September 8, 2009
Over the past 18 months, Doug Palmer and his store brands' team seem to have accomplished the impossible -- they revamped and repositioned The Great Atlantic & Pacific Tea Co.'s (A&P's) entire store brands' portfolio of more than 4,000 items across 435 stores.
At the center of the program are the grocer's core value tier brands (national-brand-equivalents) featuring America's Choice, which was streamlined and redesigned, and a line of nutritious foods for kids called America's Choice Kids, was launched most recently. Other value lines that were revamped and continue to expand include Preferred Pet, the Live Better line of health products and remedies, and its brand new Market Spa beauty care line.
While some modifications were made to the company's economy line -- Smart Price -- the largest undertaking in this tier was incorporating Pathmark's value brands into the fold, which the chain acquired two years ago.
Along the way, two innovative mega brands were created -- Via Roma and Green Way -- the former a premium brand centered on Italian cuisine and ingredients, and the latter a niche/specialty brand focused on natural, organic and earth-friendly products. And if that's not enough, another premium line called Hartford Reserve and AC Gold were born.
But Palmer knew full well the undertaking he was facing when he left Safeway to join A&P two years ago when he was recruited by a former Safeway executive, Rebecca Philbert, who now is S.V.P. of Merchandising for A&P.
Palmer's grocery career spans three decades and includes working at companies such as Thriftway, Meijer and Ahold, as well as a seven-year stint to the broker side of the business working for Daymon Worldwide. Throughout his career, Palmer has been involved in store brands and has developed some very valuable expertise.
His work at Safeway on the development of the traditional grocery industry's first organic line, O Organics, and the strategy of marketing the brand to other non-competing retailers is well known. Given his experience, it is not surprising that the prospect of the daunting job as A&P's vice president of own brands actually thrilled him.
"This was a program that had quite a legacy being 150 years old, but over the past five to eight years the program was stalling," he said during an exclusive interview with Store Brands Decisions. "This was an exciting opportunity to come in and rebuild and, in some ways, recreate the store brands' program."
A&P store brands currently represent about 18 percent of the grocer's overall unit volume, and Palmer forecasts sustainable and steady growth.
When it came to tackling the product portfolio, Palmer didn't waste any time deciding what to do first. He went directly to the primary source -- the customer -- for valuable data and information before any brands were redesigned, scrapped or created. What the company discovered was that the America's Choice brand had a huge following.
"It didn't need an overall fix, it just needed a facelift and a more contemporary label," Palmer said. "We basically had three generations of label designs on the shelf and had to clean that up in a hurry."
The logo now appears inside a prominent circle with a star, but the brand's colors still remain red, white and blue. "We wanted to tackle two different things - we wanted the brand to be iconic and we wanted to redesign the logo so it would be easy to spot on the shelf."
But don't believe for a minute that the work on America's Choice was done first and all the other product development work was done later. It was all done on a parallel track, using three design firms focused on different aspects of the brand portfolio. Palmer said his Own Brands team "moved at laser-like speed" to make it all happen.
A&P, which operates stores in eight northeast states and the District of Columbia, segments its retail banners into four distinctive formats: Fresh – A&P, Waldbaums and SuperFresh; Gourmet – The Food Emporium; Discount – Food Basics; Price impact – Pathmark.
"We don't change the strategy of own brands based upon store format. We also don't take a carte blanch approach and put items everywhere. What we do is provide that portfolio of brands within each one of those formats and we determine what best suits their customer base," said Palmer, who described the strategy as flexible and demographically focused. Admittedly, he added, "it does requires a little more thought up front and merchandising rigor to make sure that we select the right items for the right store in the right neighborhood."
Given the heavy competition in A&P's markets, including the likes of Shop Rite, Stop & Shop, Ahold, and ACME, flexibility is key.
"I think we are all addressing [the opportunity], perhaps in some different ways," Palmer said. "Certainly no one else in the northeast has the diversity of banners that we have and diversity of demographics that shop in our stores. It creates a little more opportunity for a diverse portfolio like ours to really resonate with various clienteles."
Editor's Note: Profiles in Innovation: A&P, Part II next week will focus on some of the grocers's newest premium and demographically-focused brands including Via Roma, Hartford Reserve and AC Gold, giving the chain a strong foothold for when the economy rebounds.