Retailers Seek Innovation Tools to Take Store Brands to New Heights

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October 13, 2009

By Maureen Azzato

Editor's Note: This is the first part of a series on store brands innovation, leading up to the PLMA Private Label Trade Show Nov. 15-17 in Chicago. Subsequent articles will feature case studies and focus on topics such as consumer insights, product testing and certification, packaging design, strategy and branding, product lifecycle management and supply chain logistics.

For the past two decades, retailers with store brands have focused primarily on products –– creating new lines, expanding existing ones, improving packaging and segmenting products into different price and lifestyle tiers.

But today, simply creating myriad new products is no longer enough. It's incumbent on retailers to better manage their store brands to ensure future viability, according to Brian Sharoff, president of the Private Label Manufacturers Association (PLMA).

"Private label has grown so big that is needs to be managed very carefully. Up until now, the ones who have been managing retailers' products have been the national brand manufacturers, with understandable reason," Sharoff said in an interview with Store Brands Decisions. "Huge amounts of products are sold and they can't afford to have their products mismanaged.

"Retailers are now in that phase where their private label programs are so large and complex that it is no longer a question of 'Am I offering the consumer a creative product?' It's a question of 'Do I get it to the shelves efficiently? Am I replenishing the shelves? Am I merchandising the shelves correctly?'"

Some of the industry's top performing store brand retailers such as Wal-Mart, Supervalu, Carrefour, Kroger and Tesco, to name a few, are keenly focused on innovation to solidify future store brand success.

For example, Wal-Mart is using high-tech management systems to support the relaunch its $10 billion Great Value brand this year. In partnership with Agentrics, the retail giant also is executing its sustainability initiative using a brand new product lifecycle system, which integrates many business systems from product conception, design and manufacturing, to service and disposal.

Supervalu is working diligently with Retail Optimization Inc. on space management strategies. "Space optimization not only measures the productivity of products on the shelf, but also has the capability of projecting the impact of items not currently included in the mix," said Wes Bray, president and CEO of Retail Optimization Inc. "Executed on a store-by-store basis, space optimization has led retailers to increase the overall presence of their store brands with measurable results, ranging from a 4 percent to 7 percent increase in same-store sales, as well as profits."

Meanwhile Carrefour in France, the world's second largest retailer,  is working with Interbrand on a state-of-the-art in-store marketing program, utilizing multi-level communications, new signage and a shelf management systems so that store brands are marketed and merchandised better and integrated into the entire store flow. Based on shopper insights and category research, Carrefour organized its offer into three categories –– Carrefour for Everyday, Carrefour Agir (organic and ethical products), and Carrefour Selection (premium products). Each category has a distinctive look that corresponds with the larger master brand, according to an article on the Interbrand web site.

"Carrefour for Everyday included more than 8,000 products and was given key shelf space, often on eye level," Interbrand executives wrote. "Carrefour Agir's simple look and packaging evoked the sub-brand's organic and eco-conscious contents. A mix of classical and unexpected graphics was used to convey Carrefour Selection's premium, upscale range of products."

Better Business Management

These are only a few of the many innovative strategies and business tools available to retailers seeking to advance their store brands management.

Responding to retailers' call for innovation, this year PLMA plans to debut Innovation Hall at its Private Label Trade Show Nov. 15-17 in Chicago as a "show-within-a-show."

While product development is the lifeblood of private label –– to which a majority of the PLMA show continues to be devoted –– Innovation Hall features approximately 100 exhibit stands focused on other critical areas to manage the business. Exhibitors in this section of the show offer programs and services in market research, branding and strategy, laboratory testing and certification, technology, packaging design, logistics and supply chain, international sourcing, as well as marketing, merchandising and promotions.

Brian Sharoff

"It's no longer sufficient to say I created 1,264 new products last year and I put them on my shelf," Sharoff said. "Now the challenge is for retailers to make sure they manage them correctly so growth can continue."

Innovation Hall launches Sunday, Nov. 15, one day before the general PLMA exhibit floor opens to allow maximum participation from retailers and exhibiting suppliers. "We are trying to centralize in one place all of the different innovative thinking that has been going on at various companies so that all retailers and manufacturers can appreciate the importance of it," Sharoff said.

Another unique feature of this year's show is that PLMA will broadcast live interviews and events from the Innovation Hall on demand and without charge to those who are unable to attend. "We're setting up a video studio and media center in the middle of the Innovation Hall and we will be conducting interviews with exhibiting companies at the show, which will be digitally recorded and available on the PLMA web site for both show attendees and those who do not come to the show," Sharoff said.

PLMA's approach to its educational programming also is tied into the theme of innovation. This year's topics include store and item-level optimization, getting out of the national brand mold, package design for maximum sales, profitable promotions, leveraging innovation in food safety, and demand chain innovation to drive store brand growth. Click her for more details on the PLMA workshop program.

Read These Related Articles:

• Managing the Growth of Store Brands
• Wal-Mart Installs New Store Brand Packaging Design Software
• PLMA Show 2009 Keynote Speakers Focus on Innovation
• Wal-Mart Video Demonstrates Commitment to Sustainable Store Brands
• Walmart and Carrefour Expand Store Brand Lines Internationally

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