PLMA Show: Energy High, New Products and Ideas Abound

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November 15, 2011

The Private Label Manufacturers Association trade show opened yesterday with more than 2,000 exhibit booths featuring food and beverages, household and kitchen products, general merchandise, and health and beauty care products from more than 35 countries.

As more than 2,200 retailers, wholesales and other industry buyers hit the show floor, energy was high as each sought the newest innovations and ideas to take back to their respective companies.

On Sunday, the event kicked off with four educational seminars. In the session titled, “How Consumers Make Decisions,” PLMA unveiled results of its newest consumer study conducted by Buxton. Moderated by Ned Dunn, former president of Harris Teeter, the data was presented by Joe Azzinaro of PLMA, with key insights provided by Terry Lee, former retailer turned consultant.

“What fascinates me is that shoppers are not bored or put off by the shopping process,” said Dunn, who noted that the research findings fly in the face of long-standing beliefs about consumer shopping behavior and perceptions. “In fact, the study found that shoppers are actively engaged in the process.”

What Makes Shoppers Tick
Another key finding of the study of particular interest to store brands is that although a majority of consumer use shopping lists in the grocery store, they do not typically specify brands and they frequently deviate from their lists, indicating they are open to in-store persuasion.

Drug store shoppers, however, behave very differently, with 62 percent saying they never use lists. But once in the drug store, brand loyalty is even less prevalent than for grocery shoppers, Azzinaro said. “Store brands are growing at an even faster rate in drug stores than grocery stores – 8 percent versus 6.5 percent,” he noted.

For Lee, an important take away form the research is that consumers are willing to switch to store brands, with 50 percent reaching for store brands when their national brand choice is unavailable. This is much higher than the frequency with which consumer will buy other national brands (25 percent) when their first choice is unavailable.”

“This tells me that much of what we are doing today is working,” Lee said. “Store brands continue to improve with increased consistency and quality, creativity and marketing that are helping the cause.

Other key insights, according to Lee, are:

• Retailers need to better leverage in-store promotions, sampling and demonstrations, which shoppers are predisposed to and will help drive trial;
• Repeat purchasing will increase as retailers and manufacturers rigorously focus on consistency and quality; 
• Packaging will continue to drive shelf decisions and must be impactful. “Packaging must be continuously looked at, and not just every five years,” he said. “Shoppers buy the package and come back for what’s inside the package.”

Drug Chains Gain Steam
In another workshop, Jay Forbes, The Forbes Connection, highlighted some key changes taking place in the drug channel, which has been aggressively expanding front-end categories and assortment, and private label offerings.

Although shopping trips are down, front-end turns are up from three turns several years ago to 4.7 currently, Forbes said, noting that front-end sales are fully one-third of drug channel sales. The top two front-end categories are OTC health with a 28 percent share, followed closely by consumables with a 27 percent share, and growing rapidly. “Consumables are clearly challenging OTC for supremacy in drug stores,” Forbes said.

The top three drug chains -- Walgeeens, CVS and Rite Aid -- all are aggressively pursuing store brands. The top private label categories in drug stores are milk, medications, eggs, bottled water and vitamin/nutritionals, according to Forbes’ data. “The food and OTC categories are the most successfully impacted by private label,” he noted.

Laura Sturdevant (pictured above), director of private brands for Walgreens, confirmed that the chain is aggressively pursuing store brands, revamping most of its core brands over the past two years, with plans of going considerably beyond national brand equivalency. Two-and-a-half years ago, Walgreens’ store brands team consisted of five people versus 40 people today.

Over the next 12 to18 months, Sturdevant said “there will be changes in all private label products at Walgreens,” noting that the W logo will be discontinued in favor of the chain’s other brands, including Walgreens, Studio 35 Beauty, Delish and its newest Nice brand. “We want to build brands, not labels,” she said. In the store brands food category alone, Walgreens is targeting growth of between 12 and 15 percent.

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