Packaging & Design: Elevating the Store Brands Game

Editor's Note: This is the first of a two-part report on the Store Brands Decisions Packaging and Design Roundtable held at the PLMA Show. Roundtable participants included Doug Palmer, A&P; Michael Kitz, OfficeMax, Wendy Sallak, Topco; Andy Johnson, united; Rob Wallace, Wallace Church; Maria Dubuc, Marketing by Design; and Susan Steinberg, Aisle 9. John Failla, founder and president of Store Brands Decisions, moderated the roundtable. Next week's report will focus on managing the risk of new product development and the retail mindset shift required to execute higher quality packaging and design.

Many retailers with robust store brands likely have already mastered national-brand-equivalent and economy programs and are looking toward the next frontier -- expanding the portfolio to include other tiers such as premium and niche offerings.

While this expansion presents a considerable opportunity, retailers will have to pay much more attention to product packaging and design to elevate their execution and transform themselves into focused retail brand marketers, according to a panel of retailers and design experts who participated in the Store Brands Decisions' Packaging and Design Roundtable.

"It starts with retailers recognizing the power of their brands," said Michael Kitz, vice president of OfficeMax brands. "Five or 10 years ago it was more me-too national brand equivalent, and that still plays a major role in my portfolio our Office Max brand is by far the largest. However, there is core value in creating brands that have an emotional connection with consumers and we keep them coming back to our stores with the realization that it is not just slapping a name or label on the product."

For Office Max, that has meant focusing on product and packaging quality, which means being more demanding with manufacturers and, in some cases, innovating products in-house. The other powerful motivator to increase quality and execution is "the profits we can have with private brands. We make more money with our better brands..." Kitz added.

Packaging is a critical component of store brand success because it is ultimately how retailers connect with their customers, according to Wendy Sallak, vice president of creative services for Topco, a broker that serves as a procurement and design house for its retail members. "The package is what the consumer sees in the store. But our [retail customers] do not have the advertising budgets to really push the brands, so we've got to do it through the packaging -- we have to connect with the customer on the shelf and get them to pick it up."

Whether it is a value-tier product or premium product, the goal is the same, in Sallak's opinion, although execution may be different in terms of the quality of photography, packaging materials used and design talent implemented. "The end goal is the same -- to get that emotional connection with the consumer," she added.

One of the biggest shifts is that retailers are now treating private label as a brand "and I think we’ve taken cues from the European and U.K. markets of really creating brands and subsets of those brands," said Maria Dubuc, creative director for Marketing by Design. "We’re not imitating the national brand any more and we’re not going with a white cheap store brand package look because the consumer won’t buy that anymore."

Unlike traditional consumer packaged good marketers, retailers control the store environment, which enables them to very quickly research new product opportunities, evaluate new product introductions and accelerate speed to shelf, according to Rob Wallace, managing partner of Wallace Church, a brand identity, strategy, and graphic and structural design firm.

"You guys need to take that as your innovation," Wallace told retail members of the roundtable. "You have to become the innovation leaders, and we'll mentor your processes. I think this is the next generation of the retail brand maverick -- the retail brand marketer."

Doug Palmer, vice president of own brands for A&P concurred with Wallace, adding that an additional value proposition of store brands is profit replacement of displaced consumer packaged goods company SKUs as retailers rationalize the number of brands they carry in certain categories.

"There are some brands out there that are very strong and will be around for a very long time to come, but there are a lot of categories -- especially in the organic and natural space -- where you only need one brand," and that solitary brand could be a store brand Palmer said. "So it's not just about making more money, it's about creating equity, ownership and a proprietary relationship with the consumer.

"At the same time you are creating a value asset for the company," he added, pointing to Safeway's O Organics, which he said is now the number one organic brand in the country. "Retailers can do that - they can create number-one brands in their markets. And once retailers start identifying the segments they can do that in and the brands they can do that with, you're going to start seeing this tsunami of branding throughout the country."

Retailers at the top of the product innovation and packaging and design pyramid are really creating destination brands, according to Susan Steinberg, vice president of Aisle 9, a branding and creative agency. "The concept of a destination brand - an exclusive retail brand that generates relationships with consumers -- drives patrons to your stores and creates consumer loyalty. Strategically it's a combination of developing products against consumer insights and marrying that with the retailer's vision and equity for the company."

Interestingly, Wal-Mart's Great Value brand elicited healthy debate around packaging design and quality, with some design firms disappointed in the execution of the world's largest retailer that influences so many other operators. One designer described Great Value as generic throwback.

"Personally, and from our point of view, that is a major mistake on [Wal-Mart's] part. They've gone generic," said Andy Johnson, creative partner at united*, which designed A&P's Via Roma Italian store brand. "What they've done there is taken the industry backwards."

Retailer participants, however, believe the Great Value redesign is a marked improvement over the brand impression Wal-Mart's store brand had previously. While Great Value is now firmly a value proposition to the consumer in this soft economy, it "leaves open an opportunity for another tier" when the economy turns around, Palmer said.

The store brands rubber will meet the road after the recession when the industry and shoppers won't be quite as fixated on price and new product and packaging innovation will more forcefully dictate success, Palmer added. "As much as we like to praise ourselves about the growth of our own brands, we haven't been driving it; the consumer has been driving it. We've been pretty much asleep at the wheel."

While some retailers are hitting the mark in elevating their store brand packaging and design execution, roundtable participants offered a few of the most frequent and costly mistakes they see made:

Editor's Note: Part II of this Packaging and Design Roundtable report, which will appear next week, will focus on managing the risk of new product development and the retail mindset shift required to execute higher quality packaging and design.

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Packaging & Design: Elevating the Store Brands Game