Supermarket retailers are throwing a private-label block party and everyone's invited. Whether you are watching your carbohydrate intake or trying to avoid foods made with wheat, the odds are pretty good that there will be something there for you to eat.
While target marketing is not a new concept in the food industry, the number of grocers designing store-brand lines that target specific consumer needs is on the rise.
That's not surprising.
"It makes sense for private-label innovation to mirror the branded movement toward convenience, on-the-go, value-added, or ethnic segments," said Jason Whitmer, research analyst at Midwest Research, Cleveland. "I think the best private-label products certainly do fill consumer needs. For example, I recently noticed that Kroger has a microwavable 'beans-in-a-bag' under its own label. This type of product not only adds value to customers, but also provides differentiation."
The U.K.-based Tesco, already well known in the industry for having a distinct approach to food retailing, is planning to add private-label items for people with certain food allergies to its current collection, which consists of branded goods the retailer has gathered under a "Free From" banner.
"We'll probably try to offer an alternative to everything that we've got now, so that customers have the same choice as they do in other areas of the store where they can buy a branded product or a Tesco product," Jonathan Church, external communications manager for Tesco, told SN.
Still in the early phases of development, the retailer hasn't finalized what the new range of products will look like, but Church said they will most likely include breads and bakery-type products "because people have intolerances to things like wheat and yeast."
Peanuts are not likely to be addressed with the new Tesco products because of the common nature of the allergies associated with them. "These more unusual allergies, that's where we find the Free From range really comes into its own," Church added. Currently, Free From includes selections from grocery and bakery departments, from pizzas to biscuits to breads.
Diabetics or people seeking low-fat, low-calorie desserts can now indulge in "Food Lion's Healthy Delight," a new premium low-fat ice cream sweetened with the sugar substitute Splenda. All Food Lion locations are carrying the recently introduced ice cream, which comes in vanilla, Neapolitan, pecan pralines and vanilla-fudge flavors, and retails for $3.99 per half-gallon.
Meeting various consumer needs through private label is an ongoing procedure at most retailers, and Salisbury, N.C.-based Food Lion is no exception.
"Private-label programs are evolving and growing. The objective isn't just to offer products that are comparable to national brands. We want to offer products that meet customer needs. Our new ice cream is an example of meeting a consumer need," said Jeff Lowrance, Food Lion's spokesman. "Food Lion sees its private-label program as a way to better serve our customers and build enhanced customer loyalty. Consumers in general are recognizing the quality and value offered by private-label products. This, in turn, leads to brand loyalty."
It goes without saying that private-label products help connect the retailer with the consumer in a way that increases store loyalty.
"For us, it's a real strength in being able to offer customers something from our brand," Church from Tesco said. "The Tesco brand is trusted by consumers, and that's very strong. There's a great deal of trust in Tesco and our label, and it says a lot to a customer about quality, price and convenience. Private-label sales are extremely strong."
The hopes for increased store loyalty spurred Albertsons, Boise, Idaho, to roll out a premium private-label brand earlier this year, one targeted to a gourmet consumer. In detailing the company's results for the first quarter, ended May 1, executives referred to the launch as one of its marketing highlights.
The line, dubbed Essentia, is being positioned as a national brand found only at Albertsons, and is being supported by radio and television advertising, as well as placement in weekly store circulars.
"Essentia was developed to address an outstanding opportunity to fill a growing need among our customers: the desire for a premium-quality brand at a competitive price," Terry Lee, vice president of corporate brands, said in a prepared statement.
According to company spokeswoman Karianne Cole, "We're still in soft-launch mode. We intend to do a more aggressive hard launch, we're guessing, in fall. We have so many products on the line now, and we're going to keep building that," she told SN.
The Essentia line includes an extensive cookie collection, crackers, frozen foods like lasagnas, ravioli and ribs, and frozen desserts, including cheesecake, mousse and chocolate cake. The Albertsons' name doesn't appear on the package in plain sight, Cole said.
Meanwhile, Stop & Shop, Quincy, Mass., is using packaging to draw consumers to its newest line geared toward the Hispanic market. Mi Casa is a collection of items that include rice in five-, 10- and 20-pound bags; 20 varieties of canned and dried beans, olives, canned milk and meats; and three-liter sodas in coconut, pineapple, grape, and cola champagne flavors. The packaging is bilingual, as is the literature that accompanies the products in stores.
"The premise behind Mi Casa would be that Stop & Shop is always looking for ways to serve the community that it is operating in; and as certain communities grow, your product selection needs to grow to match the community that you're serving," said Rick Stockwood, spokesman. "With a lot of different ethnic groups, a lot of socialization goes around a meal. So if you're unable to provide to a certain market the items that they need to prepare a meal, it's important to make sure you're doing that."
All told, the Mi Casa line includes 42 items in seven categories.
Providing for all these types of shoppers is also on the rise among members of Topco, the Skokie, Ill.-based cooperative, according to Mary Ruth Wilson, who has been with the company a little over six months as vice president of brand and product innovation.
"I have a job because of our efforts to target various markets," she joked. "I'm discovering that our members are much more interested than they probably would have been several years ago in reaching out to specific demographic and psychographic segments."
Topco members have the added advantage of working with other members to reach their goals, she noted.
"The more you try to target a specific group with products designed specifically for them, the more you need scale in order to compete, and that's one of the things Topco has been able to bring to this. Because our members band together and leverage their common scale, they're able to develop brands and products aimed at specific target audiences, which is kind of a departure from the older one-size-fits-all private-label approach," Wilson said.
Another change that becomes more noticeable as time progresses is the belief that private labels are sub-par to national brands, sources point out. "People had always been initially drawn to private label by cost. I think that a lot of people now are paying attention to the fact that there's quality behind private label in many cases, so you're getting a low-cost, high-quality alternative to national brands," said Stop & Shop's Stockwood.
"Private label is more than a generic brand," stressed Whitmer. "While many consumers still think with this [generic] perception, look at retailers like Trader Joe's who can drive up to 80% to 90% of its sales from its own label. That would qualify as pretty popular to me."