PL Buyer's eReport July 22, 2008

July 23, 2008
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Front and (Customer) Center

To keep loyal customers coming back for more, retailers should put customer needs and wants at the forefront. 

"Retailers need to know that customer-centricity is not going away any time soon," Paula Rosenblum, managing partner for Miami-based Retail Systems Research (RSR), told eReport editors. "Even though the economy appears to be a top-of-mind concern, and customer-centricity may turn out to include a value message, the customer still has a lot of options, and if you don't treat her well, she will go elsewhere."

Rosenblum, also the author of RSR's recent benchmark report, "The Customer-Centric Store," said a customer-centric store is one that has what consumers want, when they want it, and provides the appropriate interaction with the customer at that particular point in time. To be customer-centric, a retailer not only needs to put consumer needs and wants at the top of the list, but also needs to take another look at using employees to further customer-centricity, a currently untapped asset.

"More often than not, the moment of truth is the interaction between an employee and a customer. If the employee can respond in an intelligent and at least seemingly caring fashion, that makes the store more customer-centric," Rosenblum stated.

Retailers can differentiate themselves to be customer-centric in several ways, one of which is through their private label program. The report states: "Coupling unique products with adequate customer service is a challenge for retailers selling fast-moving customer goods." It notes that Costco is an example of a success story in this aspect, with its Kirkland brand of products drawing customers into stores.

"Private label brands in supermarkets are no longer the second-class citizens to national brands," Rosenblum told eReport editors. "The more retailers you talk to, the more you'll find that their goal is to have their private label merchandise on par with national brands. Kirkland, for example, is a brand people can trust. And customer-centricity is all about trust."

A final key element to making your store more customer-centric, Rosenblum said, is technology. And while that technology might include a modern point-of-sale system, digital signage, contactless payments or product information kiosks, for example, it also goes beyond that to include working with employees to make them part of the value proposition.

"Retailers said themselves in the report that they want to empower their employees with some technology," Rosenblum said, "and that would include better information on products, better information on tasks that have to be performed, and better information on the customer."

Our Take: Truly unique, useful store brand products might draw shoppers into a store, but sub-par customer service might discourage them from coming back. Today's "front-line" retail employees often come up short in terms of product knowledge and other qualities needed to promote "customer-centricity."

Industry Insider

Will Pay for Enhanced Labels
A new survey shows that consumers want clearer and more informative labeling on their products.

Consumers responding to a new survey conducted by Deloitte Consulting LLP and Deloitte Services LP (jointly "Deloitte," subsidiaries of Deloitte LLP, New York) said they want their foods to clearly display key information such as country of origin so they can make more informed buying decisions.

More than two out of five consumer respondents said they do not feel they currently have enough information about the food they eat, Deloitte said. Additionally, the study found that consumers are aware that the request for better and clearer labeling will cost them slightly more at the register, but 73 percent of those asked said they still want country of origin labeling even if it means paying slightly more.

The respondents' number-one concern is "healthiness of ingredients," Deloitte said, with 61 percent of respondents citing this as a concern. The "possible use of chemical ingredients that are detrimental to my health" and "safety of the ingredients" tied for second, with 49 percent of respondents selecting these as concerns.

"Today, consumers have more access to food information than ever before," said Pat Conroy, Deloitte LLP's vice chairman and US Consumer Products group leader. "Still, it's clear that what they are getting is not enough.

"Consumers are spending more time checking labels and are often overwhelmed by a flood of contradictory nutrition 'facts,'" Conroy added. "They seek clear, straightforward information they can understand so they can make more informed choices and better protect themselves and their families."

Our Take: Today's consumers are more concerned than ever about the safety and healthfulness of the foods they eat. Any extra information retailers can provide in relation to the sourcing and overall safety of store brand products is sure to be appreciated.

Eye on Health

Ounce of Prevention
A small investment in disease prevention could save America billions of dollars. 

A small strategic investment in disease prevention could result in significant savings in U.S. healthcare costs, according to a report published July 17 by the Trust for America's Health (TFAH), Washington, D.C.

The report, "Prevention for a Healthier America: Investments in Disease Prevention Yield Significant Savings, Stronger Communities," says an investment of $10 per person, per year -- in proven community-based programs to increase physical activity, improve nutrition and prevent smoking and other tobacco use -- could save the country more than $16 billion annually within five years.

The economic findings were based on a model developed by researchers at the Urban Institute, said TFAH, and a review of evidence-based studies conducted by the New York Academy of Medicine.

"This report provides strong evidence that prevention must be an essential piece of our national and state discussions on healthcare reform," said Barbara Masters, public policy director of The California Endowment. "It's time we invest in keeping people healthy instead of only treating them after they've gotten sick. It's an investment in our future health and economic well-being as a country."

Our Take: Prevention investments need not be limited to government programs. Retailers that invest in employee smoking cessation, nutritional and other preventive programs likely will be rewarded with healthier, more productive associates.

Bits and Pieces

What's News in Private Label
Among the most notable retail and private label news: 
  • Jewel-Osco, Melrose Park, Ill., a Supervalu company, said it would open a 16,000-square-foot store in Chicago's Lincoln Park community. The new "Urban Fresh, by Jewel" format will be a specialty grocery store catering to busy on-the-go professionals and time-sensitive commuters. One the key offerings in the store will be ready-to-go meal solutions. The store also will carry organic offerings, as well as a selection of fresh meat and seafood.
  • According to a July 17 article in the Democratic Chronicle, a new Rite Aid store in Rochester, N.Y., will be a prototype store based on feedback from customers and employees. The store will be called a Rite Aid "Customer World," and will incorporate customer feedback related to aisle widths and signage into a bigger neighborhood store. The move comes at a time of aggressive growth for the Camp Hill, Pa.-based company, the paper said, as Rite Aid purchased more than 1,800 pharmacy stores from Eckerd Corp and Brooks Pharmacy of The Jean Coutu Group Inc. in 2007, rebranding them as Rite Aid.
  • Amsterdam-based Royal Ahold NV will use only sustainable palm oil for private label at its Dutch Albert Heijn supermarkets and Etos drugstores by 2015, The Wall Street Journal reported on July 21.
  • According to an article in the July 13 edition of The London Times, UK-based Tesco is developing a range of private label products to tackle the "Aldi effect," whereby "thousands of hard-pressed families defect to the German discounter." The "top-secret" project, due to be unveiled this fall, "aims to drive down prices of hundreds of items in the grocery giant's standard own-brand range," the article said.

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