RETAILERS ARE WARY OF PRIVATE-LABEL PRODUCE

AMY I. STICKEL

MONTEREY, Calif. -- Many retailers will remain skittish about carrying private-label produce until some of the risks inherent in the distribution chain are eliminated, according to a source from Wal-Mart.

"We don't want to be responsible somewhere in the distribution chain for rejection [of a private label product]," said Kevin Carter of the Bentonville, Ark.-based chain, speaking on a panel of marketers at the Annual Produce Conference here last month.

"Until we find out how to take ourselves out of that risk situation and avoid the costs associated with that, I think many of us in the produce industry are leery of private label," he said. Wal-Mart currently carries two store brands throughout its supercenters and discount stores, Sam's Choice and Great Value. In the produce department of Wal-Mart's Supercenter supermarket/mass merchandise combination stores, however, the chain carries only a very limited amount of Great Value products, Carter said. "But there's a reason for that," he said. "Strategically, we want the branded brand of produce to perform in our stores. We need that recognition so that the customer comes with confidence, to see that they can get the best of everyday low prices on the branded items."

That strategy makes sense for Wal-Mart, since certain national brands are doing an excellent job of advertising already, and consumers are familiar with those names, he said.

"It's part of the foundation, it's part of the mix, because there's trust that's been developed for years with those labels that the customer's not just going to walk away from."

Where Wal-Mart does turn to private label in produce, the chain's proprietary branded items do match the national brands in terms of quality, Carter said.

"In doing so, we want to provide a value to the store. It's going to have a price value as well," he added. Associated Wholesale Grocers, Oklahoma City, doesn't offer a private-label program, according to Dean King, director of produce merchandising for the grocery wholesaler. However, if Associated did have one, the program certainly would focus on quality, he said.

"I think you can never trade down quality for price," King cautioned, "because you're trying to identify the total store with your label."