Family Dollar, Rite Aid, Walgreens Talk of Private Label Expansion in 2011

October 4, 2010
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In their most recent quarterly earnings calls, executives from major retailers commented on the progress of private label initiatives. Here's a recap for you.

In their most recent quarterly earnings calls, executives from major retailers commented on the progress of private label initiatives.
Family Dollar, Chairman and CEO Howard Levine: “At our analyst day last November, we articulated our goal of increasing sales of private brands, and we have made significant progress towards this goal in fiscal 2010. Over the last year, we have launched or refreshed 10 Family Dollar brands, impacting around 1,000 items. As a result of these efforts, private brand sales increased 19 percent to about 22 percent of sales in fiscal 2010, up from 19 percent in fiscal 2009.
“And while I'm pleased with the progress we have made, we still have a significant opportunity to increase our penetration of private branded consumables. In fiscal '11 we expect to continue to enhance and develop new private brand programs with increased focus on consumable categories. And we plan to leverage our enhanced marketing capabilities to drive greater brand awareness and strengthen our overall quality perception.

“Our efforts to expand global sourcing capabilities will also support our private brand goals. Since launching our global sourcing effort, we have improved the quality of our private brands through the establishment of standardized product specifications and more rigorous testing protocols.

“We believe that we have additional opportunity to manage our costs better through the diversification of our supplier network, and in support of these efforts we expect to establish a local presence in China in the next several months.”


Walgreens, Greg Wasson, president and CEO: “What I'm encouraged most with for private label is we've over-penetrated, over-indexed in our private label with what you would think we do and that's an over-the-counter cost goal, the health and beauty type items. We've under-indexed to our 20 percent or so total penetration in consumables. That's where Duane Reade brings a tremendous amount of expertise and talent, because of its history with Loblaws and coming out of a strong private brand consumable retailer.

“So we're looking forward to their bringing a lot of their expertise to drive our penetration in consumables. And we began that last month or two with our first introduction of the Duane Reade private brand throughout the chain with about 15 to 20 core SKUs.”


Rite Aid, John Standley, president and CEO: “During the quarter, customers continued to search for value, with our private brand penetration increasing to 16.2 percent compared to 15.3 percent last year. We expect this consumer behavior to continue even if the economy improves. And we'll continue the rollout of our new private brand architecture in the second quarter.
“Our program includes 250 new items this fiscal year with all new packaging and the following brands: ‘Rite Aid Pharmacy’ for health products, ‘Renewal’ for beauty, ‘Pantry’ for food and certain consumable household goods, ‘Tugaboos’ for baby, and our price-fighter brand ‘Simplify.’ We have now converted 136 items into these brands and expect to have about 2,200 items in these new brands within the next 12 months.

“Even though we've just started the rollout, we're getting great response from our customers and expect that with strong promotional support, good price positioning and continued development of new items, we'll continue to grow private brands sales, improve margin and meet the needs of today's customer.”

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