SWEETWATER, Texas -- Lawrence Bros. Management Services raised prices on its private-label health and beauty care items to better align store-brand pricing with the national brands.
The retailer believes the price hike will enhance the value of private label in the consumer's mind. The changes made to its private-label program last month are already paying off with a 10% increase in HBC private-label sales, said Walter Smith, the chain's supervisor of nonfood.
"Shoppers apparently perceive the line as a better value now that the retails have moved closer to the branded items," said Smith, who declined to be specific on the price increases.
He said the modified shelf prices now offer shoppers a 33% savings, instead of a 40% to 50% savings under the old price structure.
The 20-store chain -- which trades under the banners Lawrence Bros. IGA and Fiesta Foods -- also improved its gross profit margins on sales of the 200- to 250-item private-label Marquee HBC assortment. Margins are now 45% to 50%, up from 35% to 45%. The chain also added 25% to 30% more display space for its private label. There are now two private-label facings, instead of one. Over the last year, Lawrence gradually has increased space for the mix by cutting back larger-count packs in national brands and phasing out slower moving items. Private label accounts for 20% of HBC sales, according to Smith.