest Nielsen data shows that sales of retailer brands grew 7% this year compared to 2008. One reason for the strong growth is a big increase in the number of private label items offered by retailer. The number of items increased 22.7% compared to last year, reaching a total of 55,752 goods available in 165 of the 684 companies participating in the research. Store brands were sold to about 18.2 million customers, representing half of the Brazilian population.
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Independent debuts store brand wines |
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Who says independents can’t get creative with their store brand programs? Rouses, an independent supermarket retailer in New Orleans, has just introduced a line of store brand traditional and premium wines. There are two lines, Heritage and Reserve, sold under the Rouses’ brand. Rouses played a major role in the package design, said Adler Fels Winery, which sources, packages and distributes the wine.
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IN THE STORES |
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Ingles Markets
reports a “higher percentage of private label sales” as the North Carolina-based supermarket chain continues “to add more private label products throughout our stores.”
Tesco
reports a 38% sales gain for Fresh & Easy during the past year, with stronger same store sales following a marketing push in September.
Loblaws
in Canada has repackaged about 2,000 of the SKUs under its President’s Choice brand this year.
Save-A-Lot
has consolidated its corporate procurement functions under its marketing/merchandising group.
Home Depot
is introducing an exclusive range of environmentally-friendly cleaning products under the Martha Stewart Clean brand.
Petsmart,
the specialty chain, reports sales gains for its revamped dog food line under the Authority brand.
Safeway
is offering a free 24-pack of its Refreshe purified water with a $125 online grocery purchase.
7-Eleven
plans to add 550 stores across the U.S. over the next three years.
Wegmans
is selling a customized line of classic toys for the holiday season. The line consists of seven items, including a Wegmans Organic Farm Shape Sorter, buses and farm trucks.
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MARKET RESEARCH |
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Most consumers like grocery shopping |
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There’s new consumer research that may dispel the oft-stated notion that people don’t like to shop for groceries. A new Nielsen report finds that the majority of U.S. consumers (53%) really enjoy or like grocery shopping and nearly one of every five of these consumers regularly browse the entire store when shopping.
Nearly four of every ten shoppers (38%) told Nielsen that they think grocery shopping is a chore, but not a difficult one. These consumers know which parts of the store have the items they want. Planning is key with a large percentage of U.S. households using shopping lists (58%), store circulars (47%) or coupons (37%) and comparing prices (50%) on most grocery store trips. The research also found that about 30% of grocery items are purchased on deal, with deal rates up nearly 11% for high-income households, nearly 10% for middle-income households and 7% for low-income households. Only 9% of consumers purchase from end-aisle displays on most grocery trips, and three-quarters of consumers never ask for assistance in the meat or produce department. |
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EVENTS |
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| e-Scanner is a monthly publication of the Private Label Manufacturers Association, 630 Third Avenue, New York, NY 10017, Telephone (212) 972-3131. Copyright 2009 by PLMA. | ||||||||||
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