NEW DIRECTIONS 1999

HALLIE FORCINIO

There's a fairy tale in which a frog kissed by a princess turns into a prince. In today's supermarket, private-label products are playing the role of the prince. No longer relegated to economy class, many of today's private-label products offer high or even premium quality -- with packaging to match.

"Shopping is a branded experience," explained Allen Adamson, managing director at Landor Associates, a New York-based firm that recently completed redesigns for private-label programs for Albertson's, Boise, Idaho, and H.E. Butt Grocery Co., San Antonio. "There's a realization that private-label branding is one of the more important tools to shape the image of the store," he added.

As a result, the number of private-label products is increasing, particularly in categories that lack differentiation or where there's little preference for a national brand.

Packaging plays an important role by not only reflecting product quality, but also communicating product benefits. This is done through the use of high-quality printing and graphics with appetite-appealing photography or illustration, and informative copy with carefully selected descriptors and flags.

While private-label products can support and enhance store-brand equity, there's another major reason supermarkets are embracing the concept; namely, private labels return a higher margin to the store.

Strategies differ, however, in how private-label products are presented. Some companies use a chain name banner, while others rely on different names in different categories. Large retailers may have even more than one private label in some categories.

Following the Store Banner

A store banner on private-label products reinforces the chain name. The consistency "tends to promote consumer loyalty and makes it easier to find the brand among shelf noise," said Richard Garvin, senior creative director for retail at Watt Design Group, a Toronto-based design consultancy that has created food packaging for Wal-Mart Stores, Bentonville, Ark.

This strategy is common in England where major London-based chains like J. Sainsbury plc and Marks & Spencer sell a wide range of items under their own names. "The English have always been strong proponents of high-quality private-label products," explained Mark Braunstein, vice president of Firebrand LLC, Providence, R.I., a marketing strategy consultancy that has completed projects for retailers such as Dunkin' Donuts, a part of Allied Domecq, Randolph, Mass.

In the United States, Shaw's Supermarkets, East Bridgewater, Mass., a 135-year-old, 126-store New England chain owned by Sainsbury, has followed its parent's lead in private-label presence. Products featuring the distinctive Shaw's logo are found throughout the store. Each carries a quality guarantee seal, and pricing is at least 10% below the competing national brands.

Growers, processors, manufacturers and packagers are required to meet Shaw's quality standards and specifications to ensure product consistency and quality equal to or better than the national brands.

"The Shaw's brand has come to represent quality grocery products," noted Braunstein. The products are premium and the packaging matches.

Since its inception a couple of years ago, Shaw's own label program has grown to include more than 4,500 items. Sales from this group represented 40% the chain's total income in fiscal 1998.

Another chain emphasizing its name on its products is New York-based Dean & DeLuca, a gourmet food shop with five retail outlets, seven Expresso Bars and a mail-order business. It uses a minimalist design developed by Landor. The simple black Copperplate type on a white background appears on bags, cups and other packaging as well as on labels, including those printed on demand for variable-weight products.

A couple of years ago as it was expanding into new markets, Hannaford Bros., Scarborough, Maine, adopted a new corporate brand identity developed by Interbrand Gerstman Meyers, New York. To reinforce the store's attributes, the Hannaford identity is carried through on its private-label products.

Multiple Private Labels

For stores that use different private-label names in different categories, the trend is to move to what Michael Lucas, managing partner at Interbrand Gerstman Meyers, calls "exclusive branding." These private-label products are exclusive not only to the store, but also to the category. They serve not only as a point of differentiation but also as a reason for shoppers to return. Packaging combining both functional and emotive qualities is used as a communicator to grab attention and drive home the benefit of the product, providing a reason for the consumer to buy.

Noting that most national brands rely on brand equity and advertising to make the sale, "communicating key product benefits offers a tremendous opportunity for the retailer to steal value-obsessed consumers," said Garvin.

Although he admits a little corporate value is lost because the source of the product is normally not obvious, using different names in different categories enables retailers to offer products at price points not being served currently.

To build awareness, the benefits message on the package can be reinforced with point-of-sale materials like shelf-talkers, shelf-strips, shelf-dividers and price and item signage. Cross merchandising is another possibility -- stocking lemons near the fish, for example, or vitamins with water.

Another attention-getting technique is display. It offers considerable opportunity for creativity and can present a mix of products.

Finast Friendly Markets, Maple Heights, Ohio, part of one of the world's top food retailers, Ahold, Zaandam, Netherlands, uses multiple private-label names. These include Tops and Sensational for many dry grocery categories and Finast for commodity items such as hot dog buns and frozen french fries.

In the past year or so, some Ahold chains, including Finast, have begun a private-label produce program under the Walter's name. Supporting advertising and point-of-sale materials treat "Walter" as a produce expert who selects the very best quality produce for shoppers to take home. Packaging carries a satisfaction-guaranteed seal plus a statement signed by Walter, "Complete satisfaction or your money back. That's my promise." Packaging helps differentiate Walter's produce. Potatoes, for example, are packed in clear plastic bags instead of the multiwall paper bags normally used for this vegetable. Bags are printed in five colors with the Walter's logo, satisfaction-guaranteed seal and promise displayed prominently.

Creating the persona of "Walter" also meets consumers' need for expertise. In today's rushed shopping environment, there's so little time to evaluate products that consumers look for guidance and quickly make assumptions. As a result, they want to be assured that what they are taking home has been expertly selected or prepared. Packaging can help deliver that message plus provide quick product identification.

A private-label produce program makes a lot of sense because it "encourages consumers to associate the overall store with freshness," said Garvin. It also solidifies a branded image in a part of the store that until recently has been basically brand-free.