CHICAGO - Walgreens is in the midst of a major private-label consolidation that will pare some 75 brands down to just a few core lines.
For instance, the Deerfield, Ill.-based drug chain will reduce 23 household product brands to about one or two. And some 22 consumer packaged brands will be cut to about six or seven, Laura Sturdevant, director of product development, private brands, said in a session at the annual Private Label Manufacturers Association's trade show. The event ran here Nov. 13-15.
To accomplish the task, many second- and third-tier private brands will be discontinued.
“W” is among the brands being dropped because consumer research showed shoppers didn't relate to the brand.
At the same time, the retailer is developing new brands. One of the biggest is “Nice!” a 300-item line of grocery and household products at prices up to 30% below other national brands. Likewise, Walgreens' acquisition of Duane Reade led to the launch of the DR Delish line of premium snacks and beverages in Walgreens stores.
Another new line is a no-name store brand that will launch within the next month or two.
The brand will be defined by its imagery: “fresh and clean” graphics and a smiling sun, known internally as “Sunny Smile.”
The brand will have functional quality and be priced at the lowest price point, with little marketing support.
“Sunny Smile” will comprise about 50 stockkeeping units of household products like paper towels and select consumables, including cookies.
The overhaul is part of an effort to double Walgreens' private-label sales, which currently stand at $4 billion, over the next five to seven years.
“We are on pace to do that,” said Sturdevant. “We have set the momentum to get this done.”
The momentum started about two years ago with the hiring of former Kraft Foods executive Maurice Alkemade as divisional vice president/general merchandise manager for private brands. Alkemade's appointment cemented the chain's focus on managing its private brands much in the way the big consumer packaged goods firms do.
“His goal is to create a private-brand consumer packaged goods organization within Walgreens,” Sturdevant said. “He wants us to go about this business just as a CPG company would.”