NEW YORK -- Nonfood represents about 55% of the 1,820 exhibit booths slated for the Private Label Manufacturers Association's annual trade show, running Nov. 15 to 17 in Chicago.
PLMA President Brian Sharoff told SN here that supermarket growth of nonfood private label may come from retailers targeting categories that aren't vulnerable to the clout of mass merchandisers or dominance of big brands.
There is some evidence that the greatest potential for nonfood private label lies within general-merchandise categories, said Sharoff. "General merchandise is getting some movement. There is a sense retailers are open to these product categories," which haven't been conceded to the mass merchandisers. He mentioned paper goods as an example of a category that has developed an extensive selection of private label over the last decade.
Last year, dollar share of private-label general merchandise grew by 0.5% to represent 8.8% of supermarkets' general-merchandise departments, according to the PLMA's 1998 Private Label Yearbook. Unit share also rose by 0.5% to represent 12.9% of the departments. Disposable cameras headed the list of the top-10 dollar and unit gainers at supermarkets, according to the yearbook.
The challenge for supermarkets, said Sharoff, "is how to maintain a balance between products that you have to carry but are more often purchased at mass merchandisers."
The other challenge falls on the health and beauty care side. Yearbook statistics also indicated that HBC dollar and unit volume rose slightly at supermarkets last year, up 0.3% in both dollar and unit share. However, Sharoff pointed out, the rate of growth is not as fast as that demonstrated by competing formats, particularly the discounters.
"Obviously, the mass merchandisers and, to some extent, drug chains are pricing [nonfood] in such a way that the pressure is on supermarkets," Sharoff commented.
In slating private label for HBC categories, retailers first have to look at the margins. Private label had been making inroads in the toothpaste category, until branded manufacturers began paying for windows, which drove the profit so low that private label was no longer profitable for retailers to pur-
sue, said Sharoff.
He pointed to the significance of Sam's Club launching a private-label brand, Member's Mark, this year, to compete against the low-price branded strategy that it built its business upon.
"Private label may be the club store's way of saying that selling brands for less may not be worth the effort. Let's find some categories that don't have brand dominance. That is where you will see the growth coming on the nonfood side," Sharoff said.
