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Plenty Of Insights, Action At PLB360

Attendees learn and network at second annual PLBuyer conference.

August 14, 2013
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Presentations narrow and wide filled the halls of the Intercontinental O’Hare hotel in Rosemont, Ill., in mid-June for attendees of the PLB360 Conference.

Paul Hunt of Sam’s Club and Moe Alkemade of Walgreens were the headliners of the event, with Hunt presenting the first keynote event on June 12 and Alkemade leading the agenda June 13.

Hunt discussed the way Sam’s Club put together its Simply Right line of health and wellness products, and in the presentation he said that retail branding was messy, with plenty of stakeholders each having a different view of how things should go. But that if you acknowledged that fact up front, you could deal with the process ahead.

Sam’s Club surveyed more than 4,000 club members to get their ideas on what they wanted from products and brands, which helped build the Simply Right. “We put it in the language of the member,” he said. “We do all of our positioning in that sense.”

Alkemade talked about the transformation of Walgreens’ private label program, paring down from more than 100 brands four years ago to about 20 brands in place today. Alkemade stressed vision and discipline for retailers going through remakes of their program, focusing on brand architecture, product integrity, strategic sourcing and product development.

As he talked about the 1,500 new items put in Walgreens stores the past couple of years, and the revamp of OTC to Well at Walgreens products that transformed packaging in nearly 3,000 items that completed in June, he said the company had launched or rebranded 13,000 items in three years.

And Walgreens isn’t done. Alkemade said to expect a change to the Studio 35 Beauty brand over the next couple of years, along with potential expansion of the Nice brand. “Nice is probably the most successful thing we’ve launched over the course of three years; it’ll be a $1 billion brand next year,” he said. “Can we expand that name into other areas?”

Melissa Billman of Kum & Go joined Daniel Grubbs of IRI for a roundtable on private label in the convenience channel, with Billman discussing the successes of her company’s private label program over the years. Josh Katz of FMI focused a co-presentation on traceability to the need for data storage and access on the retail end to streamline the process. Sahir Anand of Trace One followed Katz by talking about the advantages traceability programs bring to retailers.

“As supply chains expanded, there’s so many non-controllable events,” he said. “Carrefour is dealing with at least 1,500 suppliers worldwide. A company like Sam’s Club is dealing with 1,000.”

Anand introduced a case study of the company’s work with Walgreens on its program, which centered around the new product specifications that Alkemade and his team had put in place the past three years.

“For Walgreens it was about specification management and creating more visibility all through the supply chain,” Anand said. “To bring some firm commitment internally to drill down. … It’s been a huge part of their rebranding.”

Joe Cook of Daymon talked about the changing face of consumers, and how that could affect product sourcing for retailers. For Cook, that meant retailers needed to find their own voice, then match that with products that spoke to consumers with the retailers’ point of view.

 “Align to the things you’re most passionate about,” he said. “Don’t put all your eggs in shopper loyalty data. Get some external data, too.”

Terry Lee addressed a packed room about the future of dollar stores in private label, while Christopher Durham and Perry Seelert broke down Walmart’s private label program with highlights from their Insight report on the world’s largest retailer, another well-attended session.

Nielsen’s Todd Hale kicked off the event by talking about the opportunities in alternative channels, where private label sales rose in the value, drugstore and convenience store channel while remaining basically flat in supermarkets.

But he said the true growth was expected in e-commerce, which would see growth of 10 percent over the next five years. Other high-growth areas included pet stores, dollar stores, supercenters and club stores.

“Amazon doubled Kroger’s sales growth in 2012,” Hale said. “Amazon is expected to grow $97 billion in sales in five years, and that’s probably at the expense of brick and mortar retailers.”

He added that private brands would continue to drive growth year over year, but not as quickly as it had since the recession started in 2007.

“You’ll see faster growth outside traditional grocers,” he said, citing retailers such as Aldi, Save-A-Lot and Wegmans as examples.

Jonathan Asher of Perception Research Services backed up Hale’s assessment while talking about PRS’ latest shopper research on private label. Asher said natural and organic stores such as Whole Foods Market, Trader Joe’s, and Sprouts passed drugstores as the third-highest channel for private label sales.

He added that their survey showed some cautionary tales for private label, as fewer shoppers bought private label than a year ago (78 percent, down from 86 percent), with shoppers saying quality of private label products was down in 10 of 13 categories.

Mintel’s Lynn Dornblaser said in her presentation that private label products had begun to address health and wellness issues that consumers were concerned over, particularly in Europe. But she said she felt like there was room for growth from retailers in those areas.

“Any retailer in the U.S. would be foolish if they don’t talk about where their food comes from,” she said.

Jim Lucas of Schawk addressed the need for retailers to push own brands, gaining ownership of their private label products. And he said value products don’t have to be just about price, but helping shoppers get what matters to them, whether through convenience or price or added features to products.

Jim Wisner discussed digital and social marketing opportunities for retailers in private label, urging retailers to create content and become engaged before big CPG companies push past them directly to the shoppers.

And Daniel Grubbs from IRI discussed the growing bifurcation in the market today, with shoppers moving toward premium and value items, leaving fewer products to grow in the middle, or mainstream, section of stores.

 He said that retailers should be cautious of opportunities in categories, but that three-tier strategies in the eight food and non-food categories that IRI studied showed private label growth opportunities.

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