CPG Practices Drive Kroger's Approach to Store Brands

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March 15, 2011

A Store Brands Decisions Exclusive

The Kroger Company was very busy in 2010 developing a myriad of new store brands, supporting them with impressive in-store merchandising and marketing programs, which resulted in the company being named Store Brands Retail Innovator of the Year by Store Brands Decisions.

Susan Sanderson

In non-foods, Kroger introduced it Mirra beauty care line and a Kroger Brand unique vitamin line, while on the food side it became the first grocer to utilize traceability technology for its Fresh Selections pre-washed ready-to-serve packaged salads. Kroger also reformulated and re-launched its premium brand Private Selection ice cream, which debuted a tamper-resistant plastic tub-and-lid packaging.

But Kroger does not aimlessly roll out product after product. The Cincinnati-based grocer is keenly focused on savvy portfolio management, brand strategy, merchandising, innovation and marketing to capture consumer trial and, ultimately, customer preference for its store brands.

In an exclusive interview with Store Brands Decision’s Editor Maureen Azzato, Susan Sanderson, director of corporate brands, revealed more about Kroger’s store brands initiatives and where she sees future growth and opportunity.

Of which new product introductions or initiatives is Kroger most proud?

At the highest level, we are proud of building a best-in-class, customer centric brand marketing/innovation team that rivals any CPG or retailer in expertise and passion for the customer. This is a big year for our team as we will be re-launching many of our key brands. We are excited about the transformation that our customers will experience in-store and at home with our newly reformulated products.

How has the role of store brands expanded over the past five years at Kroger?

As customers have become more open to corporate brands, we have shifted from copying CPG products to delivering brands that meet customer specific needs. To deliver that type of offering, we evolved our approach to embrace classical brand building and commercialization methodology combined with our expansive manufacturing capabilities.

What are some of your biggest areas of focus in packaging and design?

Package design, physical and visual, is an important tool to influence market position and consumer behavior. Our rigorous brand equity work coupled with razor sharp design realization with top design partners, has led to very impressive research results with our target customers. Additionally, we focused on enhancing our food photography across banner brand and Private Selection by enlisting a former food magazine photo director to inspire and delight our customers through photography.

How does Kroger plan to continue to evolve and expand it store brands?

New brands and/or category expansion is based on customer insights coupled with the opportunity to grow categories. We plan five years out to drive our innovation pipeline as well as being nimble to react quickly to category opportunities or threats.

Tell us about the role innovation plays in Kroger’s strategic store brands initiatives.

Innovation is central to driving preference for our brands. We develop insight driven initiatives that capitalize on marketplace opportunities. Innovation is a 24/7 job for the entire team as we seek to not copy, but truly deliver unique, relevant benefits.

What role does in-store merchandising and sampling play in Kroger’s store brands?

Most shopping decisions happen in the store at shelf level. We own the theater and therefore will use the store environment to drive awareness and trial of our brands.

What other in-store merchandising and awareness campaigns have worked for Kroger?

We have seen significant return on investment in category aisle reinventions. Our one-to-one relationship marketing activity through dunnhumby is a key tool in driving corporate brand awareness that is tied to our overall enterprise strategy of rewarding loyal customers. Additionally, working through our significant store associate base to help them become corporate brand advocates pays big dividends at the store level.

What are the biggest opportunities of being both a retailer and manufacturer of store brands?

Our manufacturing team has been delivering product quality excellence to our customers for more than a century. As an important part of our business strategy, manufacturing capability gives us competitive advantage in many ways. We can move quickly to innovate and commercialize ideas. We can deliver a great value to our customers by leveraging our scale. We can go into categories where there may not traditionally be corporate brand suppliers and/or CPG plant capacity.

How do you see vendor relationships evolving in the store brands business?

Our vendor partners, along with our own manufacturing team, are important in creating unique, consistently high quality products that our customers will prefer. Our most successful vendor partner relationships are those that bring innovation linked to our key brand strategies and those that step up to invest in long-term strategic alliances to help grow our categories.

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