is everything all white - private label buyer cover story

16 PLBUYER AU GUS T 2 0 11 WWW.PRIVATELABELBUYER.COM

White is everywhere on private label

packaging today, is that a good thing?

Maybe not, say some experts.

Read why not, and also read what other

trends are impacting private label as

2011 enters its final quarter.

Cover Story PL 4TH QUARTER OUTLOOKBY JOHN N. FRANK

Cover StoryPL 4TH QUARTER OUTLOOK

name] are a sure sign of a private label program,” says Rodmell, who will be co-chairing PLBuyer’s new Design Excellence Awards later this year.

Others, however, point out that there is method behind the white wave sweeping over private label packaging.

“You’re seeing more and more white, I think, because it’s recognizable,” says Todd Maute, senior vice president/partner with New York design firm CBX Retail, and a judge for PLBuyer’s Design Excellence Awards. “It just merchandizes better.”

Paula Rosenblum, managing partner with RSR Research agrees. “Retailers believe consumers are more price sensitive than ever, so they [retailers] are going to try to focus on more value messages than ever,” and white says value.

Walmart with its Great Value private label redesign in 2009 and Publix with its Publix brand in 2003 generally get kudos as the originators of the white movement. When they did it, it was novel.

Walmart’s Great Value went from “being somewhat invisible on the shelf to screaming on the

shelf,” recalls Maute. Ironically now, Walmart is bringing more colors into the Great Value line.

Indeed, some retailers are using colors to stand out from the white movement. “Use of vivid color continues to be a critical design element for us,” Mary Rachide, divisional vice president for private brand at Family Dollar, tells PLBuyer. “Despite the whitening trend across many other retailers, and in our national brand equivalent quality products, leveraging the Family equity is critical to helping our shoppers connect the product back to Family Dollar.”

When it comes to private label packaging, white is

the new white. White is also the new black, and the new yellow. In short, white is everywhere on new private label packages.

Retailer after retailer has been rolling out new lines and new products in packaging that is either all white, predominately white or includes white accent areas. The trend has become so pronounced that some are concerned private label may be entering a new generic era, a time when all private label packaging is so similar that consumers feel no particular brand affinity for one retailer’s offering compared with how they feel about national brands.

Not only packaging, but naming of new private label is echoing a certain sameness as well, adds one industry watcher.

“We are on the precipice of entering a new age of generics — Essential Everyday [Supervalu], My Essentials [Delhaize]—there’s no personality to these brands,” complains Christopher Durham, creator of the mypbrand.com blog and a member of PLBuyer’s editorial advisory board.

In their rush to tell consumers their private labels deliver value, retailers are missing the opportunity to create emotional connections to their brands, says Patrick Rodmell, CEO and president of Watt International, a Canadian design and marketing firm. “Everybody’s trying to find words that have specific meanings,” he says of new private label names that often include words such as essential.

National brands don’t try to describe their products in their brand names, Rodmell notes. Rather, they work to emotionally connect shoppers to their brands through marketing. “I think those more generic descriptive words [in a product

PL WINNERSKroger

Knows how to execute in-store

SafewayGood product concepts

Family DollarRolling out new packaging

WegmansAlways innovative

MeijerGood work with Meijers Gold

Sam’s ClubAttractive new PL products

PL LOSERSWalmart

Not clear where PL fitsin its retail strategy

Fresh & EasyIts problems are bigger

than private labelCVS

Design of new Just the Basics line is me-too white

THE JURY IS STILL OUT

SupervaluWill Essential Everyday

succeed?Target

Are increased PL food sales helping the bottom line?

AholdPL design sameness

7 ElevenIs 7-Select getting another redesign?

WalgreensWhat roll with Duane Reade PL play across the country?

A 2011PL SCORECARD

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Cover Story PL 4TH QUARTER OUTLOOK

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•Continued introductions of private label line extensions into new niches and new categories. At Publix, for example, “Similar to the national brands, most new products are line extensions to existing [Publix] lines,” says Maria Brous, director of media

and community relations with Lakeland, Fla.-based Publix.

• Increased promotional activity for private label offerings. Contests and in-store events, long staples in the national brand marketing arsenal, are migrating to

Beyond white packaging and packaging redesign in general, other trends evident this year include:

•Retailers, such as Supervalu, opting to create one private label that spans multiple categories and banners.

Is white being over-used in private label packaging today? Some say yes, it looks generic. Others say no, it conveys value and a certain chic.


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advisory board. “The media is talking about branded products as if they were the underdogs.”

The year began with increased national brand promotional activity aimed at regaining sales lost during and after the recession.

That could spell flat private label sales for the year compared to the 2 percent gain that the Private Label Manufacturers Association reported PL saw in supermarkets last year, several experts predict.

The New LinesSupervalu’s May announcement that it would consolidate its various store brands into Essential Everyday received generally favorable reviews in the business. The move will produce cost

Cover StoryPL 4TH QUARTER OUTLOOK

private label, generally with positive results.

Looking ahead, expect private label to continue facing the challenge of high commodity prices for the remainder of the year as it tries to regain market share lost early in 2011 to increased national

brand promotional activity, experts predict.

The competition with national brands has heated up. “The biggest surprise for me is the amount of attention that has been given to the resurgence of national brands,” says Carl Munyon, a veteran private label expert and a member of PLBuyer’s editorial


“We are on the precipice of entering a new age of generics — Essential Everyday [Supervalu], My Essentials [Delhaize] —there’s no personality to these brands.”— Christopher Durham, creator, mypbrand.com blog

Cover Story PL 4TH QUARTER OUTLOOK

is reaching out through social media, working with mommy bloggers, coupon bloggers and others, to build buzz for the new line. It also is promoting the new private label in circulars and by showing products to consumers.

Drugstore operator CVS

Caremark announced in February that it would roll out its new Just the Basics line, one of the white wave. Rival Rite Aid has been introducing its Simplify line, another white wares line, for the past year and reported in June that its private label penetration rate rose nearly 1 percent in its 2012 fiscal first quarter. “We’ll continue the rollout of our new private brand architecture in the second quarter,” said CEO John Standley during an analysts’ call earlier this year. Rite Aid at that point had introduced 250 products with its new packaging design and also was making some tweaks in its other private labels such as Rite Aid Pharmacy health products, Renewal personal care products, Pantry foods and Tugaboos baby products.

Private label diapers can represent a difficult selling proposition to new parents more worried about their baby’s bottom than price. But the recession mindset still gripping consumers today may be changing that.

“Traditionally diapers have been a high brand loyalty category,” explains Family Dollar’s Rachide. But Family

Dollar has been extending it Kidget’s brand beyond diapers into training pants, buoyed by its diaper sales success. “That we’ve been able to drive over 50 percent diapers share in our private brand has been a very positive surprise,” Rachide tells PLBuyer.

“The dollar stores are

absolutely killing it,” when it comes to successfully expanding their private label offerings, says RSR’s Rosenblum. Family Dollar, for example, has cleaned up its assortment of products, spruced up stores and worked on pricing issues, making it a standout this year, she says.

Family Dollar’s Rachide notes that “we’ve had two sustained years of aggressive private brand product expansion.” In addition

to the Kidget’s expansion this year, Family Dollar has “added new items to our newly launched Family Gourmet brand, expanded the Tropic Sun line to summer toys and Family Pet into pet food and treats. In addition, we’ve introduced a new ladies apparel and accessories line – Mix &

Co., and continue to expand extremely me! in girl’s apparel and accessories,” she says.

Supermarket SweepsWhen it comes to traditional supermarkets and private label, Kroger this year remains the leader among the large, national holding companies, continuing to lead the pack with in-store execution of private label. Kroger combines two key elements for

savings in the 0.5 to 1.5 percent range, experts estimate, while also breathing new life into what, in some cases, had become rather stale banner private labels across its various chains (see PLBuyer, March 2011).

“I think they’re starting to move in the right direction,” says Jim Wisner, founder of Wisner Marketing Group, Libertyville, Ill. “One label will help them if the label is good, if they promote it and if they do all the blocking and tackling. If they start to get price-driven [however], they’ll blow it.”

Industry veteran Munyon has some doubts about the new brand, however. “I would say it’s a tale of good and bad. On the one hand, its shear genius to consolidate all that buying power into one label. On the other hand, I’m not impressed by the name Essential Everyday. That doesn’t seem to be a label that goes across all formats and projects an image of quality or brandness to the product.”

Sam Mayberry, Supervalu’s vice president of private brands, tells PLBuyer the new name conveys key attributes of the national brand equivalent line. The line includes “products consumers use on a frequent and everyday basis and one they can rely upon for delivering quality,” he says.

The new line arose out of consumer research done by Supervalu. “We started with the shopper and wanted to make sure we understood what they thought was a value,” explains Mayberry. Supervalu’s “primary motivator was to provide a brand that was easily identifiable across the store” that consumers could equate with value and quality, he says. Mayberry would not comment on what level of cost savings Supervalu will realize by consolidating its various banner private labels into Essential Everyday.

Addressing package design, he says “the label itself will convey brand image. A lot of time has been spent on the label itself.”

The line is rolling out across Supervalu banners initially in the breakfast aisle, with cereal and other breakfast offerings, in pasta and in pasta sauces. Supervalu

Supervalu, with its new Essential Everyday line, and Family Dollar with its Family Gourmet new packaging, are using bold colors with only white accents, breaking away from a private label packaging pack that increasingly is seeing all-white designs.


“Retailers believe consumers are more price sensitive than ever, so they [retailers] are going to try to focus on more value messages than ever.”— Paula Rosenblum, managing partner, RSR Research

Cover Story

private label success that other retailers would do well to emulate – it does its consumer research and it gives store managers incentives to sell more private label, say supermarket watchers.

Kroger “really understands the consumer and is managing to satisfy how consumers shop,” says industry veteran Craig Espelien, a member of PLBuyer’s editorial advisory board.

Kroger has long worked with Dunnhumby, a U.K. company with U.S. offices, that analyzes customer data and helps retailers create branding strategies. Kroger targets new products and lines like its mirra cosmetics, using Dunnhumby data, Espelien notes. Then it provides incentives to store managers to execute at the store level.

“In supermarkets that are generally over-SKUed and under-utilized, [Kroger has] done an excellent job of execution” with private label, Espelien says. But he cautions that he’s not impressed by Kroger’s repositioning of its Private Selection premium private label, saying it too closely resembles Safeway’s Safeway Select.

Safeway gets high marks for packaging and product innovation. It introduced its Open Nature private label in January and created the world’s largest picnic table in June to promote it. While that stunt garnered media attention, Safeway in general has been focused on private label back office details in recent years as it shifted from using an outside firm to managing private label in house, and so still lags when it comes to in-store execution, says Espelien.

At Publix, PLBuyer’s private label retailer of the year, it’s been a stay-the-course year, continuing with promotions that prove effective, such as its Store Brand challenge, now in its fifth year. When it comes to new product introductions, “the past year has been consistent with the last four to seven years in that we review potential categories, evaluate the business opportunity, and then determine if we will move forward to bring the product to market,” says Brous.

Supervalu’s Mayberry notes that he’s seeing an increase in the number of new products being offered by processors for potential private label sale. “Manufacturers have realized the potential” for private label, he says; even national brand manufacturers are now turning to private label production and offering new products to attract retailer business.

Promote AwayPublicity stunts like Safeway’s picnic table, promotions and contests are becoming more the norm for private label than they

them, from shopping ad items to purchasing private label to couponing.”

At Supervalu, “I definitely think that shoppers are under a lot of economic pressure,” says Mayberry. “I think shoppers are still trying to save a dollar.”

At the same time people economize with private label, they also seek out what Family Dollar’s Rachide calls affordable treats.

Perhaps that’s why retailers continue to move into premium private label despite the tough economy. “Premium private label is certainly the most significant [trend of this year], with all of the major retailers almost bordering on a religious revival” in their belief that premium private label will sell, and will bring higher profit margins than other PL tiers, says Wisner.

Supervalu also is looking to premium for growth, Mayberry says. It is adhering to a three-tier strategy for private label, slotting Essential Everyday as its national brand equivalent tier.

And what will become of all that white packaging? Likely there will be more before there’s less.

“A certain amount of it is ‘oh isn’t that sheik, isn’t that contemporary,’” Asher says of the use of white. “But no matter what you did, to some degree it harkens back to the old generics. You can use white but you have to use it the right way.” The right way will depend on brand positioning, quality, pricing and promotional muscle put behind the product. PLB

have been, experts say. “Contests to get people

to try [private label] are the absolute right thing to do,” Espelien says. New private label promotional activity is “being sparked by social media, those kinds of events work well in that medium, I think we’re seeing a lot of experimentation,” says Wisner.

Contests and local promotions help tie private label to their

service area, explains Jonathan Asher, senior vice president at Perception Research Services, a Fort Lee, N.J.-based consumer research company.

“It makes tremendous sense for retailers to promote this way as it is far more cost-effective than advertising and, more importantly, is community based, which is a very significant part of the retailers’ brand essence and point-of-difference vs. national brand manufacturers,” he says.

Looking at which private label product categories are hot, experts point to appetizers and dinner offerings touting restaurant-quality fare as something consumers want as they continue to eat home rather than going out. Packaged deli meats also should grow in sales this year for the same frugal consumer-prompted reason. Ditto personal care products. Shoppers are still worried about their financial well-being.

Says Publix’s Brous, for example, “Our markets in the southeast are still very recessionary and customers are utilizing all options available to

PL 4TH QUARTER OUTLOOK
