Operators are finding that there is more to private labels than pure price-point positioning. Promotions, traditionally employed to boost sales of nationally advertised products, are being overlaid onto private-label strategies with stellar success.
"The most important thing to note is that retailers are now focusing on their own [private-label] promotion plans more," said Ken Harris, a partner in Cannondale Associates, an Evanston, Ill.-based consulting firm. This newfound structure is helping retailers reap rewards, he said. "They plan more and they plan better as a result of this focus."
Some out-of-the-box options take private-label promotion out of the store walls. Operators around the country are sponsoring community and sporting events, all the while promoting their private-label items through sampling, couponing and special offers. Softer promotional efforts can be felt through private-label products being used on stage at live-cooking demonstrations at various market-area celebrations.
These food-related events offer a special service for operators delving into community celebrations. Safeway, Pleasanton, Calif., regularly sponsors events at upmarket Sunset Magazine's annual "Tastes of Sunset" show. Dominick's Finer Foods, Northlake, Ill., hosts a taste tent at the annual "Taste of Chicago," along with sponsoring cooking sessions at the celebration's demonstration area. In all cases, operators aggressively promote their store brands through sampling and special offers.
"With the realization that our own label is our own brand, we are starting to look at marketing [private label]," said one Western operator. "It's really multifaceted. We are closely looking at all sorts of promotions, ranging from traditional in-store circulars and cross merchandising to innovative uses of loyalty cards and special events. We are just getting better at what we do."
Sporting events provide another platform for retailers to promote their private-label programs through store name recognition.
Wegmans Food Markets, Rochester, N.Y., aligns itself with professional sports along with local charities. H.E. Butt Grocery Co., San Antonio, teams up with collegiate-level athletics. Spartan Stores, Grand Rapids, Mich., combines its attachment to sports and charities with Special Olympics tie-ins. Percentages of sales of consumer- purchased Spartan-brand items are donated to the Michigan Special Olympics.
H-E-B uses a sweepstakes method to create excitement for its own brands. Customers are invited to enter a weekly drawing and the chain's Labels Lookout Patrol visits three selected customers. Once in the customer's home, the Lookout Patrol can award the contestant $95 for each qualifying item in the home for up to seventy-five items or $7,125. Qualifying products include H-E-B, Hill Country Fare or Personal Expressions brand items.
On-line opportunities offer another method of promotion, as operators harness the power of the World Wide Web. Internet sites abound with private-label promotional activity. For example, Jewel-Osco, Melrose Park, Ill., helps time-crunched consumers with an on-line recipe bank. Although most supermarket sites offer the same service, Jewel-Osco takes a somewhat extended approach in that many of the recipe selections tout the chain's President's Choice line. Kroger Co., Cincinnati, also uses the muscle of the Internet to promote its Kroger Brand products. Consumers entering the chain's site can select from a variety of value-oriented "U-pons." These electronic coupons are designed to spur trial of the operator's own brand.
Another new age promotional effort retailers are exploring are loyalty-card initiatives. Retailers predict that loyalty programs may be a viable vehicle for the delivering of the private-label proposition, and they report that as data-mining capabilities deepen, they are in a position to offer value to loyal customers.
Purchase history is one aspect of data mining cited by retailers as a tool to help determine what to offer customers that is above and beyond normal discounts. Most retailers report this information assists them in rewarding their best customers, fostering loyalty. Adding private label into the mix furthers the cause, since private label is chain-specific.
"Those retailers that have really taken a look at loyalty-card information have a better understanding of their consumer's purchase patterns and can leverage that knowledge to better meet the needs of their customers," said Harris. "Those who are coupling private label with frequent-shopper card information are finding some answers to assortment and price."
Once analyzed, consumers' shopping information can also be put to work in developing in-store circulars. Once retailers gain a better understanding of their customers, and who buys what products, they can set down strategic appeals to those who select private-label products.
"We communicate quality to consumers. Now we are dedicating merchandising efforts to our label," said Craig Espelin, corporate director of store brands at Supervalu, Minneapolis. "As the focus builds image and equity in the store, private label grows."