- Baby Non-Food Products
- Baking/Cooking Staples
- Household Products
- Kitchen Products
- Paper Products
- Personal Care
- Pet Products
- RESEARCH & AWARDS
The last time PLBuyer checked in with Smart and Final, three years ago, the retailer was undergoing some big private label changes.
It was consolidating private brands into two tiers – its flagship First Street brand at the national brand equivalent level and its Simply Value brand in its value tier level.
The consolidation into First Street is nearly complete – officials said its Snack’rs line of snack food products would be added to the consolidation in the near future – and results have been very well-received.
“Without giving specific numbers, our percent of penetration for private label has increased more than the total across our channel,” said Todd Fryer, director of private label marketing at Smart and Final. “We’ve seen significant improvement in our private label sales.”
But the work was not done.
Three years after the original consolidation, Smart and Final began looking at the brands anew. The company had established its two main flagship brands alongside a handful of smaller, niche private brands – La Romanella (Italian/Mediterranean foods), Ambiance (coffee/hot beverage), Cattleman’s Finest (beef), Montecito (Hispanic foods), TradeWinds (spices/seasonings), Sun Harvest (natural/organic), Iris (personal care) and Smarty (pets).
But as it looked closer, officials decided there was work to be done on the Simply Value brand, a price entry tier that included about 100 SKUs.
“Our No. 2 brand in our portfolio is the Simply Value brand and we rolled that brand out in 2009, about the same time we consolidated everything into First Street,” Fryer said. “Over time that brand had too much of a generic look to it. It was very rigid with a tight design standard. We saw, especially with a lot of the food products, consumers had a low perception of quality.”
The team decided that a new look for the brand was in order, one that would help distinguish the quality perception of its products without appearing too close to First Street.
“So a year ago, we partnered with one of our design companies to work with us to reposition the brand to keep it a value brand but give it more credibility and give each item a more unique look while still maintaining the value perception and not overpowering the First Street brand,” Fryer said. “We’re rolling it out right now and we’re very, very happy with the way that brand looks on the shelf.”
The brand had looked the same throughout products – a picture of the item within a circle on a white background, easily identifiable as a Simply Value product, but often looking the same despite vastly different products in the line.
The new look brings a bigger image of the product to the front, along with more color to set it apart from the white background. The result is a brand that looks more appealing on the shelf while still visibly a Simply Value value tier line.
“It definitely was (a balancing act),” Fryer said of the revamp process. “There was such a big difference from where we started that we had an opportunity to improve the design and give Simply Value a more appealing look without taking it too far. Even if we got halfway, we had enough differentiation (from First Street), and I think we accomplished that.”
The revamped line began rolling out in June on canned products, paper products, and larger food items targeted toward business shoppers looking for value tier items, Fryer said.
It’s a part of the unique story that Smart and Final has to tell, a retailer that began as a warehouse club and has moved toward a hybrid of a club store, a supermarket, and a farmers’ market.
Smart and Final traces its history to a pair of wholesale grocers in southern California at the turn of the 20th Century that would merge in 1953. One of the original wholesalers, Haas, Baruch & Co., introduced its first private label in the 1890s – Iris was the name of its canned tomatoes.
Smart and Final claims to have created the cash-and-carry concept for grocery retailing in 1923 at its Long Beach, Calif., store. Before that time, grocery stores and wholesalers required a clerk to collect goods for the customers.
The merger in 1953 was followed shortly by the company’s acquisition by Thriftimart, a leading supermarket chain, and the company changed hands over the years before Ares Management, a private-equity firm, took over in 2012.
The retailer has operated as a warehouse club, able to target business customers as well as some households, but without charging a membership fee.
Five years ago this month, the retailer began opening Smart and Final Extra stores – larger stores that were focused on individual customers and fresh foods, expanding the base of audience it could reach. Today, Smart and Final operates about 250 retail stores in the West – Arizona, California, Idaho, Nevada, Oregon and Washington.
“With our traditional stores, households typically shopped at Smart & Final for two reasons: 1, stocking their pantries or 2, preparing for a party or other event,” said Randall Oliver, director of corporate communications for Smart and Final. “The store format and assortment was not well suited for them to do their regular weekly grocery shopping. The introduction of Smart & Final Extra changed that.”
The change allowed the retailer to continue serving its traditional business and warehouse club customers in the 17,000-square-foot shops it operated, but also to expand its reach in a 20,000 to 40,000-square-foot footprint.
“Traditionally, Smart & Final has been positioned as the smaller faster warehouse store, where businesses and households find great savings on quality food and supplies."
“Traditionally, Smart & Final has been positioned as the smaller faster warehouse store, where businesses and households find great savings on quality food and supplies,” Oliver said. “Our stores carry everything a business or household needs for cooking, entertaining and cleaning up afterwards. Customers save time and money by shopping at Smart & Final.”
The assortment at the Extra stores includes a greatly expanded selection of products in key categories such as produce, fresh meat, frozen foods, dairy, deli and grocery basics like cereal, yogurt, bread and snacks. There are also sections for baby food and diapers and health and beauty care. The stores also continue to carry a large selection of club-pack sized products for stocking up and a broad assortment of foodservice, janitorial and other supplies for businesses and organizations.
That allows customers to shop for more items in one place, providing a convenience level to the warehouse club offerings that was not available before, he said.
“From an overall perspective the Extra stores have done extremely well,” Oliver said. “We’ve been able to carry thousands of additional items. They have allowed our customers to really do their weekly grocery shopping, whether it’s for their business or household, in a way traditional stores couldn’t.”
And from the top of the company down, that has enabled Smart and Final to find a point of differentiation in the channel.
“Dave (Hirz, Smart and Final CEO) would tell you it’s a unique format that provides the best of what you’d find in a club store – without a membership fee – a grocery store, and a farmers’ market,” Oliver said. “We provide it all.”
So what have the changes meant for the company’s private label programs?
The Extra store format began rolling out about a year or two before the consolidation of First Street and the creation of Simply Value. As the format has expanded over the past five years, it has provided more space for more items and more variety in the store.
“We can greatly expand the number of products that focus on the household customer,” said Raymond Swain, vice president of corporate procurement at Smart and Final. “As a point of differentiation, we are big in club packs and tweener sizes. Our larger store format provides us the opportunity to add additional SKUs.”
The expansion has meant room for more products overall, Oliver said.
“That also opened opportunities to bring products in other sizes in both national brands and private label,” he said.
It also opened opportunities for new and expanded relationships with manufacturers. New products were coming onto shelves, but different sizes of current products also would now be available.
“We brought in all sorts of vendors we didn’t have before, but new items with current vendors, too,” Swain said.
At its core, that allows Swain and Fryer to create a portfolio of brands and products that can grow and change over time, and still connect with customers to enable return purchases.
“We’re probably not unique from the rest of the world. We want to increase our private label sales for a couple of reasons,” Swain said. “One, we use private label and the growth of our store brands as our loyalty card. We truly believe we offer customers a high-quality, unique set of products. And by doing that, we can – along with our store format – continue to develop loyalty with customers.”
But just as important as loyalty has been Smart and Final’s message. By consolidating brands into First Street, Smart and Final has reduced its private labels from 23 to 10, and that has enabled the company to be much more directed with its message to customers.
“The whole consolidation has proven very effective for us,” Swain said. “We’re able to focus on those two brands as our primary brands in the marketing calendar and our communications.”
That can mean marketing in the store, or marketing outside the store, Fryer said.
“It allows us to target our marketing around private label and be more consistent, whether that’s signage around stores or print advertising,” he said. “We’re even venturing into social media with a lot of private label marketing, and we can tell a more consistent story.”
And as the messages have been more focused, sales of private label at Smart and Final have grown as well.
“Those brands have grown with the marketing activity,” Swain said. “It’s easier for all the brands to receive some attention. Before it was too complicated, too hard to get a message out. Now when we do a contest or promotions we can get a lot of singular focus.”
And the focus has allowed an expansion of the kinds of promotions Smart and Final can offer. Oliver offered up one example from a recent movie tie-in.
“We have partnered with movie studios on several promotions. When Fast and the Furious 6 came out, we ran a promotion for our private label ice cream, where consumers who bought two or more items received a free voucher to see the movie,” he said. “We also have actively used social media to leverage our promotional campaigns. Those are things we’re doing in the market with our brands that I don’t think you see our competition doing.”
More ways to promote private label products. More space to bring those products into the store. A warehouse club that doesn’t charge membership fees, but still provides the bulk products and savings that customers in the channel have come to expect.
“Our stores do provide our customers a unique experience in terms of convenience shopping and products we offer, the SKUs we offer that are unique to Smart and Final,” Swain said. “So the store format, the size of the store, the products we offer are very positive differentiation points for us.”