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ShopRite revamps private brands

Publix embraces seafood sustainability

Private Label Trade Show coverage December 2019 | www.storebrands.com

Private brands have entered a ‘golden age’ in their history. Here’s what the industry needs to do — and not do — to keep the era flourishing

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Volume 42 No. 12 December 2019

CONTENTS

DEPARTMENTS 3

Editor’s Take

4

New Horizons

5

Around the Industry

31

Letter From Group Brand Director

12

COVER STORY Maintaining momentum

Private brands have entered a ‘golden age’ in their history. Here’s what the industry needs to do — and not do — to keep the era flourishing

FEATURES 17 RETAILER PROFILE

21 TRENDING

ShopRite shakes it up With two new private brands — Bowl & Basket and Paperbird — grocer is giving consumers what they asked for and differentiating itself in the process

Publix takes the lead on seafood sustainability Retailer wants its private brands to be part of the solution, not the problem

26 PRIVATE LABEL TRADE SHOW COVERAGE Opportunities abound While there are challenges to be met, speakers cite favorable circumstances for store brands

Store Brands (ISSN-0190-9851; USPS # 0488-370) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631. Subscriptions: One year, $125; two years, $146. One year, Canada $190; One year, foreign $275. Payable in advance with a bank draft drawn on a US bank in US funds.Single copies $20. Foreign, $85. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or(877) 652-5295. Canada Post: Canada returns to be sent to IDS, P.O. Box 456, Niagara Falls, ON, L2E6V2. Periodicals postage rates paid at Deerfield, IL and additional mailing offices. Printed in USA. POSTMASTER: send all address changes to Store Brands PO Box 3200 Northbrook, IL 60065-3200. Copyright 2019 by EnsembleIQ. All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI, 48106. The contents of this publication can not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for claims and representations. 2

Store Brands / December 2019 / www.storebrands.com

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EDITOR’S TAKE 8550 W. Bryn Mawr, Suite 200, Chicago, IL 60631 (773) 992-4450

Group Brand Director

John Schrei

248-613-8672

WHAT WILL HAPPEN WITH CBD NOW?

jschrei@ensembleiq.com

EDITORIAL Editor-in-Chief

Lawrence Aylward

(330) 635-2586

laylward@ensembleiq.com

Managing Editor

Dan Ochwat

(773) 992-4416

dochwat@ensembleiq.com

Editorial Director/Grocery Group (813) 857-6512

I hate to be a buzzkill, but the cannabidiol (CBD) market might be in big trouble, especially when it comes to using it as an ingredient in food, beverage and supplements. And you can’t fault me for saying that. I’m sure a lot of people felt the same way when the Food and Drug Administration (FDA) issued a harsh and grim warning about CBD products last month. The FDA’s consumer update about CBD products seemed to come out of left field, considering that many industry people had been expecting the agency to approve CBD use for use in food, beverages and supplements by year’s end. That’s not going to happen — not when the FDA said that “CBD has the potential to harm you, and harm can happen even before you become aware of it.” And that’s not all. The FDA admitted there are “so many important aspects about CBD that we just don’t know.” The FDA wonders what happens if people take CBD daily for sustained periods of time, like in their coffee at breakfast, in their power bars during the day and in their choice of beverage at night. The FDA also said it doesn’t know the effect of CBD on the developing brain or on a developing fetus or breastfed baby. And the agency cautioned that CBD has been found to cause male reproductive toxicity in animals and is concerned that it could do the same in human males. And we all thought that CBD was supposed to be “good” for us. And it may still be better for us than bad, but there is clearly much more research to be done on it, per the FDA. It’s been said the FDA has been under pressure from Congress to enact federal guidelines to open the CBD market to be used in food, beverage and supplements. There has even been talk that the FDA might punt the issue to Congress to let our nation’s elected politicians figure it out. Yikes! But there’s no faulting the FDA here. I realize that some manufacturers and retailers of private brands may be champing at the bit for the FDA to issue a green light for CBD to be used in food, beverage and supplements, but the agency is doing what it needs to do — taking its time to get this right. That said, nobody really knows when the FDA could make a ruling. Will it be next year? The year after? The year after that? And a ruling doesn’t mean that the FDA will allow CBD to be used as an ingredient. There’s a good chance the FDA could say otherwise, especially if it finds that “CBD can harm you,” which is on another level than saying it has “the potential to harm you.” I’ve interviewed several industry experts in the past year about the potential that CBD could have on private branded products at the grocery store. CBD offers retailers the opportunity to offer more premium products, which is also where retailers can differentiate. But … all plans for any products must remain on hold. It’s time to hurry up and wait.

Mike Troy mtroy@ensembleiq.com

Contributing Writers

Rich Mitchell, Dana Cvetan, Nevenka Jevtic

ADVERTISING & SALES Associate Brand Director

Maggie Kaeppel

(708) 565-5350

mkaeppel@ensembleiq.com

Senior Sales Manager

Judy Hayes

(925) 785-9665

jhayes@ensembleiq.com

Regional/International Sales Manager 248-514-9500

Tammy Rokowski

trokowski@ensembleiq.com

Senior Sales Manager

Theresa Kossack

214-226-6468

tkossack@ensembleiq.com

Business Development Manager 773-992-4410

Natalie Meehan nmeehan@ensembleiq.com

CUSTOM MEDIA Director of Client Services, Enterprise Solutions Kaeli Elisco (224) 632-8221

kelisco@ensembleiq.com

AUDIENCE List Rental

MeritDirect

847-492-1350, ext. 318

Elizabeth Jackson ejackson@meritdirect.com

Subscriber Services/Single-copy Purchases 847-564-1468

Omeda

STB@OMEDA.com

PROJECT MANAGEMENT/PRODUCTION/ART Vice President Production

Derek Estey

(877)687-7321 x 1004

destey@ensembleiq.com

Creative Director

Colette Magliaro cmagliaro@ensembleiq.com

Advertising/Production Manager (973) 607-1322

Pat Wisser pwisser@ensembleiq.com

REPRINTS, PERMISSIONS AND LICENSING Please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.

EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION CORPORATE OFFICERS Chief Executive Officer - Jennifer Litterick Chief Financial Officer - Jane Volland Chief Innovation Officer - Tanner Van Dusen Chief Human Resources Officer - Ann Jadown Executive Vice President, Events & Conferences – Ed Several

Lawrence Aylward, Editor-in-Chief laylward@ensembleIQ.com www.storebrands.com / December 2019 / Store Brands

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NEW HORIZON

Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,500 members representing 900 companies and 22 regional groups in the United States and Canada. Learn more at newonline.org.

BY SARAH ALTER

NEW HORIZON

WHAT DOES GEN Z MEAN FOR OUR WORKPLACES? Its members differ from previous generations — and we can learn a thing or two from them Editor’s note: This is the last of six columns that Store Brands is running in 2019 from the Network of Executive Women. A new generation has arrived and is entering the workforce, so let’s get to know Gen Z. By the numbers, its members make up 23.4% of the U.S. population and a third of the world population. It’s undeniable that they’re going to make a huge impact on the world, the economy and the workplace. Anticipating this, Network of Executive Women, in collaboration with Deloitte, recently released its Generation Z Report. Based on data from more than 1,500 Gen Z respondents, the report separates the myths about Gen Zers from the facts and takes a deep dive into how members of this generation will impact our workplaces. Most of us aren’t total strangers to this rising generation. Many of us have — or until recently had — Gen Zers in our homes. In fact, my own children are Gen Zers and that’s one of the reasons why I’ve found this generation so fascinating: The world they know is vastly different from the one that I came up in. They grew up totally immersed in technology; they watched their parents struggle financially during the Great Recession; and, as they’ve grown, they’ve been cognizant of the rising cost of living and higher education. What I love about the findings presented in this report is that they give a three-dimensional and nuanced look at 4

who Gen Zers are and how they think about the world of work. Here are some of the key findings: • Gen Zers don’t want to be put into a box: One key difference between members of Gen Z and those of past generations is that while they’re willing to sacrifice some level of personal fulfillment for financial stability, they aren’t interested in a job that puts them into a box. They want to expand their skills and actively seek opportunities to do so. • Gen Zers are diverse: Gen Z is the most ethnically and racially diverse generation in history, but its members are also diverse in their sexual orientation and gender identity and expression. They prioritize diversity and look at it as more than just a box to be checked and expect diversity in marketing and business. • Gen Zers care about education: Gen Zers consider a traditional fouryear college education highly important and are quickly becoming the most educated generation in history. One of the most interesting findings is that Gen Zers are the generation most likely to demand a shift in the power dynamic between employees and employers. The report predicts that shrinking talent pools, combined with the need for next-generation skills, will put incoming employees into a position to ask for the

things they want out of the workplace. Gen Z is different from previous generations. Gen Zers don’t want to start their own businesses or work from home like the millennials who preceded them. What they do want is to lend their skills to companies that will offer them flexibility and the chance to act entrepreneurially in personalized, rather than cookiecutter roles. These young people are attracted to opportunities that will keep them interested, while allowing them to continue developing their skills. Many Gen Zers look to tech as an industry where they can attain these things. Out of the 1,500 surveyed, 51% of respondents ranked tech as a top industry to work in. Interestingly, only 34% of Gen Z females seek technology roles, compared to 73% of Gen Z males. This will certainly have implications for tech companies aiming to bolster diversity among their ranks. Organizations that want to attract young talent are going to need to change their approaches to hiring, developing and retaining their workforces. They’ll also need to focus on creating diverse and inclusive workplaces. They may even need to create latticed career paths with multiple work formats or introduce internal marketplaces to match projects to needed skill sets. This sounds like drastic change, and if you know me, you also know that I’m not afraid of change. Businesses should be prepared to make changes to create workplaces that attract all kinds of employees and keep them happy, too. As I’ve toured the country and discussed this groundbreaking report, I’ve thought a lot about the impact that Gen Zers are making on the world of work. There’s something very admirable about following one’s interests, staying true to one’s beliefs, and asking for what one wants in life. At work, too. Those are the hallmarks of this new generation, and I couldn’t be more excited to see what they’ll bring to the workplace. SB

Store Brands / December 2019 / www.storebrands.com

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AroundtheIndustry

IRI: Store brand sales up nearly 4% this year, doubling the growth rate of CPGs Consumers are loving the value that private brands provide, according to market researcher IRI’s “Q3 2019 Consumer Connect” report, which found that U.S. consumers across ages and demographics are buying more private label goods, and have shifted their attitudes and behaviors around purchasing such products. While the report showed private label sales decelerated from the nearly 6% pop in 2018, private label sales have increased by nearly 4% in 2019, a number even more impressive when factoring in that consumer packaged goods (CPG) sales only increased by about 2%, the study showed. The consumer survey reported that 99.9% of shoppers buy store brands today, flowing into more than 124 million households throughout 2019. The research said private label is particularly strong among younger shoppers and mid- to lower-income shoppers.

Key to the report is that consumers continued to buy private label goods during a time when they felt financially stable. The study said that 57% of respondents feel their household’s financial health is in good shape. The study did find that more consumers are looking to save money in the event there’s an economic downturn, with 42% of respondents growing their savings in the past six months — a measurement that’s four points higher compared to last year. Store brands are also having a strong influence on where shoppers choose to shop, the study said, with mass, club/warehouse, specialty grocery and traditional grocery channels all seeing double-digit growth from respondents compared to 2016 when asked if private brands influence their store decisions. The specialty grocery channel leads the way with 67% of

consumers saying private brands influence their decision to shop a store, a leap by 25 points compared to 2016. “While shoppers across generations and income groups in 2019 are undoubtedly more price conscious, they are turning to private label because of their positive perceptions of the value,” said Joan Driggs, vice president of content and thought leadership at IRI, in a press release. “Shoppers are buying private brands because it makes them feel good to save money without sacrificing taste, selection or quality. The improved consumer perception of private label value is having a growing influence on store choice, with many leading retailers offering premium private label selections.” One area the study showed where private label goods need an upgrade is in packaging, with nearly 20% of respondents saying the packaging makes products look of lesser quality than the national brand counterparts. A dive into specific categories reveals that private branded non-edible departments are showing little growth while the frozen and beverage categories are outpacing total category and national brand sales, the study said. SB

www.storebrands.com / December 2019 / Store Brands

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Store Brands Salute SPREAD 2019_FM.qxp_Layout 1 11/19/19 5:12 PM Page 2

Meet thisYear’s R PLMA congratulates the winners of this year’s Salute to Excellence Awards. Each year, PLMA gives recognition to outstanding store brand products introduced on the shelves of supermarkets, drug chains, mass merchandisers, wholesale clubs, convenience and specialty retailers from coast to coast, as well as online.

the w in n e rs FOOD FOR THE FAMILY Appetizers & Hors d’Oeuvres Metro Irresistibles Pesto Seafood Gratin

More than 750 products were submitted for consideration in the food, beverage, kitchen, household, and health & beauty categories. Entries were then evaluated by a panel of professional and consumer judges for taste, performance, packaging, presentation, and value for money. Winning products once again demonstrated the creativity and innovation of today’s store brands.

t h e ru l e s BAKERY & DESSERTS Breads, Rolls & Muffins (tie) ALDI Specially Selected® Brioche Bagels

the p r oc es s

Vegetables Albertsons

Wellsley Farms® Organic Baby Food Variety Pack

Signature Reserve® Three Varietal Marinated Mushrooms

Spreads & Dips Walmart

PICSTM Chocolate Lovers Single Cup Assortment

Breakfast Foods

Sensations by Compliments Ultimate Suprême Dutch Apple Pie

Marketside™ Dark Chocolate Hummus

Cookies & Crackers 7-Eleven

Sweet Snacks Weis Markets

Price Chopper PICS Honey Walnut Soft Cream Cheese Spread TM

7-Select Deli/Prepared Foods French Macarons 7-Eleven 7-Select® SNACKS Gourmet Snack Trio: Genoa Salame, Asian Inspired Foods Provolone Cheese & Olives ®

Main Dishes ALDI Specially Selected® Spinach & Mozzarella Ravioli Mexican/Latin American Foods

7-Eleven 7-Select® Fresa Paleta

Pasta & Pasta Dishes Walmart Sam’s ChoiceTM Italia Trompetti Pasta

Pizza BJ’s Wholesale Club Wellsley Farms® Organic Spinach & Feta Wood Fired Pizza

Soup & Broths Walmart MarketsideTM Lobster Bisque

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Kroger

Weis Quality Caramel Rice Minis

MEAL PREPARATION Condiments Trader Joe’s

Trader Joe’s® Private SelectionTM Black Sesame & Ginger Turkey Jerky TJ’s Ghost Chili BBQ Sauce

Candy & Chocolate Hy-Vee ZÖETTM Dark Chocolate with Almonds & Sea Salt

Children’s Foods Save A Lot

Dressings/Marinades/Oils Walmart Great Value™ Carne Asada Fajita Marinade

Ingredients & Flavors Save A Lot

Pickwell FarmsTM Pineapple Tidbits in 100% Juice

Marcum® Gourmet Beer Can Chicken Seasoning Rub

Fair Trade Lidl US

Jams/Jellies/Preserves Southeastern Grocers

Lidl Preferred SelectionTM Dark Chocolate (Chili)

SE Grocers Prestige Raspberry Amaretto Spread

Nuts & Trail Mixes H-E-B

Pasta Sauces & Cooking Sauces Wakefern Food Corp

H-E-B™ Texas HeatTM Trail Mix

ShopRite Trading Company™ Imported from Italy Basilico Genovese DOP Pesto Sauce

Ports Lem

Natu Meij

Meije Vegg

BEVERAGES Coffee Price Chopper

Raley’s

Cakes & Pies Sobeys

Sav

Kroger® Cuban Style Sandwich Kettle Chips

Breakfast Cereal Ahold Delhaize Retail Business Services Limited Time Originals® Limoncello Inspired Granola

Raley’s® Garlic Bread

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Infants & Toddlers Foods BJ’s Wholesale Club

Salty Snacks Kroger

PLM win pro com and

Juices & Flavored Drinks Wegmans Wegmans Organic Raspberry Lemon Ginger Kombucha

Soda, Carbonated Drinks & Water CVS Gold Emblem® Passion Fruit Seltzer Water

Tea Publix GreenWise® Blackberry & Sage Brewed Black Tea

HEALTHY OPTIONS Free-From Foods CVS

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Gluten-Free Southeastern Grocers

365 Almo Almo

SE Grocers Naturally Better Organic Gluten-Free Caramel Crunch Ice Cream

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Healthy Eating (tie) Dollar General Good & Smart™ Dried Apricots

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s Retail Winners PLMA is proud to salute this year’s winning retailers and wholesalers, whose products reflect their ever-growing commitment to excellence in quality and consumer satisfaction.

plMA 2019

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consu M e rs Save A Lot Portside Seafood Co® Lemon & Pepper Light Tuna Pouch

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Organic Foods Boxed Prince & SpringTM Organic Applesauce Pouches

Peanut Butter & Nut Butters Thrive Market

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Thrive Market Non-GMO Creamy Almond Butter

Drinks

Rice & Grains Kroger Simple Truth OrganicTM Southwest Style Quinoa

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DAIRY Cheese (tie) Schnuck Markets Schnucks Farmhouse Style Shreds TM

HEALTH & BEAUTY Baby & Toddler Care Albertsons

Oral Care Whole Foods Market

Household Cleaners & Products Brandless

O Organics® Wild Berry Pediatric Electrolyte Solution

365 Everyday Value® Cavity Fighting & Whitening Fluoride Toothpaste

Brandless™ Cucumber Mint Refillable Glass Cleaner Starter Kit

Bath & Shower (tie) Walmart

OTC & Healthcare Albertsons

Laundry & Dish Soaps Bed Bath & Beyond

Signature Care™ Secret Life of Pets 2 Bandages

Bee & Willow™ Home Rosemary & Mint Dish Soap

Skin Care (tie) Boxed

Mobile & Tech Accessories Walmart

Whole Foods MarketTM Break Apart Lavender Bath Bomb

Prince & Spring™ Makeup Remover Towelettes

MOTILE™ Vegan Leather Tassel Keychain with Lightning Connection

Beauty Care | Cosmetics CVS

Five Below

equate™ Kids 3-in-1 Watermelon Shampoo, Conditioner & Body Wash

Whole Foods Market

beauty 360® on-the-go Blender

Body Care Fresh Thyme Farmers Market Fresh Thyme Farmers Market® Unscented Shea Butter

Hair Care & Accessories BJ’s Wholesale Club

terryrichards™ Plush Comfort Eye Mask

Sun Care & Toiletries ALDI Lacura® Kids Continuous Spray Sunscreen

HOME & HOUSEHOLD Children’s Playthings & Toys Walmart

Outdoor Living & Garden Products Amazon AmazonBasics 3 Piece Grilling Barbecue Tool Set

Paper Products Sam’s Club Member’s Mark™ Facial Tissue

Berkley Jensen® Shampoo & Conditioner Combo

Spark Create Imagine™ Peek-a-Boo Elephant

Pet Food & Pet Supplies Smart & Final

Weis Quality Classic Cubed Pepper Jack Cheese

Health & Wellness Trader Joe’s

Disposable Tableware Albertsons

First Street Premium Salmon & Sweet Potato Dog Food

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Dairy & Non-Dairy Milk Products Whole Foods Market

cers

365 Everyday Value® Organic Almond Chocolate Almondmilk Beverage

Trader Joe’s® Organic Sparkling Apple Cider Drinking Vinegar

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Weis Markets

Ice Cream & Frozen Novelties Harris Teeter HT TradersTM Caramel Cookie Crunch Gelato

Men’s Grooming Target Goodfellow & Co™ Beard Oil

Open Nature® Compostable Assorted Utensils

Home & Kitchen Target Made By Design™ Stemless Wine Glass Set

Plastic Bags & Container Topco Associates Simply Done™ Hawaiian Scented Trash Bags

plmawinners.com © 2019 Private Label Manufacturers Association

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AroundtheIndustry SHORT TAKES Kroger’s private brands are expected to play a role in its new brand identity.

How Kroger’s private brands fit in with its new identity By Lawrence Aylward The Kroger Co. is on a mission to create a brand-new brand identity. The Cincinnati-based grocer announced its brand transformation plan in November, which includes an updated logo and a new tagline — Fresh for Everyone — as part of the campaign. There’s no doubt that Kroger’s private brands, known as Our Brands, will play a key role in the brand transformation. Kroger has one of the most successful and popular private brands programs in the U.S. On Nov. 5, during the retailer’s investor conference at the New York Stock Exchange, Kroger’s Senior Vice President of Merchandising Joe Grieshaber talked about the competitive advantage Kroger has with its Our Brands, which include Simple Truth, Private Selection, Kroger and other lines. “Sales of Our Brands continue to grow faster year-over-year than our total store sales,” Grieshaber said during his presentation, noting that Our Brands have also grown customer 8

loyalty and enhanced gross margin. He added that the higher-margin store brands — Private Selection, a premium line, and Simple Truth, an organic and natural line — are particularly strong in growth. “Private selection is purchased by more than 30 million households, and is growing at over 7% [year-over year],” Grieshaber added. “The brand is a point of difference.” Simple Truth enjoys 32% share of the natural and organic branded foods category, and is delivering double-digit growth year-over-year, he added, noting that Kroger continues to introduce new products to the line. Simple Truth Plant Based, which Kroger announced in September, is an extension of Simple Truth and includes 22 plant-based products. Nearly 60 items will be added to the line in 2020. Kroger’s mainstream private brand, Kroger, had more than $13 billion in sales in 2018 and also continues to grow, Grieshaber said. Citing research from market researcher

FDA: CBD has potential to cause harm At the Private Label Manufacturers Association’s Washington Conference in September, food regulatory lawyer Miriam Guggenheim said the Food and Drug Administration (FDA) was under tremendous pressure from Congress to enact federal guidelines to open the cannabidiol (CBD) market to companies offering private branded and branded food and beverage products. The hope for those companies was that the FDA would come up with a plan by the end of the year. But that now appears to be a long shot. In fact, after the FDA said in late November that “CBD has the potential to harm you, and harm can happen even before you become aware of it,” it could be some time before the FDA approves CBD to be used as an ingredient in food and beverage products. The FDA also warned that CBD can cause liver injury; affect the metabolism of other drugs, causing serious side effects; and increase the risk of sedation and drowsiness, which can lead to injuries, if used with alcohol or other central nervous system depressants. In addition, the FDA reiterated that it’s currently illegal to market CBD by adding it to food or labeling it as a dietary supplement, and that it has seen only limited data about CBD safety and these data point to real risks that need to be considered before taking CBD for any reason.

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Good & Gather helps Target earnings Minneapolis-based Target announced banner third-quarter earnings, growing total revenue by nearly 5% during the quarter. The company nodded toward “encouraging results” from its new Good & Gather store brand. Target reported same-store sales of 4.5% during the third quarter ended Nov. 2. Total revenue grew 4.7% during the quarter to $18.67 billion from $17.82 billion a year earlier, beating analysts’ expectations for $18.49 billion.

Store Brands / December 2019 / www.storebrands.com

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AroundtheIndustry SHORT TAKES Continued IRI’s “2017 Brand Equity Study,” Grieshaber said the retailer’s Kroger, Private Selection and Simple truth brands had a net promoter score of 30-40% higher versus comparable tier national brands and private brands. Turning to fresh, Grieshaber said Kroger is “laser-focused” on improving quality in the segment. “Customers tell us they choose the stores they shop based on nine key categories — and they are all fresh,” he added. “Produce, meat and dairy lead that list.” He said Kroger is seeing double-digit growth in fresh meals, from meal kits to ready-to-cook items to ready-to-eat foods, and he expects that momentum to continue in 2020. “Our customers tell us again and again they want to get everything in one location,” Grieshaber said. “The Fresh for Everyone [tagline means that] everyone deserves to have affordable and easy-toenjoy fresh food.” In early December, Kroger announced it’s teaming with Indianapolis-based ClusterTruck, a software platform that powers

profitable, vertically integrated deliveryonly kitchens, to change the way Americans access freshly prepared meals. By offering multiple menus from one central scratch kitchen, Kroger Delivery Kitchen will deliver fresh meals on-demand without service or delivery fees. Grieshaber also talked about the importance of personalization to grow loyalty. He said Kroger’s “loyal households” are its most valuable customers, representing 70% of its sales. “They are eight times more valuable than our non-loyal customers, and they visit our stores four times more frequently,” he added. Grieshaber mentioned “innovation” several times during his presentation, including how vital innovation is to private brands in part to personalize the products. “We utilize best-in-class personalization science to send the right offers to the customers based on their shopping habits and their household needs,” he added. “We are evolving it to increase frequency, expand reach and emphasize reward offers to drive more trips.” SB

While stronger sales in adult beverages, food, beauty and apparel were bright spots fueling the growth, Target said that the Good & Gather store brand has made healthy traction since its launch in September. In other Target news, an Atlanta-based entrepreneur has filed a federal lawsuit claiming that Target’s Good & Gather has infringed on her trademark business called Garnish & Gather. Several news outlets reported on the lawsuit filing from Emily Golub, the owner of Garnish & Gather, a company that began in 2013, providing locally sourced meal kits and groceries for delivery to the community. Per a report in USA Today, Golub stated that Target infringed on her business, claiming nearly 50 products within the Good & Gather portfolio overlap with her business, and that the branding of her business (complete with leaf-inspired lettering and circle logo) is too similar to the Good & Gather branding. In a statement to Store Brands, Target spokesperson Danielle Schumann said: “At Target, we have a deep appreciation and respect for trademarks. We’re aware of this lawsuit and are confident that Target’s brands, including Good & Gather, are distinctive in the marketplace. We’ve shared that feedback with Garnish & Gather and will continue to defend these claims through the legal process.”

Kroger parts with Lucky’s

Newsweek touts Publix for ‘Best Customer Service’ Customer service. It’s a store brand, all right. Intangible as it may be, excellent customer service draws people into stores and leads to loyal shoppers. It’s a true differentiator. Publix Super Markets has long been

known for its outstanding customer service, which is a reason why Lakeland, Fla.-based Publix is the lone grocery retailer on Newsweek’s overall Top 10 list of “2020 America’s Best Customer Service.”

The Kroger Co. said it is divesting its interest in Lucky’s Market, a Boulder, Colo.-based natural foods retailer. In 2016, Cincinnatibased Kroger formed a strategic partnership with Lucky’s, making a “meaningful investment” in Lucky’s to significantly accelerate Lucky’s growth in new and existing markets. The agreement also enabled Kroger to sell its products at Lucky’s 35 stores, including those from Kroger’s Simple Truth store brand. “We made the decision to evaluate strategic alternatives in relation to our investment in Lucky’s Market,” Kroger Chief Financial Officer Gary Millerchip said. “As a result, the company has decided to divest its interest in Lucky’s market and recognized an impairment charge of $238 million in the third quarter.”

www.storebrands.com / December 2019 / Store Brands

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AroundtheIndustry ALDI on cusp of 2,000 stores The opening of 20 ALDI stores in November and nine more locations in December has the Batavia, Ill.-based retailer on the cusp of 2,000 stores. The company currently operates 1,963 stores nationwide, putting it on a trajectory to achieve a five-year plan communicated in June 2017 to operate 2,500 stores by the end of 2022. ALDI’s rate of expansion makes it America’s fastest-growing food retailer with roughly 200 units having opened annually since 2017 when the company operated roughly 1,600 locations. While ALDI’s growth in the U.S. began slowly, the retailer has ramped up its presence in the past decade. From 2008 to 2018, ALDI doubled its size in the U.S.

Albertsons rolls Plated into Own Brands The Plated meal kit brand, which Albertsons Cos. acquired in 2017 for about $200 million, is now part of the Boise, Idaho-based retailer’s private brands program, known as Own Brands. Albertsons Cos. is shifting its Plated brand from a subscription meal solution to a comprehensive in-house culinary brand that will join the company’s lineup of popular private label products. As a result, Plated’s subscription service was phased out at the end of November. The Plated brand will expand with new product offerings in additional stores in 2020.

McLay named president/CEO of Sam’s Club Kathryn McLay was named president and CEO of Walmart’s Sam’s Club, filling a position previously held by John Furner who was elevated to the role of president and CEO of Walmart U.S. in early October. McLay becomes the second female executive to lead Bentonville, Ark.-based Sam’s Club after Rosalind Brewer held the role prior to Furner. She has led Walmart’s small-format grocery group since February 2019 as executive vice president of Walmart U.S. Neighborhood Markets.

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Publix has long been known for its excellent customer service and puts a premium on providing service of such value. Newsweek partnered with global data-research firm Statista for its second annual report, which recognizes 480 companies in 160 retail categories. But this is the first year that Newsweek and Statista issued an overall top 10 list, which recognizes the Disney Cruise Line as No. 1. “Some companies are particularly good at nurturing their relationships with customers, Nancy Cooper, global editor in chief of Newsweek, wrote in an introduction to the report. “And even as more and more retail jobs become automated, treating consumers well is still a key factor in business success.” In the “Brick and Mortar Retailers: Food, Health and Beauty” category, Publix was No. 1 under “Supermarkets” with a 9.01 score (out of 10). Rochester, N.Y.-based Wegmans Food Markets was a close second (8.99) and Monrovia, Calif.-based Trader Joe’s was third (8.95). The three retailers have also garnered a fine reputation for their private label products. Issaquah, Wash.-based Costco Wholesale was No. 1 in “Superstores and Warehouse Club Stores,” which

is also part of the “Brick and Mortar Retailers: Food, Health and Beauty” category, with a score of 8.75. Grand Rapids, Mich-based Meijer was second (8.48) and Westborough, Mass.-based BJ’s Wholesale Club was third (8.24). Under “Convenience Stores” in the “Brick and Mortar Retailers: Food, Health and Beauty” category, QuikTrip had the top score (8.46) followed by Wawa (8.41) and Sheetz (8.26). In the “Online Retailers: Food, Health and Beauty” category and under “Groceries,” Peapod, which operates under Salisbury, N.C.-based Ahold Delhaize USA, was ranked first with 8.41. AmazonFresh was second (8.38) and Boxed third (8.05). The “2020 America’s Best Customer Service” rankings were identified from the results of an independent survey of more than 20,000 U.S. customers, who either made purchases, used services, or gathered information about products or services in the past three years. Customers evaluated several brands: in total 115,115 evaluations were collected. The awarded brands each received on average close to 100 evaluations from customers July-August. SB

Store Brands / December 2019 / www.storebrands.com

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AroundtheIndustry SHORT TAKES Continued Walmart changing up produce

4 ways retailers can revitalize loyalty programs In what could be an opportunity for retailers’ private label programs, 75% of all consumers said they would switch brands for a better loyalty program, according to KPMG International’s recent “The Truth about Customer Loyalty” report. KPMG’s survey of over 18,000 consumers in 20 countries explores the nature of customer loyalty and how some traditional loyalty programs, long a mainstay of customer retention strategies, may not be keeping consumers brand-faithful, according to the professional services firm. Digital disruption and new generational influences are making customer loyalty tough to hold onto these days, but fresh thinking on loyalty programs is key to winning and retaining customers, KPMG said in the report. Here are KPMG’s four recommendations to improve customer loyalty programs: 1. Revitalize them — Around half of consumers agree that companies should find thoughtful ways to reward loyal customers. Responsible personalization, emotional connection and purpose-driven causes should be key considerations. 2. Keep it simple — Make loyalty programs easy to join and simple to use. Globally, 60% agree loyalty programs are too hard to join and/or earning rewards is a challenge. 3. Maintain relevance amid the noise — Retailers need to ensure their loyalty programs stay relevant to customers. Fortynine percent of loyalty program members globally agree they belong to too many programs. 4. Promote awareness and familiarity — Regular communication to consumers through social channels, email or advertising can help programs remain top of mind with consumers. SB

Walmart is changing up the look of its produce departments to further emphasize the quality factor. Here’s what the Bentonville, Ark.-based retailer is rolling out in the produce sections of its stores: • Low-profile displays will provide an “open market feel.” The new bins allow customers to see everything available in the department right when they walk into the store. • Aisles will be wider and the low-profile bins will enable customers to shop from multiple sides, making it faster and easier for customers to shop the department. • All fresh organic products will be moved into one area of the department, so customers who want organic items can enjoy one-stop shopping. • Larger and brighter signs will be added so low prices really stand out. Most stores will be updated by next summer.

Dollar General CEO touts private label growth During a conference call in early December to discuss Dollar General’s third-quarter earnings, CEO Todd Vasos talked extensively about the retailer’s private brands. “We know that private brands represent an opportunity to further enhance our value proposition for customers, while also benefiting gross margin,” he said. “We are executing a variety of tactics to drive additional growth of these brands, including enhancing our current offerings as well as introducing new product lines.” One key area of focus is accelerating growth within Dollar General’s existing private brand portfolio, Vasos added. “Our plans consist of rebranding and repositioning these products to drive greater customer penetration,” he said. “We have seen great success with our efforts today, including Studio Selection (Dollar General’s line of of hair, skin and beauty products) and Gentle Steps (baby products), and believe there is significant opportunity with other existing brands as well.” For the third quarter, Dollar General reported net sales of $7 billion, an increase of 8.9% from the 2018 quarter. Same-store sales were up 4.6%. “The quarter was highlighted by our best customer traffic and same-store sales increases in nearly five years,” Vasos said. “We continue to execute well on many fronts, while maintaining our focus on delivering value and convenience for our customers.” Moving forward, Vasos touted the retailer’s private brands as a sales driver. “We are constantly evaluating our private brand portfolio and will look to further enhance our offering when and where we see opportunities,” he said. “Importantly, we are seeing some of our best private brand sales performance in several years, which reinforces our belief that we are on the right track to deliver even greater value to our customers, while continuing to drive profitable sales growth.” Goodlettsville, Tenn.-based Dollar General operates 16,094 stores in 44 states.

www.storebrands.com / December 2019 / Store Brands

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MAINTAINING

MOMENTUM Private brands have entered a ‘golden age’ in their history. Here’s what the industry needs to do — and not do — to keep the era flourishing By Dan Ochwat

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s 2019 winds down, enthusiasm and optimism around private brands seems sky-high, and the outlook toward the future seems just as lofty. “We do believe at Ahold Delhaize USA that this is a virtuous cycle,” says Juan De Paoli, senior vice president of private brands for Salisbury, N.C.-based Retail Business Services, an Ahold Delhaize USA company. “The momentum will continue to grow, and I believe that we are going to see exponential growth in private brands over the next five to 10 years.” Retail Business Services provides services including the development of private brands for Ahold Delhaize’s grocery chains such as Stop & Shop, Giant Food, Giant/Martin’s, Food Lion, Hannaford and the online grocer Peapod. De Paoli says the company’s private brands are “thriving” because they drive 12 12

consumer loyalty, shopping trips, and help Ahold Delhaize USA’s chains innovate and differentiate. “Not to mention that millennials and Gen Zers are a lot more open to or are more private brand-driven because of that perfect intersection of quality and value,” he adds. Having witnessed more than 30 years of experience in private brands at companies such as Topco Associates LLC, Jewel Food Stores and Shaw’s Supermarkets, Jim Wisner believes the current state of private brands is succeeding because there’s a decline in market power among the large, multinational consumer goods companies, and that private brands have stepped up by offering more than just a lower price like cleaner labels and premium products. “We genuinely are in a golden age for store brands,” says Wisner, the president of Wisner Marketing in Lake Forest, Ill. “And it is one that, quite honestly, there are very few headwinds and a lot of tailwinds.” Recent numbers support this: Across lower-, middle- and higher-income levels, store brands are outpacing national brands, seeing roughly 5% growth at each income level in total store sales versus a year ago, compared to national brands seeing just over 1%, according to a November report from the Food Marketing Institute (FMI) and IRI. In that same report, annual gains from private brands far exceeded those of manufacturer counterparts across store depart-

Store Store Brands Brands // December December 2019 2019 // www.storebrands.com www.storebrands.com

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PRIVATE BRANDS ARE FAR OUTPACING NATIONAL BRAND TOTAL STORE GROWTH ACROSS INCOME LEVELS Total store sales percentage change vs. year ago by household income per capita

5.0

4.8

4.5

1.6

1.5

0.6

Lower (<$35k)

National Brands Private Brands

Middle ($35k-$70k)

High (>$70k)

... AND THIS TREND IS ALSO OCCURRING ACROSS GENERATIONS Total store sales percentage change vs. year ago by generation

National Brands Private Brands

10.0 6.8

6.2 3.3

p ns to ers e on

(0.5)

3.7

1.0 (2.2)

Millennials

Gen X

Younger Boomers

(5.2)

Older Boomers

(1.7)

Retirees/Seniors

... AND PRIVATE BRANDS SALES GROWTH EXCEEDED NATIONAL BRANDS ACROSS THE STORE Private Brands National Brands

2018 dollar sales change by department

EDIBLE

Beverages

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Frozen

NON-EDIBLE

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ort

Health Home Care

2.7%

0.9%

6.5%

0.3%

Beauty General Merchandise

5.4%

1.4%

General Foods Refrigerated

4.9%

2.8%

5.7%

1.6%

7.9%

-0.3% 1.7% 2.1%

3.8% 5.2%

ed

All three charts above are courtesy of FMI’s 2019 report: “The Power of Private Brands.” www.storebrands.com / December 2019 / Store Brands

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ments, too. Refrigerated foods saw a 6.5% bump versus a mere .3% bump by national brands; general merchandise increased by nearly 8% while national brands dropped a third of a point. IRI, in a “Consumer Connect Survey” released last month (see more on page 5), found that nearly 60% of consumers felt their households were in good financial shape, dispelling any economic downturns driving sales of private brands. In fact, 65% of households making at least $35,000 annually felt groceries were easily affordable. Not surprisingly, the percentage grew as the income levels per household grew. The IRI study found consumer attitudes shifting toward private label, noting that two-thirds of consumers felt store brand products were as good if not better than the national versions, and that private label has an impact on why a shopper chooses a store to shop. More than half of the Gen Z and millennial shoppers said they picked stores to shop based on their private label offerings, according to the study. “For the longest time, private brands were always price driven — price, price, price — so as long as you were following the brands fast, you were successful,” says Doug Baker, vice president of industry relations at FMI. “They’re no longer a private label. They are now a private brand. Consumers see them the same way they see PepsiCo, Frito-Lay, Kellogg’s, and they hold them to the same standards.” Wisner feels in some cases — like The Kroger Co.’s Simple Truth brand (delivering on a natural and organic promise) — that store brands might even be doing better than national brands at giving consumers what they want. “Somebody once characterized it as we’ve seen a switch from value to values, which I think sums it up very well,” he notes. In the IRI report, of all the consumer households sur14

veyed, nearly 100% said they buy private brands today. Store brands are clearly established and seeing success. The question becomes: With private brands footed on higher ground and feeling a blustery tailwind behind them, how do they maintain the momentum?

KEYS TO MOMENTUM Baker says a major play for private brands going forward is to become more innovative, saying there’s no rule that a private brand must wait for a national brand to launch first. FMI is actually partnering with IRI this year to do some work on helping private brands take more risks like national brands and educate them on how to “test, learn and pivot,” a concept that national brands follow when launching new products. Baker says Target’s new Good & Gather line is an example of a store brand that put in the work to test the brand, learn and make changes before launching, and he expects to see more retailers do the same. He also adds that retailers need to continue to appeal to the younger consumers to maintain momentum. “Understand the millennials and Gen Zers,” he says. “If you want to be relevant 10 years from now, look at that consumer base that’s going to be the financial power 10 years from now.” Baker notes that Gen Z shoppers love to shop in brickand-mortar stores, as opposed to buying online because

Store Brands / December 2019 / www.storebrands.com

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(Left to right) A shopper browses the aisle of Trader Joe’s; Kroger tweets on behalf of FMI’s “Family Meals Month” program; Target’s new Good & Gather private brand; and Ahold Delhaize’s Nature’s Promise, an example of a clean-label brand that is on the rise.

their parents buy online, but they want to have their mobile phones and access to technology inside the stores. De Paoli says producing private brands with cleaner products will grab the younger shoppers and build momentum. Ahold Delhaize USA set a company goal to have 100% clean labels by the year 2025. The retailer’s Nature’s Promise brand delivers against the goal and recently added a Nature’s Promise Kids line of clean products that follow strict nutritional guidelines, and the company just launched Nature’s Promise cleaning products in packages that are made from 100% post-consumer recycled content. “Last but not least, efficiency is essential,” De Paoli says. “Private brands will always continue to compete on price.” Wisner believes companies need to continue to provide premium private brand products, saying the premium category has gained its share of private brands by three points in the last year. “If you look at premium, unique and different, I mean the innovation is finally — much like it does in Europe — starting to come more from the private brand side and less from the branded side,” Wisner says. “And that’s a sea change.” Trader Joe’s hangs its nautical hat on its ability to deliver premium products and has grown a rabid fan base around its products. The company has several online influencers dedicated to the retailer with hundreds of thousands of followers each. Baker says creating loyal shoppers like Trader Joe’s is imperative for private brand future success. “If you create a loyal shopper, the margin and the profit are there,” he adds.

WHERE TO IMPROVE, WHAT TO AVOID While he may agree with the importance of loyalty, Bob Anderson, president and CEO of Fayetteville, Ark.based Store Brand Consulting, has strong warnings for how retailers and private brand manufacturers approach premium or innovative products. Anderson is a veteran of the store brands industry, credited with beginning Walmart’s Great Value brand and leaving it at a time it was worth $17 billion. Anderson says chasing trends or odd flavors just to do it could set private brands back long term, spurning more shoppers than gaining them. If a new idea like pickle-flavored ice cream fails, the store brand loses some integrity and even worse so does the store. Anderson’s biggest concern is that too much SKU proliferation and innovation aren’t in the interest of protecting the brand. For example, when Anderson was at Walmart, where he was vice president and general manager of private brands from 1990 to 2007, the retailer rolled out Sam’s Choice chocolate chip cookies that were made with butter and had 39% more chocolate chips in them. He says those were things that made the cookies premium compared to the national brand equivalent. Premium needs to be defined, not just throwing some exotic flavors onto a pizza and calling it premium, and boxing it under a new store brand name. “It makes it unusual, but it doesn’t make it premium,” Anderson adds. He stresses that private brands don’t need to be the first ones in on a new item or category. National brands have the resources and R&D money to experiment, and private brands can come in after with a twist on an item and make it better. “You need to understand the awesome responsibility

www.storebrands.com / December 2019 / Store Brands

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COVER STORY that it is to manage a brand — how many SKUs; how many dollars you do; how many lives you effect from a customer base, company base and the suppliers doing business with you,” Anderson says. “You need to understand that if you don’t leave customers with a good taste in their mouths, they won’t come back again.” Similarly, Anderson warns about over-SKUing a store with too many private brands. “You don’t have enough people to watch over the quality, the integrity, the manufacturing and the supply chain for all of them.” Rather than spending time on creating so many SKUs, Anderson would rather see private brand teams working directly with suppliers, building better relationships with them and helping those suppliers create more efficient operations that are ready for the future. He wonders further if SKU proliferation is the reason sales are up for private brands in the industry. “Is it because you walk into Walmart, and they have 12 doors of private label pizza now?” he asks. “Is that where it is? Sales are up but, most importantly, are profits up?” Another watchout for private brands, according to Baker, is packaging. The recent “Power of Private Brands” report from FMI found that nearly 20% of consumers said store brand packaging makes the products look as if they’re of lesser quality than the national brand.

THE DIGITAL FUTURE One area where national brands are threatening to curb private brand momentum is in building out more powerful online strategies. Ali Dibadj, a partner with Alliance Bernstein in New York, recently spoke at the Private Label Manufacturers Association’s Private Label Trade Show and said brands are fighting back by outspending retailers on promoting products online, assuring national products make the top of the search list and are on that first page on Amazon. (See a recap of the Dibadj session and Private Label Trade Show on page 26.) Wisner agrees with Dibadj. “Most of the national brands have moved much faster in understanding the online and e-commerce world,” he says. “They are far more sophisticated in terms of digital marketing.” Wisner likens the task in front of private brands as going from a retailer’s in-store, 70,000 square feet of shelf space down to 70 square centimeters of online screen space where only three items get listed. Wisner’s company recently performed a full-day workshop with the Italian Trade Agency on how to leverage digital communications to get content and messaging out about the authentic nature of the Italian private products the agency does for its retailer partners. It’s in the digital marketing space where Wisner sees retailers needing to improve, although he’s encouraged by retailers like Kroger, H-E-B, Hy-Vee and The Albertsons Cos., which have opened tech and culinary innovation centers. “Those are going to drive a lot of growth in a good way,” Wisner says. 16

“Private brands need to keep up with the industry and in some cases set the pace.” — Juan De Paoli,

senior vice president of private brands, Ahold Delhaize USA’s Retail Business Services

De Paoli agrees that national brands are pushing private brands in the digital space, and it’s important for private brands not to get complacent. “Private brands need to keep up with the industry and in some cases set the pace.” Digital work for private brands includes getting more involved in blockchain strategies, integrating private brands into the retailer’s data platforms, building out programs to fuel online shopping and producing digital information on products from scanning labels. Retail Business Services, for example, is the biggest participant in SmartLabel, a worldwide program giving consumers access to detailed information on 11,000 private brand products. In September, supporting FMI’s Family Meals Month program, various retailers used social tools (in addition to other tactics) to promote the importance of families sitting down together for at least one meal a week. Retailers like Kroger used Twitter to showcase private brand products that could be used to make a meal for just $10. Other participants included Weis Markets, ShopRite and more. The FMI report with IRI also looked at the biggest threats facing private brands and 70% of respondents said “a lack of innovation,” with more than 40% citing a lack of data and insights, and home delivery online sales as threats. Baker agrees that it’s important for retailers to get better in the digital space as they look to build momentum, but he does say, looking forward, that the U.S. private brand industry will never achieve European penetration levels of 40 to 50%. He acknowledges some retailer brands may achieve success close to it, but he says it’s an unrealistic benchmark. He stresses that retailers simply need to focus on loyalty. “I think, ultimately, as long as we don’t stop listening to consumers, and we don’t stop putting margin in front of loyalty, then private brands are going to continue to play an important role for the retailer,” he says. SB

Store Brands / December 2019 / www.storebrands.com

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RETAILER PROFILE

Three key players on Wakefern’s private label team are (from left) Wil Magistrelli, director of innovation for own brands; Chris Skyers, vice president of private label and own brands; and Laura Kind, director of marketing and packaging for own brands.

ShopRite SHAKES IT UP WITH TWO NEW PRIVATE BRANDS — BOWL & BASKET AND PAPERBIRD — GROCER IS GIVING CONSUMERS WHAT THEY ASKED FOR AND DIFFERENTIATING ITSELF IN THE PROCESS

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hris Skyers calls ShopRite’s revamped store brands portfolio “a transformational moment” for the Keasbey, N.J.based grocer. For nearly a year, Skyers, the vice president of private label and own brands for Wakefern Corp., the retailer-owned cooperative that operates ShopRite’s nearly 300 stores, has led a team of store

brand professionals in developing two new store brands for the revamped portfolio: Bowl & Basket, a food line; and Paperbird, a household products line. Recognizing its private brands needed a makeover to keep up with its competition and to keep up with the latest consumer demands, ShopRite introduced its sweeping new store brands program in early November. By the end of the year, about 300

www.storebrands.com / December 2019 / Store Brands

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RETAILER PROFILE items in the two lines will be introduced to ShopRite stores in the six Eastern states it serves: Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania. More than 3,500 newly branded products will be on shelves by the end of 2021. To streamline and simplify the shopping experience for customers, ShopRite will convert previous private brands lines — ShopRite, ShopRite Kitchen, ShopRite Trading Company and Cape Gourmet — to Bowl & Basket and Paperbird. The transformation will take about 18 to 20 months. “We surveyed thousands of our customers to find out what they love about ShopRite, and what they’d like to see more of on our shelves,” Skyers explains. “We learned that they love what ShopRite stands for — community and great value — but that they also expected a little more from us when it comes to our own brand offerings. We set out to exceed those expectations. Bowl & Basket and Paperbird products are tailored to our shoppers and based on what they told us they want and need — incredible quality at affordable prices.” Included in the insight gleaned from ShopRite’s customers was one tidbit of tremendous informa-

KEY TAKEAWAYS • Bowl & Basket, a food product line, and Paperbird, a household products line, debuted in early November. By the end of the year, about 300 items in the two lines will be introduced to ShopRite stores in the six Eastern states it serves: Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania. More than 3,500 newly branded products will be on shelves by the end of 2021. • To streamline and simplify the shopping experience for customers, ShopRite will convert previous private brands lines — ShopRite, ShopRite Kitchen, ShopRite Trading Company and Cape Gourmet — to Bowl & Basket and Paperbird. The transformation will take about 18 to 20 months. When the transformation is completed, ShopRite will offer three store brands: Bowl & Basket, Paperbird and Wholesome Pantry, the retailer’s organic and natural line. • ShopRite plans to grow its private label market share from 13% to 30% in the next several years.

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tion: It is that ShopRite’s customers don’t like nonfood products and food products branded under the same name. “That was unique learning for us,” Skyers says, noting that ShopRite had been offering food and non-food products under the same private brand line. “We realized that diapers and milk didn’t didn’t go well together under [the same store brand] for many consumers.” Skyers also says the team learned from its consumer research that it could offer different tiers of products under one store brand. “We learned we could offer a core offering and within that same portfolio we could offer a premium space,” he says.

ABOUT THOSE STORE BRANDS

The Bowl & Basket food line features products that are national brand equivalent or better and a premium segment that features items similar to those offered as part of ShopRite Trading Company, a line the retailer rolled out in 2018 consisting of artisanal foods inspired by different world cuisines. Under Bowl & Basket, shoppers will currently find products ranging from avocado oil to a new line of kettle-cooked potato chips to milk and water. Also new are 16 different salads, including sesame Asian salad kits, chopped romaine, coleslaw, Italian blends and spring mix arugula. Of course, many more products are on the way in 2020. “There’s a lot of white space in the premium segment, so we can really add to the line,” Skyers says. More Bowl & Basket products will eventually land in the fresh section, where Skyers sees a tremendous opportunity to capitalize. “We think some of our biggest opportunities are in the perimeter of the store,” Skyers says. “I think that’s where people will see a lot of innovation.” With Bowl & Basket, ShopRite wanted a name that connected with consumers and then delivered on that connection with relevant products. “Think of the name of the brand — it’s from our basket to your bowl,” Skyers states. “It really captures the essence of who we are at our core — that we’re taking care of families, and this brand understands what that means and how we should be thinking about our customers.” The non-food Paperbird lineup includes high-design, low-cost cleaning paper products and club-sized items such as bath tissue and paper towels. “When you think about paper, cups and utensils, we realized there was white space in that area as well, so we set out to create three tiers in that space,” Skyers says, noting that Paperbird offers national brand equivalent or better items, premium products, and items that are more earth-friendly and sustainable.

Store Brands / December 2019 / www.storebrands.com

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With Bowl & Basket, ShopRite wanted a name that connected with consumers and then delivered on that connection with relevant food products.

A NEED FOR CHANGE

Skyers, who has been with Wakefern for 20 years but assumed his current position in 2018, says ShopRite knew it needed to shake up its store brand portfolio to differentiate. The signs were all there. First, store brands have never been more popular among consumers. Nearly one of every four products sold in the U.S. today is a retailer’s own brand, according to the Private Label Manufacturers Association (PLMA). In 2018, sales of private label grew by 4.4%, four times as much as national brands, representing a gain of $5.5 billion, according to the PLMA and market researcher Nielsen. IRI recently estimated that private label sales are up nearly 4% in 2019. Skyers is also well aware of the success that retailers like Trader Joe’s, ALDI and Lidl are having with store brands. He also knows that consumers’ perceptions of store brands have changed for the better. “So it was an imperative to ensure that we were moving with our shoppers, and we were answering their needs,” he says. Skyers believes he and his team have accomplished their goal of offering excellent products at a great price. In today’s world of private label, that’s called value, and it seems to be the calling card for successful store brands programs. “We took a very methodical approach, going category by category,” Skyers says of the makeover. “We were not just switching labels here.” Every product in each category underwent

rigorous testing for sourcing and quality, he adds. “And within each of those categories, we are certainly going to be looking at innovation to ensure that we have the most relevant portfolio for our shoppers,” Skyers adds. “We feel like we nailed it on this,” he notes. “The brands are consumer-centric and are geared toward the shoppers. And that’s markedly different from what we were offering before. It feels good to see all this exciting change taking place.”

A FIVE-YEAR PLAN

Skyers and his team implemented a five-year strategic plan a little more than a year ago to establish the new portfolio, which also includes Wholesome Pantry, an organic and free-from line that ShopRite introduced about three years ago and continues to achieve year-over-year growth of 20% or more. A key part of the five-year plan was to build an infrastructure, Skyers says. Questions needed to be asked, such as if the retailer had the resources to embark on its goal. “We quickly realized that we needed to solidify our team,” Skyers says. Key members of the private brands team are: Wil Magistrelli, director of innovation for own brands, who has been with the company for 21 years but joined the own brands team about a year ago; Laura Kind, director of marketing and packaging for own brands, who came from Walmart about a year ago; Jenna Elznic, quality and regula-

www.storebrands.com / December 2019 / Store Brands

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where you can truly innovate together. You can create efficiencies through better relationships and better understanding.”

INCREASING MARKET SHARE

The new Paperbird line currently includes a variety of paper products and will feature three tiers.

tory manager for own brands; Joseph Guzman, own brand retail execution manager; and Pam Ofri, own brand sourcing manager. The store brands team has been more involved with experts in other company divisions, including marketing, packaging, product development and innovation, sourcing, quality assurance and in-store execution. Skyers says it’s vital for the experts in those divisions to counsel the store brands team in their respective areas to create what he calls “a center of excellence.” “The fact that the company has made this level of commitment is a sign of how committed we are to drive this initiative,” Skyers adds. The team took on an almost start-up company mentality. “We created an environment where the team could quickly ideate and bring ideas to market, which was somewhat unique to the organization,” he says. The team was also empowered to think quick and move fast. “We were able to create an organization that was built for speed,” Skyers says. The success of the new store brands also hinges on building better supplier relationships, Skyers says, noting that such relationships couldn’t be transactional and needed to be long-term and more strategic. “If you think about having the highest-quality products at the lowest possible cost, you’re not going to get that with a transactional relationship,” he says. “It’s not the supplier’s product that the supplier is shipping to ShopRite and then it becomes ShopRite’s product to sell to consumers.” Rather, the mindset has to be that the product belongs to both the supplier and the retailer, Skyers stresses. “When you can have a mindset like that, you can then have an open-book relationship 20

The five-year plan isn’t about ShopRite’s store brand program catching up with the competition, Skyers stresses. It’s more about leapfrogging the competition. But a final part of the plan is to increase ShopRite’s private label market share from 13% to 30% in five years. “We will absolutely get there,” Skyers insists. He says the stage is set for ShopRite’s private brands to succeed — and at the expense of branded products.

“The fact that the company has made this level of commitment is a sign of how committed we are to drive this initiative.” — C H R IS S K Y E RS “I believe the brands have taken their eye off the ball when it comes to truly listening to consumers and understanding their needs,” he adds. While the new store brands are expected to lead to new business, higher product margins and new revenue, which Skyers calls a benefit of the process, the main goal of the revamp goes back to the initial goal — to offer consumers the best quality products at the best prices. “And we’re very confident that over time our shoppers will certainly gravitate to the new portfolio, and the organization will be very successful,” he adds. Skyers just might be one of ShopRite’s best customers of the Bowl & Basket and Paperbird products. “One of my favorites is the premium quality paper towel in the Paperbird line,” he says. “My household uses a lot of paper towels, and it’s good to have a quality item at a low price.” In Bowl & Basket, Skyers says he’s a sucker for salty snacks and expects to be a loyal consumer of the chip products in the line. “We have these amazing pita chips,” he says. “That product will be easy pickings for me.” SB

Store Brands / December 2019 / www.storebrands.com

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TRENDING

PUBLIX TAKES THE LEAD ON SEAFOOD SUSTAINABILITY

Retailer wants its brands to be part of the solution, not part of the problem BY MIKE TROY

Signs touting “responsibly sourced” and “sustainably sourced” began showing up in Publix Super Markets’ seafood departments in September. And soon, Publix private brand seafood packaging will sport a new look for the first time in 15 years. The operator of nearly 1,300 stores wants seafood shoppers to know that its sourcing claims are backed by rigorous quality assurance standards created by third-party organizations so shoppers feel good when

buying seafood at Publix, whether fresh or frozen, wild-caught or farm-raised. “We know that in today’s world, customers strongly desire to shop with brands that they believe are part of the solution, not part of the problem, and they demand transparency,” says Pete Mowitt, Publix’s vice president of product business development for bakery and meat. “We want our customers to say, ‘I trust the Publix brand. I see they care about my community and the environment. I feel good about shopping at Publix.’”

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TRENDING sustainability forward,” Pizzuti told the roughly 100 attendees at the sustainability event, the third such event Publix has held in the past 10 years. “We need your support to help us get there.”

Private brand packaging at Publix now features a “sustainably sourced” or “responsibly sourced” claim, backed by rigorous, third-party quality assurance standards.

Shoppers have trusted Publix for decades, but with the company being more vocal about the sustainability attributes of its seafood in marketing, store signage and product packaging, a “trust but verify” approach is being taken. Seafood suppliers to Publix that already comply with various requirements of standards-setting organizations will now be subject to new reporting requirements and documentation. “As a company, we’ve always been quiet and just done things behind the scenes, but we are jumping out front now,” says Guy Pizzuti, Publix’s seafood category manager. “We are going to start doing reverse audits on sustainability information, because we have to make sure the information we are plugging in is accurate. This is a different game for us, and we are very protective of our brand.” “Brand” is a word that’s used a lot at Publix, and rightly so. The company is a highly regarded food retailer that has earned shoppers’ trust through decades of consistent execution. For example, Publix is one of the few major retailers that offers fresh, neverfrozen fish with many species available for sale just days after they land at a dock. Its latest sustainability efforts are another way to earn trust, but Pizzuti and Mowitt recognize that nothing happens at retail if suppliers aren’t on board with the program. That’s why this past fall, the pair convened at a seafood sustainability summit at Publix’s headquarters in Lakeland, Fla. The goal, broadly, was to share the retailer’s commitment to sustainability, provide an update on key sourcing and regulatory challenges, and then get into nitty-gritty details about the use of a reporting portal, timelines around the packaging conversion, and key process changes to simplify store-level execution for employees tasked with making sure that sustainably and responsibly sourced products are properly signed. “You are here today to help us change the industry and drive 22

‘ONLY IN SEAFOOD’ The retail industry is filled with acronyms, and the seafood category has more than its share. One of the more unusual ones — a uniquely Publix one, in fact — is OIS. “Only in seafood” is a phrase that Pizzuti says is used at Publix due to the category’s many unique and interesting challenges. “There are things that we deal with as an industry that if you are not in this industry nobody would believe could possibly happen, but it happens every day, and none of us are shocked when it does happen,” Pizzuti adds. What happens in seafood has a lot to do with the sheer complexity of a category and an industry unlike any other in food retailing. Products are sourced globally — they may be wild-caught or farm-raised, depending on a wide array of species and even subspecies, each with different harvesting methods. To top it off, the industry deals with unique labor issues and working conditions on ships, immense regulatory complexity, and environmental and geopolitical challenges, a reality with highly migratory species that don’t respect national boundaries. Pizzuti has had his share of OIS moments at Publix, having led the retailer’s seafood business for more than 20 years. Prior to Publix, the West Virginia native with a degree in marine biology spent six years with the National Marine Fisheries Service. A key moment in Publix’s seafood sustainability journey occurred a little more than 10 years ago when Pizzuti decided to hold the first seafood sustainability summit. He wasn’t sure at the time about all of the details, or even the objective, but around Publix, employees quote founder George Jenkins the same way that Walmart associates quote Sam Walton. For Pizzuti, the quote that came to mind was “Begin — the rest is easy.” Except “the rest” wasn’t so easy. Around the time that Publix and Pizzuti were embarking on a seafood sustainability

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TRENDING journey, non-governmental organizations (NGOs) active in the marine stewardship world were pressing retailers to publicly share a policy on sustainability. Publix never provided one, and Pizzuti, channeling George Jenkins again, explains the reason for this. “Some companies are founded on policy. This is wrong. Philosophy, the things you believe in, is more important. Philosophy does not change frequently and is never compromised,” Pizzuti says, referencing one of Jenkins’ more obscure quotes. “We weren’t going to write a policy statement with do’s and don’ts and hard timelines we weren’t capable of achieving. Instead, we wrote a philosophy statement about how we were going to conduct our business.”

MAKING A DIFFERENCE

The distinction between policy and philosophy can be subtle at times, but Publix’s approach to sustainability is rooted in three clear foundational principles. For starters, Pizzuti believes that sustainability needs to be “pre-competitive.” “Compete on quality, service, price, the knowledge you can provide and the availability of the products you have, but don’t compete on sustainability. Work together on sustainability,” he told attendees at the retailer’s seafood event. Closely tied to the pre-competitive concept is collaboration, not on an individual company-toretailer basis, but as a critical mass of suppliers working together with a committed retailer to effect change on a larger scale. “Unless we all come together, we are not going to get lasting change that we are all looking for. We can’t move forward independent of each other,” Pizzuti says. Last, the notion of continuous improvement is how Publix thinks about seafood sustainability. Pizzuti isn’t big on timelines and claims; that’s why the company wrote a philosophy statement rather than a policy statement, even though he’s been a tireless advocate for improving seafood sustainability. He also serves as vice chair of the Food Marketing Institute’s Seafood Committee. “We’re not scared of what we’re doing, but the reality is there is a fluidity with this industry that doesn’t exist in other categories. It is a state of constant change, so to try to make claims that something is going to happen when you have zero control over what can happen doesn’t make sense,” Pizzuti says.

GOALS ARE STILL IMPORTANT

While Publix was averse to setting specific sustainability targets a decade ago, that never meant the company wasn’t an ardent supporter of NGOs that were setting targets to advance the cause of sustainable seafood. One of those, the Sustainable Fisheries Partnership (SFP), has an initiative called Target 75, which aims to

ensure that 75% of world production in key seafood sectors is — at a minimum — either certified sustainable, green-listed in SFP’s metrics tool, or making regular, verifiable improvements. SFP Founder and CEO Jim Cannon was among those participating in the Publix event. He recounted some of the group’s activities and reinforced Pizzuti’s “only in seafood” perspective of an exceedingly complex industry that requires perseverance among many stakeholders. A similar message was shared by John Connelly, president of the National Fisheries Institute (NFI), an advocacy group for the seafood industry. Between SFP and NFI, the seafood industry is filled with NGOs and industry organizations focused on different aspects: resource sustainability, supply chain issues and labor challenges. The Marine Stewardship Council (MSC) has its certification standard, and the Consumer Goods Forum (CGF) has its Global Sustainable Seafood Initiative (GSSI), which isn’t to be confused with its Sustainable Supply Chain Initiative (SSCI). Then there are FIPs, or fishery improvement projects, which can be undertaken by any organization. From a supplier’s standpoint, the alphabet soup of organizations, initiatives and certification standards also adds complexity to the seafood industry. That’s why the catalyzing efforts of committed executives such as Mowitt and Pizzuti are invaluable to drive the industry forward, help Publix earn shoppers’ trust and sell more seafood in the process. SB Mike Troy, editorial director of EnsembleIQ’s Grocery Group, can be reached at mtroy@ensembleiq.com.

KEY TAKEAWAYS • Seafood suppliers to Publix that already comply with various requirements of standardssetting organizations will now be subject to new reporting requirements and documentation. • The grocer recently held a seafood sustainability summit to share its commitment to sustainability, provide an update on key sourcing and regulatory challenges, and provide details on the use of a reporting portal, timelines in regard to a packaging conversion, and key process changes to simplify store-level execution. • A key way that Publix thinks about seafood sustainability is the idea of continuous improvement.

www.storebrands.com / December 2019 / Store Brands

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TRENDWATCH: LOGISTICS AND TRANSPORTATION

GROWING WITH THE TIMES Because private label sales are growing and gaining market share, supply chain management could be more important than ever

2019 was a good year for private brands, and it followed another good year for store brands in 2018. Market share for private brands continues to climb across the retail grocery segment. Market researcher IRI recently reported that private label sales have increased by nearly 4% in 2019, a number even more impressive when factoring in that sales of consumer packaged goods (CPG) increased by about 2%. IRI also reported that 99.9% of shoppers buy store brands today. Dan Sanker, CEO of CaseStack, now a division of Oak Brook, Ill.-based Hub Group, believes that private label market share will keep climbing and that transportation and logistics will play key roles.

“Retailers are closest to consumers, and they’ll increasingly find ways to harvest data that enables them to outmaneuver big national brands,” says Sanker, whose company provides supply chain management services to consumer packaged goods companies, including for private brands. “To take advantage of this opportunity, private label manufacturers’ supply chains need to move even faster than national brands.” Sanker believes that store brands will become the cornerstone in an ever-increasing competitive retail environment. “These products are now a retailer’s differentiator, and cost is table stakes,” he adds. “This is another reason that retailers will need to

always be in stock and on time while maintaining low logistics costs.” Sanker says collaboration is crucial for retailers in the logistics and transportation process. “Collaboration is the key for any brand and especially for private label,” says Sanker, whose company uses a proprietary software as a service platform for its collaborative retailer consolidation programs. “Retailers should collaborate to make sure that private label items have best-inclass supply chain management. “When we at CaseStack collaborate with retailers to make logistics less expensive and more ontime for private label products, those improvements reflect well on the retailers. Preferred suppliers can then gain more physical and digital shelf space, leading to additional sales.” In the digital sector, online grocery sales continue to climb higher — they have soared more than 15% on a year-over-year basis and now account for 6.3% of total grocery-related spending by U.S. households, according to Brick Meets Click, a firm that provides strategic guidance about how the U.S. grocery business is evolving. Sanker says private brands offer retailers the chance to differentiate online. “There’s an opening for private brands to become the tastemakers of retail, even more than national brands have been doing,” he says. “Logistics networks need to be lowcost, and they’ll have to be responsive, like the networks that have become prevalent in fast fashion.” Sanker adds that CaseStack collaborates with retailers to make sure private label suppliers can out-compete their rivals by lowering costs of inbound logistics, reducing deductions and improving on-time delivery. SB

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OPPORTUNITIES ABOUND WHILE THERE ARE CHALLENGES TO BE MET, SPEAKERS CITE FAVORABLE CIRCUMSTANCES FOR STORE BRANDS BY DAN OCHWAT AND LAWRENCE AYLWARD

HHHH Another Private Label Trade Show is in the books. This year’s show, held Nov. 17-19 and coinciding with the Private Label Manufacturers Association’s (PLMA) 40th anniversary, featured more than 2,500 exhibit booths stretching across three halls at the Donald E. Stephens Convention Center in

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Rosemont, Ill. More than 5,000 attendees visited those booths. The Private Label Trade Show also included a handful of speakers who presented on trending topics at the Hyatt Regency Hotel, located adjacent to the convention center. What follows is coverage from some of those sessions.

Store Brands / December 2019 / www.storebrands.com

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Things Happen” — and noted that store brands, indeed, are making things happen. “In category after category across all departments, store brands continue to post impressive gains, even in the midst of uncertainties about the labor market, trade tariffs, the stock market and geopolitical concerns,” Manzoline said. “Store brands are going to continue to rise to the challenge by offering newer and more innovative and higher-quality items that will drive increased private brands sales and market share.” Because store brands are focusing more on innovation, and retailers and suppliers are creating more premium and niche items to their assortments, Manzoline believes the industry’s better days are ahead of it. “The future is even brighter than the present,” she added. But Manzoline noted that product differentiation has never been more important. “Private brands must stand on their own,” she said.

LISA MANZOLINE: KEEPING UP WITH THE NEW NORMAL The past two years have been quite a ride for the private label industry. A good ride. According to the PLMA, store brands have never been more popular among consumers. Nearly one of every four products sold in the U.S. today is a retailer’s own brand. Sales of store brands are rising and market share is increasing. During her address Nov. 18 at the opening breakfast for the trade show, Lisa Manzoline, the PLMA’s chairperson of the board, talked about that ride and the fact that it’s not coming to an end anytime soon for those involved in private branded consumer packaged goods in food, non-food, and health and wellness products. “Whether you’re competing in the business in grocery, drug chain, mass merchandising channels or online, the rapid and accelerating pace of change has become the new normal,” said Manzoline, director of sales for Lake Forest, Ill.-based Reynolds Consumer Products, a supplier of household products. Consumer expectations for private brands have perhaps never been higher. They want quality products at a value, and those buying online want them delivered to their homes faster. And while “the unrelenting pace of change presents unprecedented opportunities,” Manzoline said, it presents obvious challenges. Retailers and suppliers need to keep up in all facets. Manzoline believes they will. She cited the theme of this year’s Private Label Trade Show — “Store Brands Make

ALI DIBADJ: BRANDS, OWN BRANDS WILL FIGHT FOR SPACE Moving forward, national brands and retailers’ own brands are in for quite a fight, elbowing for shelf space in-store and “stream space” online. Three key areas to keep an eye on, as detailed by Wall Street analyst Ali Dibadj during a presentation Nov. 19, include retailers becoming a major player in advertising and owning the shopper’s shopping list, private label expansion online, and how national brands are investing in digital to get their products ahead in the consumer’s search. Dibadj, a partner with Alliance Bernstein in New York and a former adviser with McKinsey, gave a presentation titled, “How Retailers Are Building Billion Dollar Brands.” Dibadj clearly positioned retailers in control of the fight, saying they don’t need national consumer packaged goods (CPG) brands like they once did and are fed up with a lack of innovation coming from those partners. Dibadj pointed to Alliance Bernstein and Nielsen research that showed stagnant sales from Procter and Gamble’s Tide entries and PepsiCo’s U.S. chips products over a five-year period, although beginning as far back as 2009, and he said the sales are somewhat due to a lack of pricing power. But he noted that retailers are looking for innovation from challenger brands and store brands, rather than the leading national partners. Looking at an in-store category layout, he said the old version was made up of four tiers of brands with the top tier being dedicated to a top CPG brand, the leading challenger brand, and then the second-leading major brand. In the second tier,

www.storebrands.com / December 2019 / Store Brands

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the third-, fourth-, fifth- and sixth-ranked traditional brands would be positioned, followed by the top two private brands in the third tier. In the last tier, the eighth- and ninth-ranked national brands would sit with other challenger brands. The new layout, according to research from Alliance Bernstein, sees the same brands leading the top tier but on that second level the top-ranked private brand and the second-leading challenger brand have moved up while the fourth-, fifth- and sixth-ranked traditional brands move down. Say goodbye to any traditional brand after that and welcome in another store brand and two more additional challenger brands, Dibadj added. He also said that all of this brand movement is adding to too much proliferation, comparing a time when Walmart carried 120,000 SKUs in-store to now managing 75 million SKUs on Walmart.com. But it’s Walmart’s control of that e-commerce channel that gives retailer’s tremendous power to control the “stream space,” Dibadj added. Retailers know that shoppers typically purchase products that appear on that first page online; brands (including private brands) that fall beyond the fifth page are dead, according to a Bernstein consumer survey. “The future of food retail is advertising,” he said, adding that the new slotting fee is the top space in the e-commerce stream. An added bonus for retailers working with brands to get onto their e-commerce sites

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is they collect further consumer insights from how shoppers are shopping brands and the category online. Dibadj said an even bigger fear among traditional, national brands is the more consumers buy online from a retailer’s site, the more they lose a spot on the shopper’s shopping list. He said to consider a shopper using a retailer’s mobile app or a smart fridge connected to a retailer app that simply reorders products automatically without a tie to a brand. Dibadj noted where branded CPGs are fighting back against store brands and retailers is online, with Amazon being a key player as it drives 80% of online growth for CPG brands. On its own terms, Amazon could cause trouble by pushing its own brands, following its acquisition of Whole Foods Markets’ store brands. He pointed to a study the firm did that looked at private brand market share on Amazon and a category like trash bags had 0% share in 2018 but jumped to 14% last year. The overall volume of that share is very small to the business being done offline, but it’s a notable number, as the company does have more power to give more space to its own brands, Dibadj said, going back to the importance of being a brand that registers on that first page of the search.

"The future of food retailing is advertising," and the new slotting fee is space online. — Ali Dibadj

P “ T

The is p pro

National brands understand this importance, and Dibadj noted it’s the one area they’re fighting back the hardest. When consumers search for what they need online, they aren’t putting a brand name down into a search but rather just a product category. Brands are spending to ensure their products appear first in these searches. On Amazon, per a Bernstein study, sponsored products from bigger national companies outsell products found organically across categories on the site. Dibadj said a digital hub is now at the center of the national brand marketing strategy, altering how national brands approach pricing of products, new product introductions and even making private label products for retailers. In some ways, he said, national brands are acting more like challenger brands to fight back.

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Store Brands / December 2019 / www.storebrands.com

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SAM MAYBERRY: THE “LAST MILE” STRATEGY With 60% of millennial shoppers now buying food online, and online grocery sales making up 7% of total grocery purchases in 2019 and expected to jump to 10% next year, Sam Mayberry, president of Sam Mayberry Consulting and formerly the head of product development of retail consumables for private label at Amazon, said the e-commerce food industry is growing faster than expected and retailers need to have a “last mile” strategy in place. “We’re at a tipping point in the industry,” Mayberry said during his seminar, titled “Winning the Last Mile,” on Nov. 17. The problem facing retailers — and Mayberry said they shouldn’t feel alone — is all of the last mile solutions out there (drones, autonomous vehicles, robots and more) as well as supply chain tactics like building ghost stores for online fulfillment are laying on a table like jumbled jigsaw puzzle pieces. Companies need to find the right pieces that fit for them. Mayberry then discussed three key areas of a last mile solution: networking, differentiation and investment. “Networking is who do you align with,” he said. For the first piece, retailers must build partnerships that work for their customers. The Kroger Co., for example, has teamed with U.K. online grocer Ocado to build up to 20 highly automated e-com-

PLMA PLANNING “THE YEAR OF A THOUSAND FLAGS”

merce fulfillment centers throughout the U.S.; and Walmart has partnered with a few autonomous delivery vehicles such as Udelv, Spark Delivery, Ford and others to test self-driving delivery. The second piece of the last mile strategy is “differentiation” of private label products, particularly as share of private label continues to grow. Mayberry cited a Nielsen report that said premium products show the most growth potential over five tiers of pricing and total dollar share. A key to doing premium private label well, Mayberry said, is that 53% of millennial shoppers pick a store based on that store’s product assortment and having the items they want. The third ingredient to building out a last mile strategy is to invest in services that find the right balance of complexity and control over the overall customer experience. For a company like Amazon, the investment is higher based on the spectrum of controlling the customer experience. For instance, Amazon recently purchased 20,000 Sprinter vans from Mercedes-Benz for its delivery partners. This is versus a company that may just invest in a partnership with Instacart to manage that delivery experience. As for some of the last mile solutions out there, Mayberry talked about the potential of drones with UPS, Prime Air and Google’s Google Wing drone programs. Solutions like a drone could relieve a serious crunch in package delivery, particularly in highly populated areas, he said. Autonomous cars or last mile robots that roll along sidewalks and to a customer’s home are all options for retailers to entertain.

interest in international products has climbed as retailers have become more diverse with foods from the Mideast, South America, India and Asia, while regional and local foods from Europe are enhancing traditional tastes.

The Private Label Manufacturers Association (PLMA) is planning a "landmark event" featuring international products for its 2020 Private Label Trade Show. The event, called “The Year of a Thousand Flags,” will bring together exhibitors from Europe, Asia, South America, the Mideast and Africa to give retailers in the U.S. and Canada access to thousands of products with an international flavor for their U.S. private label programs. “The Year of a Thousand Flags” will be a central theme of the show, set for Nov. 15-17 at the Donald E. Stephens Convention Center in Rosemont, Ill. Brian Sharoff, president of the PLMA, said the reason for “The Year of a Thousand Flags” is because consumer

“Add to this trend American consumers' desires for organic, natural and alternative foods, and it’s clear that the U.S. market is dramatically different than it was and is ready for new international flavors,” Sharoff added. Also, the U.S. retail market is quickly becoming more like the market in Europe where private label share has reached 30% or more in several countries, Sharoff added. “As a result, the popularity of store brands, as they are known in the U.S., has risen rapidly,” he noted. “Retailers like Walmart, Costco Wholesale, Kroger and Amazon have given store brands status as genuine brands, and as a result consumers have responded at the checkout.”

www.storebrands.com / December 2019 / Store Brands

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"[Plant-based meats] meet a lot of the lifestyle trends going on, but walk away from some." — Jim Wisner JIM WISNER: THE TIME IS NOW FOR PLANT-BASED MEAT If you’re a retailer thinking about introducing private branded plant-based meat products, the time is now, said Jim Wisner during his presentation, “Plant-based Proteins and the New Consumer,” on Nov. 17. Wisner provided a vast overview of plant-based meats during his presentation, including about their possible pitfalls of being highly processed and too costly. But he acknowledged that the category is burgeoning and presents a viable opportunity for retailers of private brands. Wisner advised retailers to team with manufacturers “to get engaged now” and be quick to market with products. He advised them to offer a range of products and to create a defined department in the meat section and/or frozen foods. Product sampling and consumer education are vital, he added. “Don’t sit and wait and watch,” Wisner said. “You need to be there.” Wisner pointed out that several retailers —The Kroger Co., ALDI, Wegmans Food Markets, Albertsons Cos. and Loblaw — have already gone to market with store branded plant-based meat products and are ahead of the game. “So we have retailers going to market not after the market is established, which is kind of a change for how the private brands industry works … in a good way,” he said. Wisner cited research from Research and Marketing showing that plant-based meats are the fastest-growing

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segment of plant-based foods with 23% growth over the past year. Sales of plant-based meats are forecast to reach $3 billion by 2024. A challenge for plant-based meats, in an era where so many food and non-food products are moving to clean label, is that some of the products in the segment have a host of ingredients. In a slide, Wisner showed the long ingredients lists in Beyond Meat’s and Impossible Burger’s “bleeding” veggie burgers and noted, “They have to be highly processed to work.” “[Plant-based meats] meet a lot of the lifestyle trends going on, but walk away from some,” Wisner said. While he noted the environmental and sustainability benefits of plant-based meats, Wisner said the products are not necessarily healthier for consumers to eat, particularly being higher in sodium. Wisner cited research from Kerry Research noting that 90% of plant-based consumers say they read ingredient labels, 83% of consumers believe that plant-based meats are healthier than meat, 73% agree that meat alternatives should mimic the taste of meat, and that 48% of consumers perceive plant-based meat products to be more processed than meat. Wisner said the cost of plant-based meats could be a problem. He noted that Beyond Meat Burgers cost 63 cents a pound compared to about 25 cents a pound for ground beef. But some consumers may be willing to pay more for the protein-rich products as a way to eat less real meat, Wisner suggested. Who is the plant-based meat consumer? Surprisingly, or maybe not, Wisner said 98% of meat-alternative buyers also purchase meat. SB

Store Brands / December 2019 / www.storebrands.com

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OUR MISSION AT ‘STORE BRANDS’ A message from John Schrei, the group brand director of ‘Store Brands,’ ‘Progressive Grocer’ and ‘Retail Leader’

Many of you know us for being the voice of the private brands industry. That has always been true, but we’re also a great deal more than that. The fundamental measure of our success as a brand is in the value we create for you. We know the store brand industry is growing and innovating like never before. And we need to continue to innovate in our messaging, our products and in our services to our customers. Our goal is to be the brand that’s ahead of what’s next in a massive industry being tested by disruption — one that’s never been more in need of information, insights and engagement opportunities that Store Brands can provide. Each of us here at Store Brands are focused every day on the future, and the exciting things we have planned for 2020 and beyond. We plan to produce content and products that not only inform and engage, but that inspire. We will continue talking about and building upon a community that connects retailers and solutions providers. You will see a content, sales and marketing team focused on what matters — the delivery of solutions to the challenges we all face. We will provide you bold and innovative solutions that generate results and returns you expect from your investment of time and dollars. At the end of each day, we hold ourselves accountable and we know you do, too. Our success comes from what we generate for you. Your success is a result of how well we do that. We look forward to a great new year and wish everyone a prosperous 2020.

www.storebrands.com / December 2019 / Store Brands

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