Someone has to lead the way. On the private-label trail, industry observers said it's Trader Joe's.
From products to merchandising, it's a business model that excels in concept and execution by constantly reinforcing its own image as a purveyor of exclusivity, quality and value, sources told SN.
"They are pioneering an area that other retailers are going into [like] Whole Foods, and there are others that are taking a very similar path with similar success," said Brian Sharoff, president of the Private Label Manufacturers Association, New York.
While the Trader Joe's model might not work for every retailer based on store demographics, parts of it can help complement a total-store strategy, Sharoff said.
"When you go to Harris Teeter or Ukrop's, many of them are walking in the same footpaths, except that they also have other responsibilities in other parts of their store," he said.
The Southern California-based Trader Joe's does approximately 80% of its business in private label, offering Center Store products under the Trader Joe's label. Specialty, niche items include Mexican and Italian offerings marketed under the Trader Jose's and Trader Giotto's labels, respectively. The company was purchased by German limited-assortment giant Aldi in the late 1970s.
Although the company is privately held, Gretchen Gogesch, president of Integrale Inc., a consulting practice in Chicago, told SN she expects that its profit per square foot is "outstanding," based on the kinds of items it sells and their price points.
"They are able to deliver a whole-brand experience that delights and surprises consumers, [while still being] mindful of the bottom line. They have a pretty simple -- yet very sophisticated -- way of delivering on their brand promise, and that really translates all the way from product idea and development, to partnership with whatever vendor or supplier they're using to develop that product, to the packaging of it and the presentation of it in store," she said.