FUNDING ON RISE FOR PRIVATE-LABEL PROMOTION

STEPHANIE FAGNANI

Should a Hollywood film be made based on the grocery world a memorable tagline could very well become "if you promote it, they will come," as promotions take on more significance to the supermarket industry as a whole.

More of the industry's dollars are being spent on trade promotion for both national and private-label brands, with customer dollars increasing from 60% to 61% of the marketing budget in 2001, according to a study conducted by Cannondale Associates, Evanston, Ill.

Of those customer dollars, 51% are comprised of trade promotion and 10% are from account-specific marketing, according to Cannondale's "Trade Promotion: Spending & Merchandising 2001 Industry Study."

The consumer packaged goods industry has spent an incremental $16 billion on trade promotion in the last two years, Cannondale said. Retailers (77%) placed a higher degree of importance on private-label growth than did manufacturers (45%) during the research firm's "2001 Category/Loyalty Management Study."

However, this is something that needs to change in order for store brand promotion to flourish as it should, Ken Harris, partner, Cannondale, told SN.

"The holy grail for private-label manufacturers should be to provide enough funding as the brands do for major events as they develop their own label as a brand," Harris said.

Of course, he admits, this has been easier said than done in past years, as having the financial prowess to do so has been an obstacle for private-label manufacturers for some time now.

"A lot of it has to do with the money the private-label manufacturer has. All the money is often built into the cost of goods. It's a circular problem," Harris said.

Despite funding issues, some retailers still approach store brand promotions with as much vigor as national campaigns.

Michael Houser, vice chairman and executive vice president, Fresh Brands/Piggly Wiggly, Sheboygan, Wis., told SN his stores take "a very organized approach" to promoting private label -- which consists of product lines supplied by private-label cooperative Topco Associates, Skokie, Ill.

"It's a matter of life. It's the way we do business," Houser said. Fresh Brands -- which includes the Piggly Wiggly and Dick's banners -- carries 2,032 private-label stockkeeping units that span all categories. Included are the Topco Food Club grocery items, Top Crest household and paper goods items, Top Care health and beauty items, Pet Club pet foods, Value Time generics and Full Circle organic products, of which 23 more SKUs will be added by year's end, bringing the total in that line to 54.

Some of the in-store promotions centered around these products have included a monthly Wall of Values program, instituted in January of this year and rolled out to 100 stores.

Also, Fresh Brands participates in tie-in merchandise programs with national brands during which, for example, a national brand ice cream will be advertised with a store brand topping or private-label cone, or a national brand laundry detergent will be paired with a store brand fabric softener.

"It's very consistent. You can't just jump in and out of promotional activity," Houser told SN.

Fresh Brands is also about to embark on the second year of its Great Movie Giveaway promotion, which will run from Oct. 15 through Dec. 12. During the promotion, every customer that spends a cumulative $60 on Food Club items will receive a free movie ticket to Marcus Theaters, with 100 locations in Wisconsin.

"Store brands are a key way to profit for our operators. We treat it just like a brand. It's a major way of going to market for us," Houser said.

At Topco, the coop has a dual approach to store brand promotions, according to Dan Mazur, senior vice president, Center Store. This includes scheduled theme promotions -- like "Top of the Crop," which focuses on canned goods -- and more customized programs.

"Our members are cognizant of the need to promote corporate brands," Mazur said. "They are keeping abreast of what the national brands are doing."

Working with Daymon Associates, Stamford, Conn., whose operatives work on site with members to help with things like category management and scan data evaluation, Topco also enforces a push/pull tactic: the push referring to major theme sales with dominant displays and advertisements that help build repeat sales, and the pull referring to promotions that cause shoppers to seek them out, such as a recent Breast Cancer Awareness promotion instituted by Eagle Foods and Penn Traffic, which saw 2 cents per unit sold going to the cause.

These types of store brand promotion do not fall on deaf ears, either with respect to the consumers purchasing the products involved or industry peers.

In fact, to recognize retailers who have successfully instituted a store brand promotion campaign with the help of their suppliers, the Private Label Manufacturers Association, New York, distributes awards during its annual trade show. Next month's "Store Brand Mania" show will feature the Salute to Excellence Salutes the Store awards gala, among other events (see story on Page 64).

An award will be presented to a retailer that has shown creative excellence on the selling floor of the store.

"There is so much zeal for selling store brands and it is so creatively expressed," said Andy Lewis, vice president of the grocery products group for Kroger's manufacturer and current Chairman of the PLMA.

Because of his affiliation with Kroger, Lewis cannot participate in the judging process that goes into the awards ceremony. However, he told SN the PLMA looks at all grocers -- independents and large chains.

"In a fast-paced business climate the only brands they [retailers] can count on to differentiate themselves from the competition is their own brand," Lewis said.

"If the quality is equal to or greater than, why would you do anything else?"