From price cuts to cause marketing, supermarket industry suppliers have deployed a range of strategies to help drive retail performance in their categories.
This year marks the third time SN has polled its readership to determine which of those suppliers have excelled in executing their partnerships with retailers and earned top honors in SN's Category Excellence Awards.
The increasing consumer acceptance of private-label product throughout the store and ongoing economic pressures on shoppers have intensified the importance of strong retailer-supplier collaboration in 2010. As the detailed profiles of the Category Excellence winners on the following pages demonstrate, suppliers leveraged their size, brand recognition, consumer insights and innovation, among other qualities, to drive results at the shelf.
Editors chose the winning suppliers in a wide range of categories based on feedback from retailers in a comprehensive online survey, and also considered survey feedback from other industry participants. In addition to identifying the suppliers to be singled out for recognition, SN also asked respondents to identify the key reasons for their selections.
Following are summaries of some of the findings, fleshed out in more detail on Pages 41-68.
NONFOOD
Retailers who voted in this year's SN Category Excellence Awards survey frequently cited “strength of brand” as a main reason for choosing nonfood category winners. Nature's Bounty (NBTY), Duracell (Procter & Gamble) and L'Oreal all won on their strength of brand attributions by retailers. This may be somewhat surprising since private-label sales surged during the economic downturn at a cost to branded sales.
To stay competitive with their brands, many suppliers cut into their margins by lowering retail price points and investing more heavily into retailer and consumer promotions. P&G reportedly cut battery prices as much as 14% during July to gain share points. The oral care category became particularly competitive among the big CPG companies this year as they attempted to hold their ground and expand their base abroad. This resulted in aggressive retail promotions and discounting as well as increases in advertising expenditures in the category.
In the vitamin category, NBTY faced competition from a surge in private-label sales — although NBTY is also a major supplier of store-brand nutritional supplements following the acquisition of Leiner Health Products in 2008. To remain brand competitive, NBTY invested in keeping retail prices low and did co-op promotions to move products in store.
Paul Weitzel, managing partner, Willard Bishop, Barrington, Ill., said he is not surprised that retailers cited brand equity as an attribute for several category winners in nonfood. “I think if you have strong brand equity then generally you have deeper pockets. You have more ability to commit to supporting the categories because you know at the end of day you are going to win. So if I am working on an aisle reinvention program, fixture project or I am looking at assortment and space, the big brands will win.”
Product innovation also elevated this year's nonfood category winners. Duracell is concentrating on personal energy solutions for on-the-go consumers. Colgate also addressed those consumers on the move with the introduction of its Wisp portable mini-brush. In skin care, L'Oreal is ahead of the pack when it comes to investment in R&D that ultimately gives birth to cutting-edge beauty products. Novartis Consumer Healthcare received retailer kudos for its effort to bring Prevacid 24HR, a proton pump inhibitor for frequent heartburn, over the counter.
FRESH MARKET
In SN's third-annual Category Excellence report, fresh food suppliers stood out for a variety of reasons. Once again, voters tended to point to qualities such as product innovation, brand recognition, category management assistance and promotional support for this year's winners.
For example, one reader explained their vote for Tyson — which won top honors in the poultry category, and Company to Watch in the deli and beef categories — by citing the company's “simple brand recognition with consumers. Tyson means chicken, and [the company] provides far more variety for the market than the other brands.”
In an interview with SN, Tyson officials discuss how they continue to utilize their company's Discovery Center research and development facility to develop products that satisfy the needs of their diverse customer base.
Other companies, such as Del Monte Fresh Produce, were recognized not only for product innovation, but for marketing innovations as well. While many produce companies are just beginning to reach out to consumers using online social media networks and smartphone apps, Del Monte Fresh is launching advanced integrated-marketing campaigns that incorporate in-store signage and POS materials, along with Twitter, Facebook and the company's own website, www.fruits.com.
And, simply saving customers money earned kudos as well. One voter noted that Dean Foods has been “an important ally in coming up with ways to compete price-wise with the larger ‘big box’ stores.”
Regardless, all of this year's winners and companies to watch deserve recognition for their efforts to help retailers maintain or grow sales despite ongoing economic challenges.
CENTER STORE
Trading partners are banding together like never before to imbue new life in Center Store.
Efforts run the gamut from sweeping, like Campbell's revamp of 21,000 IQ-Shelf Maximizers to grow incremental sales of national-brand and private-label soup, to more customized approaches, like E. & J. Gallo Winery's suggestion that Jungle Jim's International Market place value-priced moscato wine at eye level, given its popularity.
A range of strategies also emphasizes sustainability, not just of the products themselves but how they contribute to household efficiency. Procter & Gamble's Future Friendly in-store campaign steers shoppers toward products like Tide Coldwater, touting its ability to cut their utility bill and carbon footprint. P&G even offers rewards redeemable at grocery stores, for recycling the container curbside.
Kimberly-Clark has likewise found its environmental niche, by drawing traffic to the paper aisle with a free giveaway that helps consumers cut their water bill. A Smart Flush bag is being distributed with Scott Naturals bath tissue, 8-pack and 12-pack, while supplies last. The device absorbs water and expands when placed inside a toilet tank, reducing the amount of water consumed by about 2,000 gallons annually for a family of four.
Cause marketing is a year-round priority for Nestlé Purina Petcare Co., which worked with Kroger Co. to craft a months-long annual campaign to strengthen the emotional bond between the retailer and pet owners. It's customized programs for countless other retailers, including Price Chopper, Schenectady, N.Y.
“Nestlé Purina has continuously presented ‘outside the box’ strategies that have helped us to better connect with our pet consumers,” said spokeswoman Mona Golub. “Some unique programs that they've brought to us have been centered around social media, which in turn has helped to drive traffic into our stores and to expand the dialogue that we have with our customers.”
CPG companies are also teaming up to conceive and execute new merchandising treatments, layouts and Center Store approaches as part of the Grocery Center Store Initiative.
By Christina Veiders, Matthew Enis and Julie Gallagher
