Retailers Seek 'Art and Economics' From Private Brand Community

Long beyond the point of being corporate knockoffs, private brands have evolved into engines of distinction, growth and value for the nation’s largest conventional grocery chains.

In separate presentations that premiered during the Private Label Week event, officials behind the own-brand programs at Kroger and Albertsons Cos. urged potential suppliers to look to them with their innovative ideas, consumer trend data and a commitment to cost control that can support this critical element of their respective businesses.

“Before we put an item on shelf, we ask a simple question [of ourselves]—would you recommend this to a family or friend? This simple question instills passion and purpose for our team,” said Brad Studer, Kroger’s senior director of our brands. “When you’re partnering with us, I want you to ask the same question of yourselves.”

Albertsons officials likewise emphasized their own appetite for innovation among product suppliers, urging those with new ideas and data to join the 650 private label suppliers currently doing business with the Boise, Idaho-based retailer.

“Innovation is huge for us,” said Alice Chen, VP of own brand sales and marketing for Albertsons. “If you have a new technology, new innovations and new things you're thinking about, we want you to use Albertsons as a test pilot.”

Chen’s message was among a rash of practical suggestions for suppliers from Albertsons, who was represented by Chen; VP of Strategic Sourcing Don Davidson; Own Brands VPs Nancy Cota and Beto Galvan; and Chad Coester, the retailer’s SVP of own brands, during the presentation. This team emphasized its commitment to diversity in assuring its own brand product portfolio—some 12,000 items under nine brands—is meeting the varied needs of its shoppers.

Davidson urged potential new suppliers to familiarize themselves with Albertsons’ standards, but also to recognize that its decentralized business model puts decisions in the purview of its local operating divisions. “That means we have different price points, different promotions [and] different assortments at each division, and understanding who to talk to in our organization is really important,” he said.

“We also want you to have a ruthless pursuit of cost improvement,” Davidson added. “We are  constantly trying to take costs out of the system. It allows us to compete against the brands and our competitors. So if you have that approach, and you have that mindset, you can be successful with us.”

Studer described Kroger’s approach to cost efficiency and innovation in private brands as “a carefully crafted combination of art and economics” grounded in “four Ps,” comprising people, perspective, performance and pride.

Studer noted the wide array of customers—the people in the first P—are driving development and innovation in emerging categories such as organics and plant-based food the retailer has attacked largely through private brands.

Perspective comes from a “point-of-view” the portfolio espouses, noting a three-tiered approach to categories such as ice cream, where Kroger’s base brand includes unique flavors such as Unicorn Swirl; the Private Selection line, which delivers “culinary-forward” products emphasizing textures for an indulgent eating experience; and its better-for-you Simple Truth line, which interprets ice creams through eating and diet trends such as keto and organics.

Performance reflects what Studer called “high standards” for the own brands group. “We're not interested in the status quo. Our goal is to set new standards. This is why we have rigorous testing tasting and auditing processes, because details matter," he said. 

Private Label Week was a series of virtual conferences and presentations from the Private Label Manufacturers Association, an industry trade group.