Skip navigation

Something Different

Consumers emerged from 2008 a little bit poorer and a little bit wiser. Retailers recognized that if their mid-tier corporate brands could provide an experience equal to or better than that of the national-brand equivalent, they'd have a chance to convert consumers for life. After testing more than 5,000 Great Value items against branded counterparts, Wal-Mart reformulated 750. But to appeal to higher

Consumers emerged from 2008 a little bit poorer and a little bit wiser.

Retailers recognized that if their mid-tier corporate brands could provide an experience equal to or better than that of the national-brand equivalent, they'd have a chance to convert consumers for life.

After testing more than 5,000 Great Value items against branded counterparts, Wal-Mart reformulated 750. But to appeal to higher income consumers, it added new items like organic cage-free eggs, fat-free ice cream and thin-crust pizza. Meijer also gave new identity to its Meijer Gold. Items like Champagne Dill Mustard, Grilled Pineapple Chipotle Salsa and Sparkling Lemonade fill a dearth in the market since all come from original recipes from family-run or local businesses.

Supermarkets also aimed to provide something you won't find everywhere else with tools to gauge nutritional value. Supervalu, Stop & Shop, Hy-Vee and Price Chopper, Schenectady, N.Y., got their feet wet with color codes, numbers or all-or-nothing markers.

Others decided that their strategy required new direction. After making improvements to its proprietary system, United Supermarkets decided to switch to the NuVal system, which assigns a score from 1 to 100. A handful of manufacturers adopted the Smart Choices program, but the companies phased it out after the Food and Drug Administration said it would review on-pack rating programs.

Digital coupon programs that enabled paperless links to loyalty card savings were introduced by ShopRite, Giant Eagle, A&P, Lowes Foods and Pittsburgh-based Shop ‘n Save. Many also took to the blogosphere to build unique relationships with shoppers. Exclusive offers and drawings for gift cards kept Facebook fans, Twitter followers and blog readers engaged.

Private Properties

IN 2009, retailers capitalized on a market prime for private-label growth, with 43.6% expressing plans for natural/organic lines; 34.5% for an additional tier of product; 23.6%, new specialty items; and 18.2%, new ethnic products, according to an SN survey conducted in May. Just 9.1% had no store-brand plans in the works.

Wal-Mart revamped its existing Great Value line after testing more than 5,000 Great Value items against national-brand equivalents. It made the decision to reformulate 750, and add more than 80 items like thin-crust pizza and organic cage-free eggs. All got new packaging.

Wal-Mart's investment in the quality of Great Value led analysts like Citigroup's Deborah Weinswig to predict it will grow store-brand penetration from 16% to 40% over the next three years.

Costco Chief Executive Officer Jim Sinegal also projected a store-brand spurt. In a published report, he said that Costco will grow its private-label share from 20% to 25% over the next five years. In addition to introducing new items, the wholesale club replaced branded products with private labels in categories like spices, said Patty Edwards, a research analyst for Storehouse Partners.

Meanwhile, Kroger's exclusive brands hit record highs in March when the retailer announced that its private labels made up 35% of grocery unit sales, according to reports.

Across the board, store-brand unit share averaged a much lower 22.8% this year, but that was up from 21.6% in 2008, according to Information Resources Inc.

Greater investment in corporate brands was partly responsible for the growth.

Earlier this year, Target's Target-brand got a new identity in “up & up,” and its Archer Farms line supported a brand extension called Simply Balanced. The line focuses on foods that are nutritious yet affordable.

Sobeys also shifted its corporate-brand direction when it announced that its high-end Sensations line will grow from 150 items to 1,000. A new value tier, to be called Signal, will replace its Compliments value brand. There will only be 250 Signal items, down from 1,000 Compliments items.

Meijer also made a switch from everyday premium items to more differentiated products that are made from an original recipe that comes from local roots, family tradition or for a food endemic to a particular region.

Rather than introduce products of their own, other retailers turned to store brands with proven results.

Big Y, Price Chopper and Hy-Vee were among the chains who distributed Safeway's Eating Right private-label line. Albertsons LLC likewise sourced products from another retailer when it took on Safeway's O Organics line.

Store-brand marketers pulled out all the stops to convert shoppers.

Contests were a popular promotional tool used by Big Y, Spartan Stores and Harris Teeter to drive private-label trial. All three hosted holiday recipe contests requiring a video (or a picture, in the case of Spartan) of the entrant preparing their favorite recipe using store brands.

Publix Super Markets, Bi-Lo and Food Lion offered special deals that allowed shoppers to buy one national-brand item and earn its store-brand counterpart for free.

Wal-Mart, Food Lion and Fresh & Easy Neighborhood Market made gauging shopper opinions about specific corporate-brand items a priority. Wal-Mart and Food Lion held gift card drawings to encourage survey participation, while Fresh & Easy collected opinions via email from its “friends of Fresh & Easy” members. The winning items got a promotional boost since they earned a sticker declaring their Fresh & Easy favorite status.

Others took to the blogs to get a sense for reactions to store brands. A J.D. Power and Associates' analysis of 50,000 store-brand blog entries, posted over the course of a year, revealed that only 11% of sentiments expressed were negative, 39% positive and half were neutral.

Highlighting Health

LABELING systems paved the way to nutritious choices this year, as retailers and manufacturers adopted a variety of new programs.

In January, Supervalu launched Nutrition IQ — a color-coded, shelf tag program that highlights nutritional attributes. The system rolled out to 1,300 Supervalu-owned stores nationwide.

Months later, Supervalu made another program — Healthy Elements — available to the independent retailers it supplies. Green tags list up to four traits to identify foods that are low-fat, low-cholesterol, low-calorie, low-sodium, organic, a good source of calcium, a good source of fiber, gluten-free, or list whole grains as its first ingredient.

Another proprietary system that hit shelves was Stop & Shop's Healthy Ideas. Unlike Supervalu's systems, Healthy Ideas is an all-or-nothing program, so products either meet the nutrition criteria or they don't.

Marsh Supermarkets, Indianapolis, also launched a system all its own.

The chain teamed up with Indianapolis Colts quarterback Peyton Manning, The Peyton Manning Children's Hospital at St. Vincent and Ball State University to develop the “Project 18” campaign. Its “Down the Aisle” component is a shelf tag system based on nutrition criteria developed by the hospital and Ball State. Items are either worthy of the tag or they're not.

Several others looked outside of their organization for an appropriate fit.

United Supermarkets, Hy-Vee, Meijer and Price Chopper, Schenectady, N.Y., are among those who decided on the NuVal Nutritional Scoring System that assigns all foods a numeric score ranging from 1 to 100. The higher the score, the more nutritious the product. The system is facilitated by NuVal, a Braintree, Mass.-based joint venture of Topco Associates and Griffin Hospital, and powered by the Overall Nutritional Quality Index, a patent-pending algorithm.

Before selecting NuVal, United made improvements last spring to its four-year-old tagging system that highlights heart-healthy; lean/low fat; sugar-free/reduced sugar; organic; and gluten-free items. Due to limited shelf space, most tags will be replaced by NuVal tags, according to spokesman Eddie Owens.

“I do believe we'll come up with a solution for keeping the gluten-free tag,” he said. “We've had such great response regarding that effort.”

Manufacturers also joined forces in the hopes of cutting down on confusion resulting from several disparate nutrition systems.

While food makers like Sara Lee adopted their own program, Kellogg's, Kraft Foods, General Mills, ConAgra Foods, PepsiCo and Unilever got on board with Smart Choices, which assigned a Smart Choices checkmark, along with calories per serving, and servings per package information, to items that met its nutrition criteria. More than 500 products qualified. That was too many according to critics who contended the system was too lenient.

Smart Choices was short-lived since the program's facilitators postponed operations days after the Food and Drug Administration announced a plan to review on-pack nutrition rating programs for violation of federal regulations.

“Some nutritionists have questioned whether this information is more marketing-oriented then health-oriented,” said FDA Commissioner Margaret Hamburg of the systems on the market. “And judging from some of the labels that we've seen, we think that this is a valid concern.”

The FDA is reviewing standards for a single set of criteria to be used with all programs; has commissioned an 18-month study to determine whether a single set of nutrition symbols is necessary; and proposed opening a dialogue with the industry to discuss options going forward.

“We look forward to sharing our insights and actively engaging with the FDA in this process” Kellogg's spokeswoman Kris Charles told SN.

Amidst mounting criticism, the cereal maker put the brakes on another of its efforts and pulled immunity claims on boxes of its Rice Krispies and Cocoa Krispies cereal.

“While science shows that antioxidants help support the immune system, given the public attention on H1N1, the company decided to make this change,” according to a Kellogg's statement.

Electronic Sales

CONSUMERS suffered from fewer paper cuts as digital coupons hit the mainstream this year. ShopRite (Cellfire), Giant Eagle (e-Offers), A&P (Red Tag online coupons, via Zavers), Lowes Foods (eOffers, via InsaSave) and Pittsburgh-based Shop ‘n Save (E-coupons, via You Technology) all began leveraging platforms that allowed shoppers to link online offers to their loyalty cards.

Some new programs even granted access to savings that didn't require club card membership.

In June, ShopRite launched a four-week test of Samplesaint cell phone technology that allowed consumers to select Unilever coupons via their Web-enabled device. Once chosen, a barcode representing the offer was sent via text message to their phone and scanned at the checkout.

Shoppers could also access savings by locating and texting a number featured below eligible items at the shelf's edge. A barcode was texted back for scanning at the register. “It was a very successful program but it was only a test,” said ShopRite spokeswoman Elizabeth Loeb.

Another program, slated for release in the near future by a food retailer in the Great Lakes region, will include an online coupon hub and the ability to link savings to a phone number rather than a club card, according to platform provider MDot Network. Shoppers simply enter their digits at the checkout.

Since with digital coupons convenience is paramount, retailers made accessing savings as easy as possible.

Early digital coupon adopter Safeway launched its couponLink program, which allows visitors to access savings from several digital coupon providers at one central location. Offers from Shortcuts.com, Cellfire, Coupons.com and Procter & Gamble's P&G eSaver are aggregated via a link on safeway.com. Visitors are invited to browse savings and electronically transfer relevant offers to their Safeway Club Card. Another pioneer, Kroger, grants access to the same providers from its website. The only things that are different is at Kroger, coupon.com offers can only be printed, and P&G eSaver offers will no longer be available to Kroger shoppers as of Dec. 31.

Last week Safeway added another way for shoppers to link coupon.com savings to their Safeway Club Card — via a free, new iPhone app.

Access to savings is expected to grow in 2010. An SN poll conducted in March revealed that although CPG companies relied most heavily on traditional coupon tools in 2009, more and more manufacturers are turning to digital offers, with 5.5% saying they used the offers this year, and 7.3% planning to use it in 2010.

Social Butterflies

THE FOOD INDUSTRY socialized with shoppers this year via Facebook, Twitter, blogs and other social mediums.

Retailers like Dorothy Lane Market, Safeway, Lowes Foods, Ukrop's, Whole Foods, Brookshire's, Price Chopper, Hannaford Bros and a host of others took to the Web to field comments, answer questions, provide exclusive offers and get the word out about special events and private-label products.

Their strategies are wise since they effectively reach the lucrative woman-with-young children market, according to a Retail Advertising and Marketing Association survey conducted by BIGresearch and released earlier this year. It found that mothers of kids at home are more likely to use Facebook (60.3%), MySpace (42.4%) and Twitter (16.5%) than the average adult (50.2%, 34.4% and 15%, respectively).

To keep visitors coming back for more, Safeway continued to give mommy blogger “Kate” a forum to communicate with her peers. She is a full-time Safeway employee who's a married mother to three girls: Gabriella, Madeleine and Mae. Not just women, but also men followed her during the blog's first year.

“At first, I thought you were just a robot or something, but when I saw you responding to a comment, I started posting comments too,” Christopher wrote. “Thank you for taking the time to post stuff every day.” The chain also distributed exclusive offers via Facebook to its fans.

Other chains like Ukrop's took an all-at-once approach to getting its feet wet with social media. This fall, it launched a Facebook page, created a Twitter account, and started an online blog called Dish, all in the same day.

“We're excited about this effort because it gets us back to our roots of word-of-mouth marketing,” Lynn Schafer, Ukrop's targeted marketing manager, told SN in September.

To generate comments at blog.ukrops.com, the retailer offered free entry in a drawing for a $100 gift card to all who left a comment.

Most consumer packaged good companies who participated in a Grocery Manufacturers Association poll indicated that they're late bloomers when it comes to online outreach.

More than half (52.6%) of those polled by the GMA said they have low presence or engagement in social media, according to findings revealed at the GMA CPG Social Media Forum earlier this month. Half said they use Facebook, 41% Twitter and 29% blog regularly.

“Companies are also having a problem realizing ROI or figuring out how to measure it,” said Jeanne Iglesias, senior director of industry affairs for GMA.

Of the 22 companies surveyed, 11 said they are working toward generating revenue through social media but have not yet achieved it, while two indicated they're currently generating funds.

A study by Wet Paint and the Altimeter Group indicated that high social media engagement had the ability to grow revenues by 18% during the previous 12 months, while the least engaged companies saw revenues sink 6% on average during the same time period.