BOSTON -- Stop & Shop here will introduce a line of premium private-label products under the Select label. The products will be supplied by Safeway, Oakland, Calif.
According to Terry Vanderwater, Stop & Shop's director of public affairs, Select items will begin to appear on shelves in midsummer. Gary Giblen, an analyst with Smith Barney, New York, said Safeway has established an "unusual arrangement to sell to noncompetitive chains, which will afford it the wholesale profit margins on the sales, as well as enhance the company's buying power and utilization of manufacturing and processing assets."
Melissa Plaisance, Safeway's senior vice president of finance and public affairs, agreed with Giblen's assessment, and noted that Safeway had first established the program last year with Vons Cos., based in Arcadia, Calif.
But, because Stop & Shop is on the East Coast, certain provisions have been made to accommodate the distribution of more than 350 Select items.
"We manufacture slightly less than half of our private-label products," explained Safeway's Plaisance. "In the case of Stop & Shop, they will be doing some of the manufacturing through a third party."
Plaisance used the soft drink products as an example. "We do all the bottling for ourselves and Vons. But for Stop & Shop, we'll supply the syrups that match our formula, and a third party will actually do the bottling, because we don't have a conveniently located bottling plant."
"Both companies met and
agreed the program would be mutually beneficial; it's a good combination," said Vanderwater.
"Safeway has a very successful program and it can be adapted to fill our needs as well. Our customers equate our stores with quality. So, this fits in, because you can get excellent products and still save."
Vanderwater said Stop & Shop plans on eventually carrying more than 300 Select items, including the flagship cookies and soda products. However, the company declined to reveal how the products will be introduced and positioned as far as the regular private-label products and national brands.
According to Plaisance, Stop & Shop initially will purchase approximately 100 Select stockkeeping units, and quickly expand to the full 300-plus line.