Take It From The Top
By JILL RIVKIN
Too many brands dilute the message, take Safeway’s lead and focus your program.
Billboard’s Top 100. Radio’s Weekly Top 40. David Letterman’s Top 10. And the Olympic Game’s gold, silver and bronze Top 3. All of these things illustrate the significance of being on top. Recently Safeway has sent a competitive message that it understands what it means to be on top. The Pleasanton, Calif.-based retailer announced plans to focus its efforts on its own Top 10 list — its Top 10 “power brands.”
Reports indicate that as part of Safeway’s “Ingredients for Life” initiative, which focuses on lifestyle solutions, and an aggressive move to upscale its 1,800 stores nationwide, the retailer this year will embark on a major restructuring of its private label program and create an organization functioning more like a consumer-packaged goods company. Safeway’s Brian Cornell, executive vice president of marketing, said the company’s “fragmented portfolio” will evolve to a “clear, broad architecture.” Safeway is scaling down its 70 private label brands to drive its 10, high-margin “power brands” such as Lucerne Dairy and Rancher’s Reserve.
This month’s cover feature showcases Pittsburgh-based Giant Eagle, another retailer staying focused on its key brands. Giant Eagle execs tell me that some of the lesser-known brands will be phased out, and even its successful Laurenti Specialty Foods line will become part of a bigger, potentially more powerful, brand called Market District set to span the store with unique items.
With a renewed focus on the top brands, these retailers are using private label to its full potential — as a key differentiator. These brands are relevant and recognizable to consumers. Having too many brands waters down a program, making a less powerful impact on consumers compared to a focused, very visible emphasis on key brands. Take Costco Wholesale, for example. The Issaquah, Wash., retailer’s clean, single-label Kirkland Signature program has become just that — the retailer’s signature. And it’s recognizable and respected by consumers nationwide.
A recent Forbes.com article cited a study by marketing professor Vishal Singh from Carnegie Mellon University. Singh studied the effect of Wal-Mart on traditional supermarkets and found that when Wal-Mart enters a new market, 70 percent of the revenue decline suffered by traditional supermarkets can be attributed to 20 percent of the customers. Those consumers seeking fresh produce and specific brands remained loyal to their grocer, while bulk shoppers looking for pet items, diapers or paper towels left for Wal-Mart. Interestingly, Singh points out, the average-sized basket ring barely changes, attributing lost sales to lost bulk shoppers and not customers shopping both channels.
Consumers want unique brands, high-quality products and assortment. Be sure they know your program has those elements, aggressively market them and use your key brands to leave a lasting impact. Focus on the top and you’re sure to land there.