Specialty Surge

JEFF WELLS

If the supermarket industry needed a tagline to market the latest generation of store-brand offerings, “This isn't your dad's private label” would be appropriate.

That's because corporate brands have come a long way over the years. Most retailers have done away with the drab packaging and commodity ingredients of old, replacing them with colorful graphics and high-quality ingredients. The result has been higher sales and loyalty, and now companies have the confidence to go even further, to push the envelope and roll out premium lines that not only rival, but sometimes exceed, national-brand taste and appearance.

So stylized and sophisticated are these premium items, in fact, that some retailers avoid referring to them as “store brand” or “private label.”

“It's much more than just a facelift,” said Jim Hertel, retail consultant with Willard Bishop, Barrington, Ill. “It's really about building brands.”

A&P, Montvale, N.J., is one company that's steering clear of the store-brand label with its newest premium lines.

Developed over the past three years, its collection — including Via Roma, Hartford Reserve and the natural/organic brand Green Way — incorporates sophistication inside and out. The packaging is distinct, yet stylishly understated and at times even humorous. Meanwhile, the food itself uses premium ingredients — like the five different types of apples used to make a Hartford Reserve Scrumptious Apple Pie.

If shoppers didn't know any better, they'd think they were buying a national or niche brand.

“Historically, this is a major departure from most store-brand programs, which are not consumer centric,” said Doug Palmer, vice president of own brands with A&P. “We develop brands, not items.”

The ailing economy has helped drive people towards premium private label.

According to a recent consumer survey conducted by the New York-based National Association for the Specialty Food Trade, 37% of specialty shoppers bought more store-brand specialty foods in 2009 than during the previous year.

Now is the time, many sources agree, to build loyalty and transition consumers over to more profitable store brands. But doing so could prove tricky, especially after the recession lifts. That's why it's imperative to focus on quality items that can forge an emotional connection with shoppers, said Marcia Mogelonsky, analyst with Mintel, Chicago. Because, all things being equal, people will always opt for lower prices.

“People are going to think, ‘Why should I spend the extra money if I'm satisfied with what I have?’” she said.

To make sure they get it right, supermarkets like Ukrop's, ShopRite and Sobeys have utilized in-depth consumer research in developing their specialty lines.

Sobeys recently announced it would expand its premium Sensations line from 150 to 1,000 items after research showed consumers wanted more affordable gourmet products.

“Sensations is about affordable indulgences, its about premium product that stands out from a quality perspective and an innovation perspective,” said Chief Executive Officer Bill McEwan during the company's most recent financial earnings call.

A&P found through its research that shoppers were looking for products presented in a clean, uncluttered fashion that offered a unique proposition from other items on the shelf.

“Consumers are open to experimentation in their lives, probably more than most retailers think,” said Perry Seelert, managing partner with United dsn, which helped design Hartford Reserve, Via Roma and Green Way. “It doesn't take a huge marketing budget and traditional media to build a dynamic brand anymore.”

For A&P's Via Roma brand, which encompasses a collection of pasta sauces and other Italian foods, the company sent a photographer to Tuscany, to a tiny hilltop village called Lucignano to take pictures of the locals. The result was candid black-and-white shots showing elderly residents laughing, smiling and talking with one another. A&P decided to use these on the product labels and in advertising and marketing materials.

“Our market area has a large population of second- and third-generation Italians, so Via Roma was quickly embraced by our customers,” said Palmer. He noted that in consumer research, many respondents associated people on the label with a member of their own family.

With the Hartford Reserve line, introduced a year ago, A&P had the task of replacing Master's Choice — one of the first premium private-label lines in North America when it was introduced in 1987. In addition to the homemade apple pie, Hartford Reserve products include coffee, balsamic vinegar, cookies, maple syrup, as well as perishable items like specialty cheese and ham. The tone is serious: Black is the dominant color on packages and in marketing literature, but included on the packaging are short stories about the origins of the ingredients.

“[Hartford Reserve] exists in a lot of categories where you have never typically seen a premium private label,” said Seelert. “It balances the idea of being both sophisticated and approachable, where there is a story to the creation of all the products.”

A&P's greatest challenge may lie with its latest premium store-brand offering, Green Way.

Unveiled earlier this year, Green Way represents the retailer's latest foray into natural and organic — an area filled with national-brand competitors. To stay ahead of the game, the company decided it needed to once again offer products that stood out from the crowd. So rather than focus strictly on organic or natural products, A&P decided the line should include both categories, creating a health and wellness umbrella brand, with a lineup of more than 200 products including salad dressings, preserves and pasta.

In designing the brand, Seelert said it was important to avoid the typical agrarian cues associated with natural and organic: farmhouses, fields, animals grazing. Instead, A&P's team decided on a clean look that emphasized the purity of the products and reduced the feeling of “clutter and over-stimulation” that so many shoppers feel, according to Seelert.

“Green Way is not complicated in its specifications or its design,” said Palmer. “It was important we told the Green Way story through an absence of color.”

Other supermarkets have followed a path similar to the one A&P has taken. Trader Joe's and Whole Foods pioneered the premium store-brand movement, Mogelonsky noted, by offering high-quality items, many of them niche. Two years ago, Ukrop's unveiled Joe's Market, a line of specialty foods that eventually become a stand-alone store.

Wakefern's ShopRite stores also offer a lineup of gourmet products, each with an international focus. There's the hazelnut spread imported from Italy, kalamata olives from Greece and sparkling cider imported from the San Sebastian region of Spain. ShopRite's tagline: “We travel the world to bring you the best of the best.”

And then there's President's Choice by Loblaw. Started 25 years ago, it's the No. 1 selling line in Canada, encompassing 2,500 products — everything from frozen rainbow trout meals to ultra-concentrated detergent.

“They're looking at it as a great way to build their sales as well as their image,” said Ron Tanner, head of education and communications with the NASFT. “All supermarkets really want to be viewed as a quality place to shop.”

But “quality,” in this case, shouldn't just be a marketing angle, said Hertel. It also needs to be the driving concept behind every product.

Retailers are “making darn sure that if their name goes on the outside, that it has to be good on the inside,” said Hertel.