In their increasing efforts to touch at the very root of customers' needs while increasing register rings and fueling profits, retailers used 1999 to increase the amount of, and change the faces of, their store brand lines; cater more and more to ethnic populations, which, for some, constitute the majority of their customers; and jump on the health-conscious bandwagon by upping their stocks of organic products and by creating natural destination centers within their stores. What this all resulted in was increased foot traffic within Center Store's aisles.
Introduction of new private-label items and packaging redesigns continued throughout 1999, and on the eve of the annual Private Label Manufacturers Association conference in November, PLMA president Brian Sharoff told SN he felt store brands were successfully filling voids left by national brands, accounting for the steady growth in the private-label segment seen over recent years.
Adding credibility to Sharoff's words, and further emphasizing the growth of the private-label sector, is the glaring fact that certain store brands, including A&P's Master Choice and Safeway's Select label, have become as well-known as national brands, and some specialty retailers almost exclusively carry their own brands, such as Trader Joe's, where private label accounts for 85% of store sales.
Among the operators to roll out new products this year were mass-merchandiser Wal-Mart, which added juice drinks to its line; EatZi's, which launched a line of private-label oils; and retailers Publix, which added homemade-style ice cream; Wegmans with a new line of RTE cereal; and Wild Oats, which created an entirely new private-label line called "Down to Earth Value" including items such as water, peanut butter, paper products and coffee.
While the introduction of new products was one piston that kept the private-label phenomenon moving full steam ahead, paying close attention to labels was another equally important component, as many retailers demonstrated this year. For example, in January IGA began a three-year plan to redesign the packaging of its 3,200 private-label items; Wegmans repackaged its line of liquid laundry detergent to give it a more "upscale look;" Piggly Wiggly gave its store labels a facelift starting with its canned fruits and vegetables over the summer; and Haagen Inc. changed the look of its entire line to convey a "more contemporary image."
According to statistics from Information Resources, Inc., Chicago, coffee filters, food and trash bags and cups and plates saw the strongest growth among private-label product categories in 1999 -- growing by 2.7%, 1.9% and 1.5% respectively.
Never before have the Center Store aisles been more ethnically diverse, and in 1999 consumers used their shopping muscles to shape the buying and merchandising decisions of retailers across the nation. Customers seemed to be saying they not only wanted to see more shelf space devoted to products related to their particular ethnic background, but they also demanded that those products be of the finest quality.
This year there was an increase in products marketed to African-Americans, which mainly consist of Southern brands. Although this is one of the least dominant ethnic categories, companies like American Comfort Foods in Louisville, Ky., stocked Kroger stores with its bread pudding mix, while Certified Grocers of California's African-American offerings were heavily promoted in Apple Supermarkets chains in the Los Angeles area.
In addition, in February, Locricchio's International Marketplace opened shop in a small Detroit, Mich., suburb, delighting local customers with its emphasis on Italian specialty foods. However, the most progression on the ethnic front in 1999 was predominantly in two segments -- kosher and Hispanic, both of which cater to two of the most rapidly increasing populations in the U.S.
Sales of kosher products reached an all-time high this year, which could be attributed to the greater variety of items and better merchandising strategies retailers featured in their stores throughout the year. SN was able to catch glimpses of the growth within the category during impromptu stores visits, which found a Winn-Dixie Marketplace unit in Fort Lauderdale, Fla., featuring a large Passover display in addition to its year-round kosher section located in the front of the store, while Greenfield's ShopRite in Plainview, N.Y., had two aisles labeled "Passover Needs" topped off with endcaps featuring matzoh crackers on sale. And, the category is expected to continue its growth in supermarkets, being buoyed by more than strictly Jewish shoppers, but by vegetarians and the lactose-intolerant as well.
The Hispanic consumer was also met with a more comfortable shopping experience in 1999 as food retailers worked hard to break down ethnic barriers by featuring bilingual packaging and signage, offering bilingual in-store demonstrations and even playing Spanish music throughout the store, as was the case with Southwest Supermarkets, located in Phoenix, Ariz. At Southwest, 90% of consumers are of Hispanic origin, which has prompted the grocer to create a large Hispanic private-label line, featuring the most authentic ingredients. "You need to know your customer," was the advice dispensed by Roland Ekstrom, HBC and nonfoods buyer for Southwest, during a multicultural session at the PLMA conference in November.
Another store that weighed heavily on the Hispanic side this year was a new Sedano's in Pembroke Pines, Florida. When the retailer took over a vacant 36,000-square-foot location once operated by Food Lion, Sedano's began stocking its shelves with specialty Hispanic items, including Goya olives, Iberia rice and beans and Hispanic barbecue sauce. Also this year, several retailers used ethnic celebratory events as opportunities to move Spanish goods. For example, Fiesta Mart stores in Houston held special demos during Hispanic Heritage Month -- from Sept. 15 to Oct. 15 -- and H.E. Butt Grocers in San Antonio ran a variety of promotions geared toward Hispanics during the month.
The baby boom generation -- led by adults now in their early 50s -- did as much to fan the organic fires in 1999 as they had the previous year, as more people continued to seek out healthful, "good for you" foods in attempts to sustain a hearty life. The organic industry grew at a rate of 20% to 24% per year during the 1990s, according to the Organic Trade Association of Greenfield, Mass., with 1997 sales of about $4.2 billion.
This year began with the U.S. Food and Drug Administration seeking comments on a petition from Protein Technologies International which requested that food labels carry health claims for soy protein. After months of debate, the FDA approved the claim in November, allowing products to carry labels linking soy bean consumption with the reduced risk of heart disease.
While government agencies began to give more credence to the benefits of soy, grocers across the nation tempted consumers with new healthy product launches and steered them toward a path of fitness by creating entire sections devoted to "good for you" products.
Dan's Super Market in North Dakota had so much success with a natural foods section it rolled out in two of its stores in 1998 that in early 1999 the chain decided to add natural foods lines to all its stores. Pratt Foods in Oklahoma began testing a new line of certified-organic canned vegetables in February; Albertson's introduced a frozen organic baby food line in March; and the Boulder, Colo.-based Wild Oats Market rolled out a 23-item frozen private-label organics line as it watched organic products grow to constitute almost 60% of the chain's grocery products for this year. Nature's Northwest in Oregon added spas and lifestyle units to their stores, while Atlanta's Kroger tested its Nature's Market natural food store-within-a-store for the first time in July, and Super Fresh in New Jersey also delved into the organic market with a section devoted to natural foods. Organic baby food continued to rack up sales, and, in the case of Gerber's Tender Harvest line, even took some sales away from standard formulas. Another major manufacturer got in the game this year, as General Mills launched its Sunrise RTE cereal in the spring, a combination of organic wheat, corn and brown rice flavored with honey; and mass merchandiser Wal-Mart helped push organics into the mainstream by testing dry grocery sets, including pastas, mustards and salsas, in September.
A panel of experts put together by the PLMA released a study in September that attributed the growth of the category to sophisticated marketing, the publication of USDA standards for organic certification and expanded private-label offerings. With agencies like the Minnesota-based Organic Alliance heralding the promotion of organic foods at the retail level -- through events like its ambitious promotion in September that involved 312 supermarkets across the nation -- retailers are sure to continue running alongside the natural movement well into the years to come.