HOW TO SOURCE GOURMET PRIVATE LABEL

Barbara Murray

CHICAGO -- Ten Do's and Don'ts for retailers considering sourcing gourmet private label were supplied to SN by Frank Mayes, a consultant here who is a principal in Mayes Consulting.

The first three are general admonitions, he said. The next two have to do with developing a focus, and the last five relate to the procurement process.

"First, I think that anybody who goes into a program like this has to realize that it's a whole new world," Mayes said. "The retailer must now do the marketing thinking, rather than relying on the vendor."

Secondly, he said, do not copy someone else, whether it's a President's Choice or a Safeway Select. Look at your own customers, and develop a focus that way. Determine your own uniqueness.

Thirdly, forget about the "quality equal to the national brand" idea. Go it one better.

4. Decide what you want this program to be. So, define your desired result. Are you trying to bring new people into the store? Are you trying to give customers a new choice? Develop it defensively. Look at what role you want the profit structure to play. Do you want to change your store image? Maybe your answer is "All of the above." Each retailer must figure this out for himself.

5. As a means to an end, there are lots of different options. You may want to develop a healthy, good-for-you line. My advice is to go for volume. You don't need to have everything.

You don't need capers in your program. Are the items going to be ingredients? Prepared foods? Meal replacement items? My recommendation would be "All of the above."

6. It is necessary to do exhaustive testing to know what the competition is up to. Buy data from Information Resources Inc. TransUnion's income data by ZIP code can help you decide in which of your stores the program might succeed.

Retailers are used to relying on the vendor. A switch to a private label specialty line means you cannot do that. You have to use focus groups and outside kitchens for testing. 7. Stay objective. Don't develop the program to your own taste. Understand your market. 8. Have one single source of supply per item. At first, this should be per category. Don't have two guys trying to make the same thing.

9. Do your intellectual property homework. You own the formula or the recipe.

10. The vendor you use quite possibly won't be your usual private label vendor. He is used to doing the same as the national brand. It's a whole new culture.

If you do use your current vendor, be sure he has the skill to go beyond the standard "same as the national brand."

Finally, negotiate with kid gloves, not with hammers.