REINVENTING CPG SUMMIT

SAN FRANCISCO - With its rebranding campaign beginning to bear fruit, Safeway said it will focus in the year ahead on planting tailored marketing messages in the minds of shoppers.That effort will involve working closely with CPG makers on promotions and customizing product placement, assortment and promotions, said Brian Cornell, the retailer's chief marketer, speaking last week at Information Resources

SAN FRANCISCO - With its rebranding campaign beginning to bear fruit, Safeway said it will focus in the year ahead on planting tailored marketing messages in the minds of shoppers.

That effort will involve working closely with CPG makers on promotions and customizing product placement, assortment and promotions, said Brian Cornell, the retailer's chief marketer, speaking last week at Information Resources Inc.'s Reinventing CPG & Retail Summit 2006 here.

"We recognize as much as you do that one size doesn't fit all," said Cornell, a CPG veteran who joined Safeway in 2004.

Supporting those objectives is the retailer's 1+-year-long commitment to understanding consumers. Cornell said Safeway has been working with experts from the CPG industry, academia and its own workforce to study shoppers' behavior in its stores and what they buy in order to better understand their preferences and target them accordingly.

Safeway's research found consumers value high-quality products, seek out service and convenience, and want to simplify the pursuit of health and wellness.

Better understanding of shoppers was key to the retailer's ability to turn around poorly performing stores and a cornerstone of its Ingredients for Life branding campaign, which launched in 2004, Cornell said.

He cited as evidence market share increases in all but one week and improved same-store sales in 2005. Its "lifestyle" format stores, the core of its branding campaign, have been exceeding sales expectations. The company last year converted 290 stores to the upscale and fresh food-focused format, and another 326 are set to be converted this year.

"We believe Ingredients for Life is changing the way consumers think about our brand," Cornell said.

He also reiterated Safeway's previously announced plans in the year ahead to continue reducing its corporate labels from 70 to 10; redesigning its store-brand packaging to achieve a cleaner look; rolling out its new organics line, O Organics; and introducing package icons signifying products' convenience, health, safety and environmentally friendly attributes.

"What we're creating is an in-store shopping guide for our customers," Cornell said of the icons.

Other speakers reiterated Cornell's message of the importance of consumer-driven marketing to growing sales:

IRI Chairman Romesh Wadhwani said the proliferation of new products hasn't led to meaningful sales growth because it confuses shoppers, who respond by craving simplicity. Retailers can meet that need by organizing stores around solutions rather than around products, he said.

Bob Connolly, a retired chief marketer at Wal-Mart Stores and now an independent consultant, called for more cost-based activity to determine the true expense of stocking tertiary brands and multiple line extensions. He said packaged goods makers should focus on being consumers' default brand.