Store Brands

APR 2016

Store Brands delivers unprecedented strategic and tactical information needed by retail executives to develop and support compelling, differentiated store brand programs to build customer loyalty.

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6 Store Brands / April 2016 / www.storebrands.info The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Rethink the status quo I t's no secret that the traditional supermarket is hurting. As retail continues to fragment, non-traditional formats such as e-commerce, fresh concepts, dollar stores, wholesale clubs, supercenters and limited-assortment grocery outlets are growing at a rate that outpaces inflation, said Jim Hertel, senior vice president for Long Grove, Ill.-based Willard Bishop (an Inmar company), in a March 18 session held during the Private Label Manufacturers Association's Leadership Conference in Miami. "ALDI right now is the hottest retailer in this country," he added. Meanwhile, supermarkets, drugstores, mass merchandisers and c-stores lag behind in terms of growth. And if they are to thrive — or even survive — in the years to come, supermarkets, in particular, must adapt to mesh with today's unique market dynamics. According to Hertel, today's traditional supermarket boasts an assortment that's "too broad, undifferentiated and off-trend." To right-size the assortment, retailers will want to offer fewer national brands — and add differentiators in the form of specialty, natural and organic, and, of course, private brand items. And the traditional supermarket has other challenges, too. Pricing is too high and too easy to compare; traditional promotional strategies such as the circular are less than efficient; and the store layout is "out of touch." Hertel pointed to fixes in the form of fair pricing with fewer head-to-head comparisons, more-targeted promotions, and a revamping of space that considers the way people shop for food today. The latter fix, meanwhile, likely should also involve a ramp-up in terms of prepared foods — an extension of own-brand territory. "I think prepared foods in-store is probably the next big thing," Hertel said. He also pointed to five "growth levers" traditional retailers are expected to use going forward: better-for-you products, solutions (cross-department and information-based), occasions (behavior-driven, multi-category and more), disruptive innovation and e-commerce. "If you get in early to the growth areas, you're going to make gains," he stressed. Of course, store brands could be a big part of each one of these growth levers. With few mega national brands, the natural and organic arena, for example, spells private brand opportunity under the better-for-you growth lever. And meal solutions that feature own-brand items as ingredients could differentiate a retailer under the solutions growth lever. Inside and outside the store brand space, the worst thing a traditional retailer could do right now is to accept the status quo. One need only look to the now- defunct A&P, at one time the largest grocery retailer in the United States, to understand the potential consequences of not responding to a changing market. "A&P not only failed in connecting and appealing to customers, but also in modernizing its dated look," wrote Hayley Fitzpatrick in a July 22, 2015 BusinessInsider.com article. "This led the business to be overrun by competitors like Whole Foods and Kroger that appealed more to customers whose interests have shifted in the past years to include organic and healthy food." SB Editor's Note Kathie Canning, Editorial Director [email protected] Business Intelligence for an Evolving Market 570 Lake Cook Rd. Suite 310, Deerfield, IL 60015 (224) 632-8200 • Fax: (224) 632-8266 ADVERTISING & EDITORIAL Associate Brand Director Suzanne Caputo (201) 855-7628 [email protected] Regional Sales Manager Jim Philbin (224) 632-8182 [email protected] Editorial Director Kathie Canning (224) 632-8233 [email protected] Managing Editor Michal Christine Escobar (224) 632-8204 [email protected] Advertising/Production Manager Bette Boyers (224) 632-8251 / FAX: (888) 445-1123 [email protected] Creative Director Jeff Bowes [email protected] Contributing Writers Dana Cvetan, Meghan Hogan, Ryne Misso, Rich Mitchell, Bryan Salvage EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION VP/Custom Media Division Pierce Hollingsworth (224) 632-8229 [email protected] SVP/Carbonview Research Richard Ratcliff (561) 277-6144 [email protected] Production Manager Anngail Norris Strategic Marketing Director Bruce Hendrickson (224) 632-8214 [email protected] Promotion Director Robert Kuwada (201) 855-7616 [email protected] Director of Events Ken Romeo (224) 632-8181 [email protected] Director of Digital Strategy Matt McGuire (224) 632-8180 [email protected] Director of Market Research Debra Chanil (201) 855-7605 [email protected] Audience Development Manager Shelly Patton (215) 301-0593 [email protected] List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Reprints and Licensing Wright's Media (877) 652-5295 [email protected] Subscriber Services/Single-Copy Purchases (978) 671-0449 [email protected] CORPORATE OFFICERS President & CEO Kollin Stagnito [email protected] Senior Vice President, Partner Ned Bardic [email protected] Chief Brand Officer Korry Stagnito [email protected] Vice President & CFO Kyle Stagnito [email protected]

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