NEW YORK -- Retailers need to be more creative and innovative to achieve their sales goals for the end of the decade, according to Thomas I. Rubel, president and chief executive officer of consulting firm Retail Forward, Cincinnati.
Rubel addressed a crowd of nearly 500 people at the firm's Strategic Outlook Conference titled "Retailing 2010: Five Years Survived, Five Left to Thrive" this month at the Crowne Plaza Times Square here.
Not only must new ideas be created, retailers also need to adapt to changes in the consumer base, including the aging baby-boom generation and the increasing Hispanic population, he said.
Rubel mentioned some supermarket chains that have emerged as frontrunners of retail innovation.
As health care costs continue to skyrocket, Kroger, Cincinnati, and Cub Foods, owned by Supervalu, Minneapolis, are offering convenient health care at MinuteClinics inside their stores. Each MinuteClinic is staffed by a nurse or physician's assistant who can diagnose common infections, write prescriptions and screen some exams. The retailers offering this service are seeing a rise in over-the-counter and prescription sales, while the customer is getting quick solutions.
"If you just have a cold or need a prescription for something, this is a great deal for the consumer, because they come in and get convenience, and save time and money," Rubel said. "The retailer gets a tremendous amount of traffic and a huge influx of over-the-counter and prescription business."
To cater to the Spanish-speaking consumer, Publix Super Markets, Lakeland, Fla., has recently introduced Publix Sabor, a Hispanic-themed concept with specialty food items, bilingual employees and signs, and Latin music in Kissimmee and Hialeah, Fla.
Finding a niche for private brands is a key way to increase profits, according to Mary Brett Whitfield, senior vice president and director at Retail Forward, who spoke about how private brands have evolved over time and how some supermarkets have taken the lines to new levels. In 2004, private brands generated 16.6% of food store sales and accounted for 21.4% of all units sold, she said. The categories with the largest private-label market share are fresh eggs, milk and sugar.
One example of a company that has enhanced the concept of private brands is Wegmans Food Markets, Rochester, N.Y., with its omega 3 fatty acid bread that offers nutrients associated with the prevention of certain cancers. Wegmans went to great lengths to be the first company to offer a bread product with these health benefits and experimented with more than 200 recipes before choosing the one with the best taste. Whitfield said that this illustrates the effort retailers are taking to differentiate their products and make them more "feature rich."
Giant Eagle, Pittsburgh, has also come up with an innovative concept in private branding with its Laurenti Mediterranean Specialty Foods line of premium cuisine items like pasta, sauces, jarred olives and oils. The Laurenti line is priced one-third higher than Giant Eagle's private Valu-Time brand but still lower than similar national brands.
"The reason why Giant Eagle chose this category as its first premium private brand was because pastas and Italian brands index very high with its customer base," Whitfield said. "They've really used their private brand to go after that niche."
Whitfield used Wild Oats, Boulder, Colo., as an example of a private brand making a name for itself on a national level. It has more than 100 products offered through online grocer Peapod, Chicago.
Whitfield said that an average Peapod transaction is $9 higher when Wild Oats products are part of the order, making it a win-win for both companies. Wild Oats is currently talking with five other companies about similar alliances and is testing its store-within-a-store concept with some Stop & Shop stores.
"Wild Oats has found a way to become a national brand, without the capital expense of having to expand their store base," Whitfield said.
