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Walk Down The Aisle: Non-Food Groceries

August 16, 2011
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Noticing the  Non-Food Aisle
Retailers must put more emphasis into on-shelf comparisons for private label non-food items. Read what else PLBuyer's secret shoppers found that can help you improve your PL sales.
Retailers must put more of a focus on promoting non-food items both in-store and on the shelves, report PLBuyer’s secret shoppers. Of the three stores visited across the country by our secret shoppers this month, none had on-shelf price comparisons and only one had any kind of in-store private label advertising in the non-food aisle of the store.

Based on the results of PLBuyer’s secret shoppers, there seems to be minimal emphasis placed on promoting private label non-food items in-store.

This trend has shown up in other aisles as well. On-shelf price tag comparisons also were minimal in the deli, bakery, packaged meat and dairy aisles as well.

In-store private label advertise-ments were more common in the stores visited by our secret shoppers with both Hy-Vee and Walmart featuring in-store promotion of private label non-food products. This trend was evident in other aisles our shoppers have visited this year as well. The deli aisle seems to feature in-store advertisements the most prominently, shoppers found. Indeed, the non-food and deli aisle seem to share about the same amount of in-store private label promotion.

On the other end of the spectrum, our secret shoppers found that side-by-side comparisons of non-food products were common in the stores visited. Indeed, every store our shoppers went to featured private label products next to their national brand competitors. While this trend is not true of every aisle, it is mirrored in certain categories like the deli and dairy aisles.
Shoppers found price spreads between private label and national brands in non-food grocery items, generally of less than a $1. The only exception was in laundry detergent in which Hy-Vee’s Signature Ultra Power brand was priced at around $9 lower than a national brand competitor.

While it should be noted that each product was priced at less than its national brand competitors’ prices, larger price gaps have been found in other aisles this year.

For instance, secret shopper Kim C. found that Walmart’s private label food storage Mainstays were priced at $1.84 for three while the national brand Rubbermaid were priced at $1.98 for the same amount. Hy-Vee priced its private label brand bowls at only 30 cents cheaper than the national brand competitor.
In other categories, the price gap is easier for the consumer to spot. For instance, in the packaged deli meat aisle, our secret shoppers found that private label ham could be found at almost $4 cheaper than the national brand. The same can be seen in the dairy aisle with products like brick cheddar cheese. Our secret shoppers found an almost $4 difference between Kroger private label and national brand competitors.

Experts agree private label non-food items have greater sales potential in the average retailer’s store.  “Private label absolutely has a role in the non-foods area of stores. In general, private brands can offer a value alternative in these categories; the more commoditized the category, the easier it is for a private brand to show a value alternative,” says Neil Stern, senior partner at the Chicago-based retail consultant firm McMillian Doolittle LLP. “Where innovation and performance is stressed, in a category like laundry detergent as an example, it is more difficult for private label to penetrate but there is a still a role for value.”

Communication with the customers and letting them know that private label non-food products exist as an alternative is fundamental, explains Stern. “As for marketing on the shelf, that is the primary place where private label can communicate with customers. Any kind of call-outs, from shelf-tag comparisons to shelf strips to bigger displays, are all tools that retailers need to use to promote their own labels,” he says.
The non-food aisle must be attacked differently than other aisles, says Paula Rosenblum, managing partner at the Miami, Fla.-based consultant firm Retail Systems Research. “Once a private label brand has established itself, there is no reason not to have it in non-food aisles,” she says.

Not every retailer is handling the non-food aisle correctly, both experts agree. Bentonville, Ark.-based Walmart, for instance, got rid of many of its private label non-food brands last year as part of brand clean-up campaign before it had established its own private label products (see page 22 for a look at how to tackle SKU rationalization), says Rosenblum.

Private label products have managed to escape the decline in home laundry product and food storage sales seen since before the recession, says an April 2011 report by Chicago-based research firm Mintel International Group.
Private label food storage has recorded  a 6 percent increase in dollar sales from 2008 to 2010. “These positive trends have been most likely driven by retailers continuing to grow their marketing and increase shelf space for their store brands at the expense of branded competitors. Coupons and discounts combined with more upscale packaging have been helping private label brands to better compete with national brands rivals,” explains the study.

The same can be seen in private label home laundry products which saw a growth in nearly every segment for the 52 weeks ending March 22, 2009 examined in the study. During that period, private label share for the category as a whole increased 0.5 percent. “Despite gains by private label and value-priced brands, superior product performance remains a powerful motivator and a key to long-term growth for individual brands and for the category as a whole,” states Mintel.

While consumers may have warmed up to food storage and home laundry items, the same cannot be said for household cleaning products. “While budgeting behavior remains strong in most CPG categories, consumers’ interest in private label has cooled as both the economy and consumer sentiment have made halting gains since the official end of the recession,” says the study.

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