	FEBRUARY 2007

	IN THE STORES Sam’s Club is holding in-club demonstrations nationwide
	MARKET RESEARCH Store brands lead fresh categories around the globe
	PLMA NEWS Annual Meeting to be held March 22-25 in Orlando
	EVENTS

Tesco outlines plans for “Fresh & Easy” stores in U.S.

Tesco executives formally outlined some of their plans to enter the U.S. market later this year. Surprisingly, the company will not be using the Tesco brand, as it does for virtually all of its 2,800 stores throughout Europe and Asia, but will be featuring the “Fresh & Easy” brand for its store and private label products here.

   The stores, under the “Fresh & Easy Neighborhood Market” banner, will be about 10,000 sq. ft. in size and emphasize fresh and prepared foods. Most of the products offered are expected to be store brands. In the U.K., where Tesco is the dominant retailer, more than half of its sales come from a comprehensive multi-tier store brand assortment.
   The “Fresh & Easy” logo has shades of green and features a large, simple, lower case font, reflecting a stress on simplicity which is part of the overall brand message. The logo has a clock with an apple stem at the top and the time 4:05 on the clock face—references to the time most people might begin to think about what’s for dinner and the ease and convenience of the format. Tesco wants the stores to be identified as “a Fresh & Easy place to shop” where “we keep things simple.”
   The “Fresh & Easy” brand also will have a strong environmental message. Tesco said it plans to label each product it sells with a “carbon footprint”—the amount of carbon dioxide generated during the item’s production and distribution—to help consumers choose environmentally friendly products.
   Tesco USA President Tim Mason said the company was planning on spending as much as $2 billion over the next five years on its U.S. launch. Tesco has visited 600 possible sites within 250 miles of its Riverside, Calif. distribution center.
   Tesco will initially target the greater Phoenix area and has secured 20 sites in and around Phoenix and additional locations were being researched. It is also focusing on Las Vegas, Los Angeles and San Diego with the stores due to open later this year.

Aldi wants stores in all 50 states

   Aldi has ambitious expansion plans in the U.S., a senior executive told an industry meeting in Europe this month. The limited assortment retailer eventually wants to have its Aldi stores in every state of the country, according to former Aldi Süd International CEO and Chairman of the Supervisory Board, Dr. Ulrich Wolters. “We are currently present in 29 U.S. states, and we’re still fairly small. As everybody knows, however, there are 50 states in total.”
   Aldi will continue with its private label strategy, with more than 90% of the products it sells being store brands. “Anything else will result in customer confusion. You’d depreciate your own labels by putting more expensive national brands on your shelves,” Wolters said.
   Aldi’s ambitious expansion is likely to have an impact of another retailer, Trader Joe’s. Although not a part of Aldi, Trader Joe’s is owned by a trust created by Aldi co-founder Theo Albrecht. While their merchandising images are quite different, Aldi stands for value on basic products while Trader Joe’s has a reputation for unique specialty items, the two retailers have some important things in common. Besides carrying private label almost exclusively, both chains operate small stores, focus on rigorous cost control, and are expanding into multiple regions of the country.

Private label adds $400 million sales in supermarkets

Store brand sales in supermarkets increased by about $400 million in 2006 over the previous year to a total of $43.3 billion, according to ACNielsen data. Over a five-year period, private label sales are up almost $2 billion in the channel.
Store brand products in U.S. drug stores enjoyed a healthy year during 2006, ACNielsen reported. Private label gained 6.7% in dollar volume, compared to an increase of 3.4% for national brands, a performance that enabled store brands to jump to an 11.9% (from 11.6%) dollar share in the channel, an all-time high. Private label brought in some $4.6 billion for the year, an increase of about $300 million over 2005; total private label dollar volume has expanded by one-third over the past five years.

Store brands boost profits for CVS

   Gains in store brand market share are boosting bottom line profits at CVS, top executives told Wall Street analysts during a conference call. The executives touted an increase in private label penetration as a major contributor to a higher profit margin on front end sales. Store brands now make up 14% of front store sales, compared to less than 13% last year.
   The gains in private label were part of a successful front end program, Tom Ryan, Chairman & CEO said. Front store comps rose 6.2%, up from 5.5% in the prior year. “Our focus on health care, personal care, beauty, private label and proprietary brands coupled with our loyalty program of ExtraCare is producing industry-leading results.”
   Ryan said the stores acquired from Eckerd in 2004 continue to grow at a rate well in excess of CVS’ core business, both in front and pharmacy. In addition to the acquired stores, the retailer opened 265 new or relocated stores, adding organic square footage growth of about 3.2%.

Supervalu hires chief marketing officer

Supervalu has taken another step in its strategic plan to strengthen its marketing and store brand programs, following its acquisition of Albertson’s stores. The company has named Susan Parker to the newly created position of Senior Vice President and Chief Marketing Officer. She will oversee branding and marketing strategy for Supervalu’s 12 grocery and pharmacy banners, including Albertson’s, Jewel-Osco, Shaws, Acme, Cub Foods, Shop n Save and Lucky.
In explaining the move, Duncan MacNaughton, Supervalu Executive Vice President, said “it is essential that we continually strengthen our marketing and brand management capabilities.” In December, he told Wall Street analysts that store brands will assume greater prominence as the company embarks on a new “premium, fresh and healthy” marketing approach in its stores. As part of its new emphasis on store brands, Supervalu has formed a new Own Brands organization that is scheduled to begin operating this month.

Publix plans more GreenWise stores

Publix has decided to expand its GreenWise natural and organic store format in Florida. Two new stores, in Tampa and Vero Beach, will be added to the two GreenWise stores under construction in Palm Beach Gardens and Boca Raton.
“Among the criteria used in determining GreenWise locations are the level of purchases or requests for our GreenWise label and other natural and organic products,” a Publix spokesperson said. “We have seen exceptional growth in the health, natural, and organic food areas of our traditional stores. Publix GreenWise Markets will allow for an environment focused on natural foods as well as provide a venue with an emphasis on prepared foods.”

Whole Foods adds restaurants in large format test

Whole Foods Market is testing a larger store format that features multiple restaurants. The 65,000-sq. ft. store includes five restaurants serving seafood, barbecue, Italian and Asian cuisines, and cheese sandwiches and soup. During the week, customers order at the counter, but table service is available on weekends. A wine bar lets customers buy samples of Whole Foods’ wines. The restaurants seat up to about 40 people each.

IN THE STORES

Sam’s Club is holding in-club demonstrations nationwide to help promote its Member’s Mark brand baby products. The Member’s Mark BabyBaby Event offers complimentary Member’s Mark brand baby products, including infant formula, diapers, and baby wipes.

Hannaford Bros. has introduced what it calls “the next generation of steam packaging”—quart and half-gallon sizes of microwave steam bags, under the Hannaford private label. The patented micro-porous venting system of the bags permits up to 10 ounces of fresh vegetables to cook in less than four minutes in a 1,000-watt microwave oven. The quart bags retail for $2.99 and the half-gallon bags retail for $3.99, both in 10-count packages.

Staples is branding its service operations, including technology installations, maintenance, and upgrades for home office and small business customers. The new EasyTech service will have an in-store technician to help customers with services such as hardware and software installations, data protection and security, and repair and troubleshooting.

Wegmans has begun offering free online cooking demonstrations. Visitors to the retailer’s website can see videos that include step-by-step instructions, time-saving shortcuts and information about the ingredients.

Trader Joe’s is offering Veggie & Flaxseed Tortilla Chips. They have no trans fats and are dotted with whole flaxseeds, providing 500mg of Omega-3’s and three grams of fiber per serving. Each bag contains an assortment of three flavor combinations—carrot & tomato; spinach & garlic and red beet & onion. A 12 oz. bag retails for $1.99.

Costco is featuring its Office Impressions range of more than one hundred home office products on its expanded website offerings.

Hy-Vee, an Iowa supermarket chain, has introduced fresh no-dough pizzas under an exclusive brand called Van Harden, named after a local radio personality. The pizza crust is made from a combination of cheeses. It includes no flour and is gluten-free. The price was $8 for a 12-inch pizza.

Pathmark Stores, a 141-supermarket chain in the Northeast is now carrying about 150 store brand products from Wild Oats Markets, a Colorado-based retailer of natural and organic products.

Price Chopper, a New York-based supermarket chain, has eliminated artificial growth hormones from its fluid milk products.

MARKET RESEARCH

Store brands lead fresh categories around the globe

   A new ACNielsen global research study shows that retailer brands are gaining a dominant market share in the fast-growing fresh departments for retailers. The study, covering 45 national and regional markets, found that nine of the top ten private label categories, in terms of market share, are in the fresh product categories.
   “It is clear that private label dominates many of the fresh categories in retail stores,” said Jane Perrin, ACNielsen Vice President. “Retailers are focused on their consumers’ needs, and some have even created specially designed in-store areas for fresh and prepared foods. Consumers can quickly and conveniently shop for the meal components they need for their families.”
   ACNielsen reports that retailer and wholesaler brands claim 60% share in three categories—cakes, ready to eat salads and frozen fruit—while posting at least a 40% market share in soup/bouillon/stock, savory fillings/pastes, dairy/milk cream, fish/shellfish/seafood and frozen fruit.

Cosmetics suppliers add fruit extract products

Products containing fruit extracts are proliferating in cosmetic categories, according to a report by Mintel. The company said products are being launched around the globe that take advantage of the numerous anti-oxidant properties in fruit extracts for products ranging from facial color cosmetics to skin care lines. Mintel finds that manufacturers want to stay abreast of the growing consumer awareness for products that contain botanical and herbal ingredients that also serve to care and nourish the skin.

PLMA NEWS

Annual Meeting to be held March 22-25 in Orlando

   There’s still time to reserve a place at PLMA’s Annual Meeting and Leadership Conference, to be held March 22-25 at the Hyatt Regency Grand Cypress in Orlando. With the overall theme, “Driving Private Label to the Next Level,” the Conference focuses on the strategic choices both retailers and manufacturers face if they want to move closer to 30% market share mark.
   Joe Sheridan, Executive Vice President, Wakefern Food, which serves more than 200 stores under the ShopRite name, will be a featured speaker at the Retail Trends Breakfast on Saturday, March 24. Sheridan will give his outlook on retailing and store brands.
   The keynote speaker for the conference will be Mark Husson, Global Head of Consumer Research, HSBC Securities. His latest report, “Private Brands, Growth and Retail Consolidation,” analyzes where growth will take place next and names retailers most likely to succeed.
   Other Conference speakers are: Christine Cross, former Group Business Development Director, Tesco; Craig Espelien, former Corporate Director, Store Brands, Supervalu; Sam Hill, author of best-selling business book, “Sixty Trends in Sixty Minutes;” and Dr. Fred Lachotzki, Professor, Strategic Entrepreneurship & Business Policy, Nyenrode Business University, The Netherlands.
   Registration for PLMA’s Annual Meeting & Leadership Conference begins Thursday afternoon, March 22, with an Opening Reception held that evening. In addition to the program, the Conference will include meetings of PLMA committees and the board of directors.
   For more information, contact Linda Morales, Director of Programs and Conferences, at (212) 972-3131 or e-mail, lmorales@plma.com

EVENTS

March 22-25	Annual Meeting & Leadership Conference Orlando
May 22-23	“World of Private Label” Trade Show Amsterdam, The Netherlands
June 11-14	Executive Education Program Saint Joseph’s University, Philadelphia

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