RETAILERS PITTING PREMIUM STAMP ON PRIVATE LABEL

CHRISTINA VEIDERS

NEW YORK -- The movement to premium private-label goods is expected to cross over and further affect the health and beauty care aisles of mass market channels, including supermarkets.

"Upscale private label keeps getting bigger on the health and beauty care side," Brian Sharoff, president of the Private Label Manufacturers Association, told SN in an interview at the organization's headquarters here.

"Two years ago you couldn't name the retailers with these premium lines. Last year you could name two and now you can name 10. It will explode. Everybody will be doing it," said Sharoff about the hottest movement in private label.

This trend will be examined during a seminar entitled "Health & Beauty Care Going Premium," presented by consultant Shawn Clark, vice president of Median, Austin, Texas, on the opening day of PLMA's trade show at Chicago's Rosemont Convention Center, Nov. 17 to 20.

This year's event is expected to be the biggest ever, according to Sharoff, with 3,500 retailers, wholesalers and other visitors expected to attend. Overall attendance is projected to top the 5,000 mark. There will be more than 1,500 exhibit booths featuring more than 20,000 different products. More than half of the show will be devoted to nonfood -- 28% to HBC and 26% to general merchandise.

In the supermarket trade, examples of retailers who have developed premium packaging, positioning and merchandising to extend their brand equity and build imagery in personal care and cosmetics categories are Portland, Ore.-based Fred Meyer Inc. with its Personal Choice line, launched last year, and Denver-based King Soopers with its beauty care line, supplied by its parent, Marks & Spencer of the United Kingdom.

American Stores Co., Salt Lake City, also just launched Daily Ritual, a premium HBC line with 58 stockkeeping units in four categories: spa, skin, sun and salon. The line, priced 20% below branded equivalents, is being merchandised at the company's Osco and Sav-On drug chains.

Premium lines noted in other channels of trade are: CVS's Down to Earth line, comprising 12 stockkeeping units of bath gels and lotions, and Eckerd Drug Co.'s Paul Milan, a cosmetics line, and Spa Classics, a skin care line.

Premium private label has become an integral part of Sears, Roebuck's re-engineering strategy. The retailer rolled out Time Out, a bath and body line with 180 items. Its Circle of Beauty line is expected to generate $500 million by the year 2000.

According to Sharoff, it's the drug chains that are leading the charge into premium HBC development and overall department private-label growth. "After all, it's their meat and potatoes," he said.

"Everyone agrees that chain drug private label has been growing at a phenomenal pace," he said.

Yet, according to Chicago-based Information Resources Inc. figures published in PLMA's 1996 Private Label Yearbook, supermarkets are keeping pace in store-brand HBC, with a 5% to 8% growth rate in unit share posted over the last four years, Sharoff pointed out. "Supermarkets are attempting to stay competitive with drug chains. That means they will expand their private label to a larger extent by getting into more categories, because that is what drug has done," he said.

Meanwhile, mass merchandisers are posting modest growth in HBC unit share, up just 0.9% in 1995. "This suggests there is a slowdown in HBC private label in the mass channel. This may be caused by a number of things. The industry is in such a tough competitive whirl. The effect of discounting is so great in this channel that brands benefit and private label is not built up," Sharoff commented.

Regardless, the trend toward premium private label in HBC is not easily seen in the IRI overall department figures, Sharoff pointed out. The premium segment is not tracked separately.

"It's tough to compare formats. It's easier to compare chains within the formats. The drug chains like CVS are more aggressive and committed to expanding their private label more quickly than a comparable supermarket," Sharoff said.

He added there are supermarkets doing the same thing as CVS in terms of extending their image through dramatic-looking store packaged lines, but it isn't necessarily taking place in HBC. "A&P is doing an incredible job building up Master Choice and America's Choice, but they are still building Healthy Pride as their HBC private label. Whether they plan to take the next step and expand it dramatically using America's Choice or continue to segment the brand has yet to be seen. They are doing wonderful things, yet HBC is still in the development stage," he said.