COLLABORATION EDUCATION

No snow days are built into the supermarket retailing calendar. The class known as The Ins and Outs of Private Label 101 has been in session ever since that segment of the industry began to take off in the 1960s and 1970s.While much progress has been made since those days, from the quality of private-label products to the attention they receive through merchandising and promotion, there are still

No snow days are built into the supermarket retailing calendar. The class known as The Ins and Outs of Private Label 101 has been in session ever since that segment of the industry began to take off in the 1960s and 1970s.

While much progress has been made since those days, from the quality of private-label products to the attention they receive through merchandising and promotion, there are still plenty of lessons that all involved could learn.

For a private-label program to succeed, many believe there needs to be true collaboration among several parties -- retailer/manufacturer, store executive/manager/personnel, store personnel/consumer, and so on. But, in many cases, communication within these relationships has yet to be perfected.

According to Brian Sharoff, president of the Private Label Manufacturers Association, New York, some vendors say retailers are not necessarily knowledgeable about the categories they buy due to increasing involvement in online programs. On the flip side, he said he has heard buyers say they don't feel as if their private-label manufacturers and suppliers are sufficiently trained in how retailing works; they don't know the stores themselves, but only the buying office.

"Each side has looked at the other in this special partnership/relationship and said a lot more can be done and a lot needs to be improved," Sharoff told SN.

At the consumer level, store personnel need to be well versed in private-label procedures and products.

"If you're going to have a private-label program be successful, everybody on your staff -- right down to the guy stocking your shelf -- has to be able to talk about the program intelligently. They have to support it," said Marty Meloche, associate professor of food marketing at St. Joseph's University, Philadelphia. "You don't want someone coming up to the stock boy and saying, 'What do you think of these ABC green beans?' and they say, 'I wouldn't eat that private-label stuff.'

"The bigger problem is that the company -- upper management and the merchandising staff -- has to be committed to a quality program."

At the family-owned Big Y Markets, Springfield, Mass., this type of companywide dedication to private-label can be seen on a daily basis.

"The D'Amour family is very involved in private label, down to the functioning of Topco and the merchandising of our brands in our stores," said Phill Schneider, vice president of Center Store, Big Y Foods.

In addition, he said, every category plan contains a private-label section with goals and results, and a category manager in charge of the retailer's private-label program works very closely with Topco, the cooperative in Skokie, Ill., that supplies Big Y with its products, which include about 2,400 stockkeeping units across food and nonfood categories. Labels currently carried by the retailer include Big Y, Top Crest, Top Care, World Classics, Full Circle, Dining In and Value Time.

Big Y has had a good relationship with Topco for over a decade, Schneider said, adding that he and the category managers visit the co-op three to four times a year to meet with every product specialist. Big Y also schedules buying days with Topco at all the major product shows, including frozen food, dairy and private-label conventions, to name a few.

"As long as you remember that your co-op is an extension of your buying office and not them -- it's not their job, it's our job -- you'll both win," Schneider said.

However, in today's business environment not every retailer is engaged in such promising private-label campaigns.

For the larger retailers -- like Wegmans and H.E. Butt, for example -- having the financial wherewithal to invest heavily in their store-brand programs has played a huge role in the success of their lines and in their working relationships with peripheral players.

"[But] the smaller the retailer, the more that retailer has to worry about bottom-line revenue. And they're looking at every single way to maintain some kind of profitability," Sharoff pointed out.

Unfortunately, limited finances turn into big obstacles on the road to collaboration among players.

"I think the good retailers are doing what they should be doing -- they're developing super-premium lines and they set quality standards which are equal to or better than the brand leader out there. They're willing to reject a truck at the warehouse because they have a cutting team that cuts open a couple samples and says, 'This is not up to standard,"' Meloche told SN.

"You've got to have that policing at that level because you've got to guarantee that the quality stays there, and I think the good ones are doing that. The real pressure is on the smaller, midsized retailers because they don't really have the resources to fund all of the extra personnel to do sampling and stuff like that."

Other conflicts regarding price can land some players at odds. Retailers want to buy from their suppliers for as little money as possible, which can lead to manufacturers developing subpar products. Low-quality products, no matter what they retail for on the shelf, only cast a negative shadow on the retailer's image.

"I've told a number of private-label manufacturers, if you're challenged by a retailer to provide them with, let's say shampoo, and they want to buy 16 ounces for 50 cents a bottle, you'll produce it. You'll add enough water to it to make it 50 cents a bottle. But, then it's on the shelf and it's got the label on it and it taints people's opinions across the board for private label," Meloche told SN.

In Sharoff's opinion, many operators make the erroneous assumption that all consumers want is a low price, when in reality what they want is a fair price.

"If more retailers bought into the 'consumers don't want to be overcharged' deal, then private label would make much more sense to them and they would be much more involved in it themselves. But when you start out with the concept of what a consumer wants is cheap it forces you into two terrible policies -- you are forever trying to sell national brands at a loss and you're trying to produce private-label quality which is not as good as you could offer or what the consumers want.

"When you give consumers really good value, whether an expensive item or an inexpensive item, and they don't feel they've overpaid, they are really very, very happy," Sharoff added.

All the more reason to work out these kinks and make private a priority.

"Private label is one of the very special ways to differentiate. When you realize that private label, the retail, depends on quality and not cost, then you've probably got a great private-label line," Big Y's Schneider said.