CHICAGO — Connecting private labels to licensed characters, celebrity chefs and meal ideas can help retailers differentiate their stores and revitalize the Center Store, a new report says.
Private labels also can be elevated with premium packaging with added functionality; health and wellness options that go beyond organic; and aggressive marketing that puts store brands in the spotlight, according to “Center Store Renewal: Leveraging Private Label to Drive Growth.” It was conducted by Wisner Marketing Group and Information Resources Inc.
Advancing private label is key at a time when Center Store is shrinking. As a result of increased focus on perimeter departments, grocery's store space declined from 39.7% to 34.9% from 2000 to 2005.
“The only way to re-energize the Center Store is by making private label a point of difference,” Wisner's president, Jim Wisner, said last week at the Private Label Manufacturers Association's annual trade show here.
Published by PLMA, the report includes input from 39 retailers and wholesalers — including Albertsons, Jewel-Osco, Schnucks and Giant Eagle — as well as interviews with 30 store managers and more than 1,300 shoppers.
One of the key takeaways is that retailers need to be more selective in the private-label Center Store products they carry. Doing so can help them boost the number of store trips. This is critical, because between 2001 and 2006, the number of all-outlet trips per shopper slipped from 14.5 per month to 13.6 per month as consumers increasingly shop multiple outlets.
Some retailers need to improve the perception of their private labels. While 35% of shoppers interviewed said store brands at their main food store are “better” or “much better” than at other stores, 57% said they are “about the same.”
Respondents mentioned interest in better private-label variety (35%), packaging (17%) and healthier alternatives (13%). Just 8% mentioned price.
“There are tremendous opportunities that are not being exploited,” Wisner said.
Most retailers fall short when it comes to private-label packaging, including label design, graphics and the functional components of the package. This can be improved if retailers incorporate packaging technologies like dripless spouts, tear tabs, pull-top lids and resealable bags.
Nearly two-thirds (64%) of shoppers interviewed said it's “very important” to have a special set of symbols on store brands to indicate healthier items, such as low-fat or whole grain. And more than one-third (39%) said it was “somewhat important” or “very important” to call out organic items with a special section or sign.
Creating awareness and trial are the most important first steps in private label. Nearly one-third (31%) of shoppers were unaware if there was a store-brand alternative for the item they were purchasing.
One way to influence trial is by tying store brands to meal solutions ideas, according to the report. About 60% of shoppers interviewed expressed interest in having displays of meal solution ideas available in-store. And nearly half (47%) of store managers said more demos and sampling events could help promote private label more effectively.
“[We] inform the public that the products are high-quality, and do demos to let them taste the product without investing dollars,” one store manager said.
Another way to create more interest in private label is by tying items in with exclusive brands, such as celebrity chefs and companies like Disney.
PLMA President Brian Sharoff expects licensing will become a major trend in private label over the next two to three years.
“Most supermarkets have already taken their products to the next level in terms of quality and assortment. Now they're looking for ways to improve the image,” Sharoff told SN. “Licensing is a great way to do it, because it allows you to buy into the credibility of an existing celebrity or cartoon character.”
Licensed products generate $14 billion to $18 billion a year at retail, according to IMC Licensing, Louisville, Ky. Licensed food and beverages account for 38% of the business.
Store-Level Support
Of 30 store and grocery managers interviewed, a strong majority actively support their companies' store brands
93% — Gave an 8 or higher rating (out of 10) when asked how comfortable they are recommending store brands to customers
73% — Said their company informs and trains employees about private label
73% — Said their store's private-label quality is better or much better than that of their major competitors
67% — Said they have specific performance expectations regarding their private label
Source: Wisner Marketing/ IRI's “Center Store Renewal” report
