LAKE BUENA VISTA, Fla. -- It's now clear that the growth of store brands is more than a manifestation of a poor economy and that the growth trend will continue even as the economy improves.
That observation was made by Rick Witherspoon, executive vice president of sales and marketing at Merico, Carrollton, Texas, at this month's National-American Wholesale Grocers' Association convention here. The observation was bolstered by new scanning data released by the Private Label Manufacturers Association, New York, showing private-label share gains in both dollar and unit volume in 1993.
Witherspoon, also chairman of PLMA, was one of several featured speakers at a NAWGA workshop session on private label.
"The growth in store brands will outlive the recession, especially because new opportunities are coming from areas such as premium private label, health and beauty care, frozens and others," Witherspoon said.
Citing data from Information Resources Inc., Chicago, Witherspoon said private label is now a huge business. He said last year's sales volume was $28 billion, representing some 24 billion units sold out of supermarkets.
Indeed, newer scanning data indicates the business is bigger still. In an interview after the NAWGA conference, Brian Sharoff, PLMA president, said store brands hit a record $30 billion in sales during the 52-week period ended Jan. 2, 1994.
That activity represents 14.9% of the total dollar volume and 19.7% of all units sold. It compares
with 14.6% of dollar volume share and 19.4% of unit share in 1992.
Sharoff said the latest statistics "clearly fly in the face of recent claims that private-label sales have waned." He added that while the latest figures showed private label growing 0.8% in unit volume, they also showed national brands slipped 0.8% from the previous year. "It was definitely a misconception that private label had flattened out in 1993," Sharoff told SN. "We expect this pattern will remain consistent. There will definitely be more categories added to retailers' premium label programs, and we will see more retailers strengthen the presence of their brands on the shelf. Looking ahead, category management will be the greatest single boon to private-label premium brands."
At the NAWGA meeting, Witherspoon said the pace of growth will continue if attention is paid to considerations such as:
· Quality: "Consumers try for price, but repurchase for quality. It is imperative that quality is consistent across all items in the private-label line."
· Image: "Make it distinctive and give it consistency of appearance across the line. Make it easy for shoppers to compare to branded label and price."
Another speaker at the workshop, Ron Glass, president and chief executive officer of Federated Foods, Arlington Heights, Ill., also stressed the importance of consistency, and said retailers or wholesalers should ensure that by entering into written agreements with suppliers, by frequently testing products and by paying visits to production plants.
And, he said, once the quality and consistency of products are established, that fact should be made known to store-level employees -- perhaps by means of cutting tests -- so they can honestly tell shoppers about the quality of private labels.
"Employee orientation is often overlooked," he said. "There's nothing worse than a cashier who tells shoppers they don't know anything about the private label and have never tried it." He also recommended the use of a single name for all components of a private-label program, but acknowledged that there is ample opinion to the contrary. Indeed, Tom Arledge, senior vice president of marketing at Scrivner, Oklahoma City, told the workshop session that for a wholesaler, three private-label programs are necessary: premium, first label and second label.
"The wholesaler faces a problem that's unlike that faced by chains because wholesalers must supply many formats, each of which needs a private-label strategy that their consumer research shows is the way to go."