MAKING PRIVATE LABELS STICK

MARYELLEN LO BOSCO

Some retailers are beginning to "think outside the box" when it comes to marketing private-label grocery products, but trend watchers say that supermarkets could be doing a lot more to enhance the image of their store brands and could work harder to brand their stores.

Some of the innovative strategies that retailers such as Kroger Co., Safeway and Ahold have used include publishing their own magazines, in which they promote private-label products as well as their stores. And some chains, such as Jewel Food Stores and the aforementioned Safeway, team up with outside organizations to sponsor major events and, in the process, promote their private labels.

Safeway, Pleasanton, Calif., for example, has a close relationship with left-coast, upscale Sunset magazine, and, for the last three years, has been one of the major sponsors of "The Tastes of Sunset Show," an annual event. Last year, Jewel, Melrose Park, Ill., participated in a citywide celebration of Chicago and had the opportunity to demo numerous products and promote its stores.

"Safeway has a great alliance with Sunset and values the Sunset audience as key and potential customers," noted Beth Fazo, marketing programs director for Sunset Publishing, Menlo Park, Calif. "[Safeway] brings a variety of their Select products to sample and uses [the event] as a venue to promote their store brands.

"The event is very upscale and well done. You feel like you are coming to someone's private backyard party," Fazo continued. She noted that last May, Safeway showcased its salsas, cereals, coffee, cookies and breads at the Sunset show. Safeway also had its food expert, Marlene Sorosky, who writes a section of the retailer's magazine, Select, on the cooking stage to prepare some meals that were later sampled by the audience.

The September/October issue of Select featured several cooking articles, including one called "A Passion for Pumpkins." More than $7 worth of coupons for Select grocery items, including frozen waffles, salsas, salad dressings, drinks, pet food and detergent, appeared in the magazine, along with eight recipe cards from Safeway and Sunset. Recipes called for both Select and national-brand ingredients. Sunset Publishing creates the editorial content for Safeway's magazine. The publication is also available in Vons and Dominick's stores.

Meanwhile, the November/December issue of Goodness From Kroger, Cincinnati-based Kroger's upscale magazine, included $14 worth of private-label coupons.

Kroger's magazine, which is produced by Southern Progress Corp. (the publisher of Southern Living), Birmingham, Ala., has many feature articles that are not about food. The publication looks like a mainstream magazine, and recipes in the magazine do not call for brand ingredients. But many of the coupons in the holiday issue were for holiday items, such as Kroger-brand canned yams, spices, ice cream, coffee, ham and so forth. This went along with the theme of holiday recipes, of which there were many in the issue.

In addition, a full-page ad, featuring what appeared to be Kroger employees decked out as Santa Claus and his helpers, touted the Kroger brand promise: "Try it, like it, or get the National Brand free."

While efforts such as these are impressive, it may be true that most supermarkets are not getting enough mileage out of their excellent private brands.

"The failure to effectively market, advertise, and promote private brands is a tragic flaw in American retailing," claimed Burt Flickinger 3rd, managing director of Reach Marketing, Westport, Conn. "It is costing retailers significantly in lost profits and return on investment."

Flickinger noted that British and Canadian profitability on private label is twice as high as in the United States because these countries give tremendous marketing, advertising and sampling support to their private-label products. He urged supermarkets to invest 5% of their private-label profits back into marketing and advertising.

Some additional marketing strategies that retailers can use include making more deals with national-brand manufacturers, in which sampling and couponing programs include noncompeting private-label products; pricing private label much closer to national brands; marketing private brands through direct mail; and participating in more events and community activities.

"Wegmans and H.E. Butt are two of the best retailers in terms of events," Flickinger said. "Wegmans teams aggressively with professional sports and local charities, while H-E-B teams with collegiate sports and local charities in both Anglo and Hispanic communities." Spartan Stores, Grand Rapids, Mich., partners with minor baseball leagues to promote private label, as well as with charitable events, such as the Michigan Special Olympics. "We've been the exclusive sponsor of their summer games," said Tom Berg, director of corporate brands. "Through the purchase of our products [from February to June], contributions are made to the event." Spartan also provides hundreds of volunteers, both store employees and recruits from the community, for the June event, as well as plenty of signage and private-label products to feed the hungry helpers.

Berg noted that Spartan promotes its private label "52 weeks of the year.

"We've always treated our private label as a brand," he said, "and we use the same tactics a brand would use." These include, for example, promotional ads that bring together products by category. "Right now we are promoting baking-related products." Spartan also provides retail-support services that will give retail customers display suggestions and point-of-sale material.

Stores distribute electronic coupons for private-label products, and the wholesaler does direct mail for private-label items, targeting products to consumers not currently shopping at Spartan stores. In the case of Spartan consumers, a mailing may advertise a category that has not recently been shopped.

Spartan gives its private label exposure through numerous other community events and charities, such as road races, golf events and food-donation efforts, and it uses its own packaging to cross merchandise items. For example, a package of crackers may have a coupon for cheese.

The company will soon be upgrading its packaging to give it a more premium look, Berg said. "We are always looking for new and creative ways to promote our brands, both from a wholesaler and competitor standpoint."

Spartan prices its national-brand equivalent 10% to 15% below the national brand. "We try to position it as the best value in the section," he said.

Piggly Wiggly, Memphis, Tenn., also prides itself on offering a quality brand with a value price. Jim Garrison, vice president of marketing and advertising for Piggly Wiggly, did not agree with the notion that private brands should be priced closer to the national-brand competition.

"Our distinction is price. What would be the purpose of becoming a 'me-too' and pricing private label exactly the same [as national brands]?" he said.

About 70% of Piggly Wiggly's private-label products are now wrapped in the franchiser's new packaging. Of the approximately 1,250 stockkeeping units in the private-label line, more than 1,000 are frozen and grocery items.

Piggly Wiggly positions itself as the "downhome, down-the-street store" in smaller markets in the mid-South. According to Garrison, one of the important services that Piggly Wiggly provides its franchisees is a brand name for their stores, as well as a mini-billboard, in the form of private-label products.

The Piggly Wiggly brand is promoted through a variety of vehicles, from point-of-sale material to television advertising. Newbern Rooks, director of private brands for Piggly Wiggly, noted that the franchiser will also tie its private brands to national promotional events, such as Dairy Month (with a Rise & Shine dairy promotion), National Frozen Food Month and the Fall Harvest Sale.

"These events are national and we promote national and private brands," said Rooks. "As we get closer to the holiday season, we'll promote canned vegetables, holiday items like canned pumpkins, and candy."

"Back-to-school is becoming a huge opportunity," said Garrison. "A lot of national-brand manufacturers are realizing that, but that also becomes a good time to spend down and try a private brand. For example, private-brand peanut butter is 10 or 15 cents cheaper, and that's an opportunity to hook a [new] customer."

Piggly Wiggly also has its own convention each year, usually in late June or early July, in which retailers come to buy products. "This is one of the ways we get to show our new items," Rooks said.

Ed Kolodzieski, president of Acme Markets of Virginia, North Tazewell, Va., told SN that this year the retailer infused new life into the "Labels for Help" program by increasing its donation to 15 cents per label. For each participating nonprofit organization, such as schools, charities or churches that brought in an eligible private label during a 60-day period, the retailer tripled its usual donation. Participating labels included Acme, Hy Top, Better Valu, Morning Fresh, Select Brands and Our Family. The promotion was run in three stores.

While all the retailers SN spoke with pay a lot of attention to private brands, none seemed to indicate that it might be time to seriously rethink the way supermarkets promote these products. However, a consumer-behavior consultant, David Wolfe, of Wolfe Resources Group in Reston, Va., indicated that the weathervane for branding -- including private-label branding -- is pointing in a new direction. Perhaps retailers ought to sit up and take notice, he said.