Corner Office Perspective

January 14, 2010
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A Discussion with Doug Palmer, A&P's Vice President of Own Brands

The Great Atlantic & Pacific Tea Company’s (A&P) first private label product - baking powder - made its retail debut 129 years ago. And while a lot has changed since then for the Montvale, N.J.-based retailer, the long tradition of offering high-quality private label products has continued.

This year, A&P put intense focus on a revamped private label program, which better integrated the best of what A&P and Pathmark Stores (acquired in 2007) had to offer. The result: A&P now offers a comprehensive tiered program that appeals to its growing customer base.

A&P’s revamped Own Brands program is home to more than 5,000 SKUs under the brand names Smart Price, America’s Choice, GreenWay, Via Roma, Hartford Reserve, Live Better, Market Spa and Preferred Pet. What’s more, the retailer now enjoys a private label penetration of 18 percent.

Recently, PL Buyer had an opportunity to talk about the program and the industry with A&P’s Doug Palmer, vice president of Own Brands. He offered his insights on private label strength in a weak economy, critical elements to succeed with own brands, the grocery industry and much more. 

PL Buyer: The recession and improving store brand product quality have left a very positive mark on the industry recently. Where do you see the industry heading in the next few years? 

Doug Palmer: The recession has created a ‘thrift’ mindset with consumers, and it appears to have a lasting effect with consumer shopping behaviors. This has certainly benefited store brand programs.

This has been a year of reflection for a lot of retailers, where they have taken stock [of] their store brand programs and invested in brand building. Those retailers and suppliers who have a point of difference will be those leading the industry with sustainable growth over the next five years. 

PL Buyer: What private label segments are you most excited about right now, and why? Which segments aren’t getting the attention they deserve?

Palmer: We are most excited about the consumer response to our new Italian line of products - Via Roma. The response to the brand, the graphics and the quality has been overwhelming.

We don’t really see any segments that are not being shopped by consumers. Consumers continue to recognize value in our brands, creating loyalty and repeat purchases. 

PL Buyer: From your perspective, what are the most critical elements to successful private label programs? 

Palmer: [Successful private label programs are] consumer-centric, meaning they are value-priced, needs-based and have an emphasis on quality. [There also needs to be] a desire for innovation, associate ownership and a focus on brand building.

PL Buyer: In your view, how has private label’s role in the traditional grocery store changed in the past year?

Palmer: The economic environment has caused consumers to consider store brands as a larger part of their shopping needs. As a result, retailers have had to adjust their merchandising strategies to capture more of those consumers looking for everyday value. Stores brands have become the most effective way for retailers to offer more of a value proposition to budget-conscious consumers. 

PL Buyer: What do you think is the appropriate mix of national brands and store brands in the grocery segment today? 

Palmer: We are seeing SKU-reduction trends across the country where the number of national brands is being reduced. Retailers are recognizing the economical and logistic efficiencies of a proper mix of items. The proper mix within a category depends on a number of factors, including demographics, promotional frequency, profitability, shelf space and trends.

PL Buyer: Where do you see your program going in the coming year? 

Palmer: A&P store brands will continue to play a major role in our go-to-market strategy - now and in the future.

PL Buyer: We hear a lot about the importance of retailer/manufacturer partnerships in the equation for private label success. What changes are you noting in retailer/supplier relationships? 

Palmer: Our relationships with suppliers are a key element in product development and sales-building activities. The conversations with suppliers today are more about strategy in the category and long-term planning versus discussing only cost.

PL Buyer: What do you see as the biggest challenge for the private label industry right now?

Palmer: The challenge for both retailers and suppliers in the future will be to find new ways to collaborate on brand-building activities, not just item extensions and duplication of national brands. Those retailers and suppliers who are flexible and creative in what they offer consumers will be able to create points of difference with their competition. PLB

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