Meijer and Kroger Forecast Double-Digit Store Brand Growth

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

July 8, 2009

By Maureen Azzato

While the economy has helped drive further gains in store brands, many retailers say their sales have been growing aggressively for the past two to three years because they have been focusing on quality and innovative products, and it doesn't hurt that consumers are getting smarter.

In fact, retailers are so bullish on their stores brands that many are setting their growth targets between 20 and 25 percent, according to Patrick Walsh, vice president of industry relations and collaboration for the Food Marketing Institute (FMI), who also served as moderator of the panel titled "Our Time is Now," at the association's Private Brands Summit in New York last month.

"Not that the economy hasn't helped a bit, but we were on an enormous growth rate with our own brands," said Ralph Fischer, group vice president of foods at Meijer Inc., which operates 190 locations and is based in Grand Rapids, Mich. Several years ago, store brands represented approximately 15 percent of total Meijer sales, "and now they are in the high 20s and [we expect them to be] in the low 30s in next few years... and that's because of brand development and staying true to our core values."

Fischer emphasized that his company is not only focused on national-brand equivalent products, but also true innovative items such as natural food products and organics, for example, which the national brands have been slow to embrace, but consumers are demanding.

"Everything you read talks about consumer looking for cheaper alternatives. Then you turn the channel and you hear about smart choices and that how the consumer is getting smarter," Fischer told event attendees. "Well I'd like to think that the consumer is getting smarter, not just trying to be cheaper."

Linda Severin, vice president of corporate brands at The Kroger Co., said her company ensures continued success in store brands by executing on its Customer First strategy every day.

"I'd like to challenge the premise of national brands versus private brands. At Kroger we need to provide a broad range of choices for our customers. It's important for us to have the national brands our customers are looking for and a broad portfolio of corporate brands that meet our customers needs. Within our corporate brands team [we are constantly asking] how can we drive overall category sales so we do not end up with a share battle between national brands and corporate brands."

Switching gears, Walsh asked suppliers on the panel if there is enough manufacturing capacity in the country to support the projected growth in store brands, especially given Wal-Mart's recent announcement that it intends to grow its Great Value store brand from 17 percent of sales to 40 percent in five years.

"It will put a little pressure on manufacturing, but our job is to make sure we keep that supply there and invest capital to keep pace," said Maurie Fettig, executive vice president of Red Gold LLC, a manufacturer of tomato products based in Elmwood, Ind. "Retailers and suppliers must partner very closely because both parties are investing capital. They must align needs and growth expectations."

Meanwhile, Topco Associates, comprised of 52 retail company members, encourages retailers to carefully set goals and accountability for driving corporate brands, said Dan Mazur, senior vice president of center store. We encourage a "three tier brand strategy -- premium, national brand equivalents and economy. We're seeing growth in all three segments despite this terrible recession we are in. All segments are important and retailers must look for underdeveloped areas to drive private label penetration."

Read These Related Articles:

• Safeway and Supervalu Fuel Store Brand Growth in Organic Food
• Store Brands Gain Share in Significant Categories
• Meijer Launches Specialty Store Brand Foods
• FMI Kicks Off Private Brands Summit in New York
• U.K Research: Consumer Loyalty to Store Brands is Here to Stay

Most Read

Guest Columns

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

Linking Your Empowered Customer into Your Store Brand Management Process

The formula for success is for retailers to take a holistic store brands management approach by collaborating with customers to maximize store brands potential.

Source: Austin Clark Group

See All Guest Columns »

Press Releases