STORE BRANDS SEEK PRICE-VALUE BALANCE

JOEL ELSON

A significant price difference, plus value, are essential for private labels to make inroads in general merchandise categories such as light bulbs, hosiery, photo/ film, batteries, foil pan and mops and brooms at supermarkets.

According to the Private Label Manufacturers Association 1994 Industry Yearbook, private-label dollar share gained 0.5% last year in general merchandise and represented 8.3% of general merchandise department sales at grocery stores. In comparison, health and beauty care private labels gained 0.8% in share, and represented 8% of the HBC dollar volume generated at grocery stores. "We only bring in a private label when we can get equal to or better than national brand quality, and price it less than the national brand. We want to offer savings to the consumer and make more penny profit on it than the national brand," explained Ken Johnson, vice president of nonfood merchandising at Hannaford Bros., Scarborough, Me.

John Adams, director of nonfood at Affiliated Foods Southwest in Little Rock, Ark., said: "The key to a store-brand program succeeding at supermarkets is that there's enough of a price differential between the national and private-label brands that will motivate the consumer to seek a value product."

Wayne Gresl, director of nonfood at Copps Corp., Stevens Point, Wis., said: "Just because national-brand manufacturers get more aggressive with their costs doesn't mean that there's any more opportunity for profit. In private label, at least, we have some opportunity for profit; not every competitor handles the same one. And to the customer, private label is an individual brand."

In general merchandise, Hannaford Bros. carries store-brand panty hose and light bulbs.

Johnson said assessing private label in general merchandise requires continual evaluation. "Do you need it to make extra money versus the brands? Or do you need it because it truly is a brand, and consumers want that brand based on the value you give to them?" Johnson said. Johnson mentioned that national manufacturers are protecting their turf by lowering prices and asserting the value of their products. However, merchandising private label in some product categories is necessary in order to compete.

"To be competitive you have to have the private label, and it can be the leading item in the category," said Johnson.

He added that private-label general merchandise in supermarkets appeals not only to the price-sensitive shopper, but to all consumers who are conscious of getting a value. "There's a difference in getting something cheap that's no good. We look at private label as offering something of value," Johnson said.

Consumers choosing private-label general merchandise at the supermarket may think of it as a separate and distinct brand, with an image comparable to the major brands elsewhere on the shelf, according to Gresl at Copps Corp.

"We carry coffee filters in the IGA label, which have always done quite well and they are our top-selling filter," added Gresl. "Sales are constant. I think consumers recognize the filters as a formidable brand."

Copps carries only one size of its store brand coffee filter under the IGA label. "We are interested in getting into more general merchandise under the IGA label," Gresl said. "If we can find the suppliers that are willing to make that particular label, we'd like to expand our IGA general merchandise."

He sees greater store-brand general merchandise sales potential, "even as the national-brand manufacturers are doing all they can to lower prices to induce consumers to stay with their products."

According to Gresl as major vendors attempt to shave expenses to become more efficient and pass along these lower product costs to wholesalers and retailers, "other trade classes also begin to reflect lower retails in their store brands from light bulbs, film and rubber gloves to panty hose, motor oils, mops and brooms and automotive chemicals."

Indeed, private-label general merchandise assortments "allow us to remain competitive with the other retailing formats," said John Adams of Affiliated Foods Southwest.

Affiliated's private-label variety includes automotive chemicals, anti-freeze, mops and brooms, light bulbs, panty hose and rubber gloves. He added that as private-label sales have grown the major brand manufacturers "have started lowering their prices to protect their territory." Adams said this has started happening in light bulbs and cotton jersey gloves. "You can buy jersey gloves in a national label as cheap as you can in a private label now," he said.

Nash Finch Co., Minneapolis, Minn., which carries Our Family private-label latex gloves, coffee filters, mops and brooms, sponges and light bulbs, has had "excellent growth in the past two years as consumers view it as a national brand," said Kim Schell, general merchandise buyer. Schell said sales benefited by "offering consumers value, positioning it on the shelf next to the name-brand merchandise and promoting it diligently in our major rotos, which enhances the brand's image."