January 2010
	VIDEO INTERVIEWS PLMA Live! interviews some leading exhibitors from Innovation Hall at the Chicago Trade Show. CLICK HERE TO PLAY VIDEO INTERVIEWS
	MARKET RESEARCH Loyal shoppers account for 40% of sales
	UPCOMING EVENTS Annual Meeting & Leadership Conference, Orlando, March 25-28

Supervalu CEO: bigger push for store brands

  Supervalu’s CEO says the giant retailer is becoming more aggressive with its private label program as it embarks on a dramatic SKU reduction program that may cut assortments by up to 25% in certain categories.
   Craig Herkert, President and CEO, told Wall Street analysts, “We are no longer bashful in endorsing our wide assortment of owned brand products with more prominent positioning on our shelves and representation on our displays.” He also pointed to new pricing policies, noting that Supervalu is creating “new guard rails around our owned brand pricing.”
   While store brand promotions will increase, the number of suppliers is decreasing, Herkert said. “We have seen some great success as we have looked at consolidating suppliers with some of our own brand categories and we have seen really, really good benefit and cooperation partnership with our supplier partners.”

P & G launches online store

   Procter & Gamble plans to launch an online store that will sell key brands. The initiative aims to study “consumer buying habits as it counters moves by traditional retailers, which have reduced the variety of brands they carry,” according to the Wall Street Journal.
   P&G says the new online store is a “learning lab,” where it can study consumers’ online buying habits, rather than a direct source of sales growth.
   P&G’s new “eStore” will start as a pilot using 5,000 consumers. Not every P&G product will be available via the site initially, although big brands including Tide, Pampers and Olay will be sold there. The site—pgestore.com—is not yet publicly accessible but will be up for use beyond the pilot program in the spring.

Limited-assortment stores keep growing

   Limited-assortment stores carrying mostly store brand goods are poised for strong growth in 2010. Two of the country’s largest retailers, Food Lion and Supervalu, have announced ambitious expansion plans for the format, while a major regional chain, Giant Eagle, is adding stores following a successful test.
   Food Lion executives announced that the chain plans to double the size of its 30-store Bottom Dollar chain. The expansion is part of Delhaize’s plan to use discount banners to bring its pricing closer to that of Wal-Mart.
   Supervalu is putting the Save-A-Lot chain at the center of its turnaround efforts. “Among the growth vehicles that Supervalu possesses, none is as potent as Save-A-Lot,” Craig Herkert, CEO, told analysts. “I am committed to doubling the size of this hard discount format over the next five years.” Plans call for 100 new stores in the coming fiscal year.
   Giant Eagle’s first two Valu King limited-assortment stores proved profitable after their first year, encouraging the Pennsylvania-based supermarket chain to invest in further expansion. “What we’re really excited about now is the value opportunity, competing with the players like Wal-Mart and Aldi,” Giant Eagle told Supermarket News.

2010 to be “breakout year” for store brands, analyst says

   While some pundits are predicting a big brand comeback this year, one highly respected retail analyst foresees even more big market share gains for private label.
   Deborah Weinswig, an analyst at Citigroup, predicts that 2010 will be a “breakout year” for private label growth. “We believe that there will be another growth spurt in 2010 for private label and exclusive products as retailers cater to the growing demand for these products and better merchandise these products in-store to appeal to the consumer,” she wrote in a report.
   Weinswig believes food retailers experienced a “modern-day price war” in 2009 and in 2010 an “old-time price war” will break out, led by big price cuts at Wal-Mart. “We view this move as a game-changer in the food retail industry in 2010,” she wrote. “As a result, there likely will be further price investments from food retailers and gross margin pressure as they scramble to match Wal-Mart’s aggressive pricing in 2010.”

Dollar stores ring up private label gains

   The nation’s two largest dollar store chains are reporting big gains for their store brands.
   At Family Dollar, Howard Levine, President & CEO of Family Dollar Stores, told retail analysts that private label sales “have had double digit improvement over the past 12 months.” He expects the growth to continue: “Looking forward we also see further opportunity to expand our private label program. Customers are turning increasingly to private label brands to help better meet their need for value.”
   At Dollar General, CEO Rick Dreiling attributes some of the retailer’s improving financial results to the growing number of store brands offered in the stores. “In consumables, we now carry nearly 1,300 private brand items, accounting for over 21% of consumable sales,” he said.

A&P takes a hard look at its store brands

A&P is undertaking a strategic review of its store brand program. Christian Haub, Chairman, told analysts the supermarket retailer is “looking at the entire private label program” in terms of how well it has been developed and executed. The review has “identified where we had not the entire assortment of private labels in our stores for example,” he said, and this offers “some quick hit opportunities” for better performance. The review of store brands is part of a larger revamping of pricing and promotion. Haub said the retailer’s “exclusive focus on dealing with the current environment through promotions clearly didn’t work” and was responsible for the company’s disappointing financial results.
A new strategy for its recently acquired Pathmark stores is under consideration. One possibility is switching to an EDLP strategy similar to the Food 4 Less chain in the West.

CVS goes for high-end cosmetics

CVS is stepping up its efforts to capture the cosmetics business normally sold by department and specialty stores. The drug chain has launched a web site for its Beauty 360 prestige beauty stores. The site offers customers nationwide one-stop shopping for everyday health and beauty care items, including prescriptions, through a shared shopping basket across both cvs.com and beauty360.com. Beauty 360 stores are adjacent to select CVS/pharmacy locations and provide access to a broad assortment of prestige cosmetic, skin care, hair care, fragrance and grooming brands.
There are nine Beauty 360 locations in Washington, D.C.; Connecticut and California; and CVS plans to open more this year.

Walgreens looks to add fresh foods

   Walgreens is talking to a range of food manufacturers, including Unilever, Nestle and Sara Lee, that could help it develop fresh foods and prepared meals to sell as both as national and store brands.
   Walgreens has not set a time for an expanded food program, but Bryan Pugh, Vice President, Merchandising, is about to hire someone to run the program. Pugh has experience with fresh foods; he formerly was with Tesco, the U.K. supermarket retailer.
   Meanwhile, Walgreens top management indicates the chain will be relying on its store brands to boost profits this year. Greg Wasson, CEO, told analysts: “We’re going to continue to see a cautious consumer that’s going to be looking for non-discretionary products and more value.” The chain plans “to counter the margin pressure” by driving more private label sales.

Fresh & Easy talks with Dunnhumby

   Tesco may be making a big move to improve its Fresh & Easy stores. The British retailer is talking with the U.S. affiliate of Dunnhumby, the highly regarded shopping data and loyalty marketing company, about working with its money-losing Fresh & Easy division, based in California.
   Dunnhumby is widely credited with helping Tesco become the dominant retailer in the U.K. There, Tesco owns a majority ownership stake in Dunnhumby. In the U.S., however, Dunnhumby has a 50/50 partnership with Kroger, with which it collaborates on a loyalty program.
   Edwina Dunn, Chief Executive of Dunnhumby, told Supermarket News: “If we were to become involved with Fresh & Easy, we would make sure that Kroger was entirely comfortable with what we did and how we did it.” Some Fresh & Easy stores are in the same California markets as the Ralphs supermarkets operated by Kroger.

Aldi switches to TV, radio ads

Aldi is cutting back on its print advertising and using the savings to start television and radio advertising. It plans to run TV and radio ads throughout this year and explore opportunities in digital marketing, Joan Kavanaugh, Vice President, Corporate Purchasing, told Supermarket News.
The new media mix accompanies a shift in branding. “We’re definitely working to be more aggressive with brand improvements,” Kavanaugh told the publication. “We want to be right in step with what the national brands are doing, not behind.”

Target adds celebrity chef brand

Target has announced the launch of Giada De Laurentis for Target, a line of cookware products and specialty food items, endorsed by the celebrity chef. In another move, the mass merchandiser acquired the Smith & Hawken brand for use with its outdoor furniture and gardening products. Smith and Hawken was an upscale retail chain that was closed last year by its parent company, Scotts Miracle Grow. Target already was marketing a range of outdoor products under the Smith & Hawken for Target brand.

Costco, Sam’s put their brand on liquor

The leading wholesale club chains are expanding their private label programs for the liquor category. Costco is introducing Kirkland Signature premium tequila that is available in select Costco warehouses in states that allow retail liquor sales. Sam’s Club, owned by Wal-Mart, is offering Rue 33, a Member’s Mark distilled vodka from the Cognac region of France.

IN THE STORES

Aldi plans to launch about 100 products in 2010, many with a better-for-you positioning.

Brookshire Bros., the Texas supermarket chain, is carrying the Eating Right and O Organics brands created and marketed by Safeway.

Rite Aid will rollout a loyalty program called wellness + later this year. The program has resulted in almost a 50% gain in front end sales in four test markets.

Food Lion has introduced a low-sugar children’s cereal under the Good 4 Kids private label.

H-E-B in Texas is stepping up in-store promotions for its price cut program. New signage and highly visible shelf tags calling out specific products and savings.

Target has launched a promotional campaign offering discounted bulk pack products. ‘The Great Save’, which runs until February 21, is described as offering shoppers warehouse club savings without the warehouse membership fees.

Office Depot has introduced more than 70 fashion-oriented business products, including both private label and manufacturer brands.

MARKET RESEARCH

Loyal shoppers account for 40% of sales

The top 10% of the average North American retail store’s customers visit the store more than twice a week, spend more than $39 per visit, and represent nearly 40% of the store’s total sales, according to an analysis of over two million grocery shoppers by Concept Shopping.
The study also found that these most valuable shoppers tend to remain very loyal to the store, with 95% continuing to shop there throughout the year. Conversely, only 34% of the store’s worst shoppers, those who visit the store less than once a month and spend only $9 per visit, remain customers.

PLMA NEWS

Leadership Conference to be held March 25-28 in Orlando

   This year’s Annual Meeting & Leadership Conference, March 25-28 in Orlando, offers a strategic look at the issues facing private label. “Store Brands at Half-Time: What are we doing right? What are we doing wrong?” is the Conference theme and it will be examined by presentations from three different perspectives on Friday, March 26.
   Don McGeorge, former President and Chief Operating Officer, The Kroger Co., gives the retailer’s viewpoint. David Skarie, President and Co-Chief Executive Officer, Ralcorp Holdings, focuses on the manufacturer’s perspective. The consumer’s point of view is covered in a presentation by Tod Marks, Senior Projects Editor, Consumer Reports. A look at financial issues facing private label will be presented by a leading analyst, Jonathan Feeney, Janney Montgomery Scott.
   On Saturday, the Retail Trends Breakfast speaker is John Failla, Publisher, Store Brands Decisions. He is followed by a two-hour presentation on “Inventing Business Opportunities No One Else Can Imagine,” by Art Turock, author and management consultant. The day concludes with the Private Label Hall of Fame reception and dinner.
   The host hotel is the Hyatt Regency Grand Cypress Hotel, and PLMA’s Annual Golf Tournament will be at the Grand Cypress Golf Club. For more information email annualmeeting@plma.com.

EVENTS

March 25-28

Annual Meeting & Leadership Conference
Orlando

May 18-19

“World of Private Label” Trade Show
Amsterdam, The Netherlands

June 14-17

Executive Education Program
Philadelphia

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