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- RESEARCH & AWARDS
Over the last couple years in the retail industry, private label has been the belle of the ball. Playing the private label game no longer is just about competing with the national brands - nowadays, retailers are coming up with new and innovative products to set themselves apart from other retailers.
To recognize the retail executives creating the best-in-class store brand programs out there, PL Buyer holds its annual Retail Executives of the Year Awards. Nominated by the private label supplier community, the winners are well-known and well-respected retail executives who share a deep dedication to building unique private label programs that cater to their customers’ needs.
Please join us in congratulating this year’s winners (listed alphabetically by last name):
• David Bloomquist, grocery procurement manager at St. Louis-based Save-A-Lot
• John Burry, commercial executive at El Segundo, Calif.-based Fresh & Easy Neighborhood Market
• Mike DeCory, vice president of private label, Wegmans, Rochester, N.Y.
• Ralph Fischer, group vice president, food merchandising, Meijer, Grand Rapids, Mich.
• Tom Gerrity, senior product director for private label/store brands at 7-Eleven Inc., Dallas
• Ken Keelor, vice president, private label procurement, Stellarton, Nova Scotia-based Sobeys
• Doug Palmer, vice president of Own Brands at the Great Atlantic & Pacific Tea Co. (A&P), Montvale, N.J.
• Laura Sturdevant, director of private brands at Walgreen Co., Deerfield, Ill.
PL Buyer invited the 2010 award winners to offer their thoughts about what currently is going on in the world of private label retailing. The Q&A that follows provides key insights into current triumphs and challenges, as well as areas to grow in the future.
PL Buyer: Private label has been riding a real growth wave over the last couple years, thanks to the recession and improvements in store brand product quality. Where do you see the industry heading over the next year or two?
Bloomquist: The private label industry will continue to grow as long as we remain focused on the consumer. At Save-A-Lot, we are dedicated to high-quality, innovative exclusive brands that enhance the shopping experience.
Retailers previously battled consumer misperceptions that private brands meant lower quality because of the inexpensive price. In today’s environment, consumers are astute in the products they are demanding. Private label has now become a true brand in itself, with higher-quality products and packaging that rival the national brands'. At Save-A-Lot, we have award-winning private label products. My favorite is our Wylwood frozen vegetables. For continued success, private label packaging needs to communicate the brand with appetizing imagery
Retailers and manufacturers must also work together within the industry, continuing to improve the quality on the inside to maintain the private label upward sales spiral.
Fischer: I believe our customers will stay with our own brand assortments. Once they have tasted our quality and experienced our value, I do not see them quickly returning to national brands.
Gerrity: I believe 8 to 10 percent growth will continue as long as retailers meet the consumer need for consistent high-quality products that deliver value. Many retailers are now spending some of their marketing and advertising dollars to create consumer awareness for their specific store brands, which helps the private label business for all retailers. Private label is here to stay and will always be an important part of the product mix, much like it is in Europe today.
Palmer: The increase in acceptance by consumers for private brands creates an excellent opportunity for retailers to “invest” in their programs and extend the recent growth trend. We will see an increase in the number of retailers who revitalize their programs by committing additional resources to branding, quality improvements and package innovation. Those who invest “now” will continue to experience growth 3 to 5 years from now.
Sturdevant: I feel private brand sales will stabilize, but not decline, as has happened in past economic downturns and subsequent recoveries. The trends will move to better-for-you and differentiated products, and retail marketing of more private brand products.
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, and why?
Bloomquist: Retailer/supplier relationships are very important in all aspects of the supermarket industry. At Save-A-Lot - which is 80 percent exclusive brands - these relationships play a vital role in our business plan. Strong partnerships with our suppliers allow Save-A-Lot to better serve our customer with great foods at a great value.
We invite our top private label vendors to “Top-to-Top” meetings throughout the year. Save-A-Lot believes it is important for our vendors to understand our perspectives and strategic growth goals. In return, Save-A-Lot benefits as vendors share their innovative ideas growing sales and profits. This is still a people business. Through these face-to-face meetings, we accomplish a goal of making sure we are both on the same path to success.
A strong relationship with vendors is mutually beneficial, and the best part is that it is a win-win for Save-A-Lot shoppers.
Fischer: Today’s business is about relationships. As we form partnerships and align strategically, we improve our products collaboratively. We also set common goals and work together as a team.
Gerrity: It’s critical that we establish a close business relationship with our supplier partners. They need to understand our category plans, expectations and commitment to grow share while maintaining balance with the brands. As retailers, we need to understand their goals to achieve mutual financial objectives. Together, we need to better understand our consumer, the dynamics of the marketplace, and trends. Both organizations need to drive costs out of the system and deliver a profitable program that can be replicated with each new product launch.
Palmer: Discussions between retailers and suppliers are starting to move beyond “cost” due to the desire of retailers to create proprietary points of difference in product innovation. This requires more conversation about capabilities and mutual goals. Behind every new innovative product, there is a healthy two-way dialogue between supplier and retailer.
Sturdevant: Retailers and suppliers will continue to work closer together to find unique opportunities to differentiate retailers’ offerings. Creating unique offerings that will not be seen at other retailers [will be the goal].
PL Buyer: What private label sectors are you most excited about right now, and why? Which sections aren’t getting the attention they deserve?
Bloomquist: As manager of sourcing at Save-A-Lot, I have had the opportunity to grow into the smoked meat category while continuing to manage the frozen meat and seafood categories. I am excited about the opportunities these categories offer. What I enjoy the most is knowing that the work I do allows a family to enjoy a quality meal together at a great value. At Save-A-Lot, we serve the underserved customer, and that excites me every day.
The smoked meat category has not shown the rapid rate of private label growth as traditional frozen or grocery categories. This could become a new frontier for private label growth.
Fischer: Organics are very exciting. The demand and growth in this segment is stellar. People can have organics that taste great and still have affordability with own brand products.
Gerrity: Although we’ve been in the private label business for many years with Slurpee, Big Gulp and other proprietary products, we’ve expanded our assortment across most categories in the store with our 7-Select brand. I’m excited about our recent launch of 7-Select beverages - like tea, juices, soft drinks and Game Day beer. Of course, many best-in-class retailers have been in these categories for years, so we have some catching up to do. However, we are leading the way in the convenience store channel.
Private label dairy and dairy byproducts have a significant share of category in the food, drug and mass-merchandising trade classes. We are not in this business today; however, [we] are exploring options and conducting some tests along this line in a few markets later this year.
Palmer: The most important trend in recent years is the addition to store brand programs of sophisticated, well-thought-out proprietary brands. Managing “brands” vs. “private labels” is changing the way we think about store brands and how they compete on the shelf. This continues to be the most dramatic change in our industry and, at the same time, the greatest opportunity.
Sturdevant: I’m most excited about healthier alternatives, including better-for-you, all-natural, no artificial ingredients and portion-controlled products.
PL Buyer: In your view, what components are most critical to private label program success?
Bloomquist: Real simple: Quality, cost and service say it all when understanding private label success. There is a lot of media attention today saying the consumer wants cheaper alternatives. However, I feel they want smarter alternatives following the value equation.
DeCory: The most critical component to a successful private brand program is total commitment from the entire organization. At Wegmans, commitment starts with the enthusiasm and passion of the Wegman family and continues throughout the organization all the way down to the newest store employees. This commitment keeps everyone at Wegmans focused on the high standards needed to be the brand of choice for our customers.
Another critical component to success is execution at store level. Because of the commitment I mentioned above, our store employees feel connected to our brand and therefore do an unbelievable job of merchandising our products and educating our customers on features and benefits.
Fischer: Product development resources to take our own brands from quick followers to innovators.
Gerrity: The most important component is understanding the customer need, then identifying products that also meet our company’s financial expectations for total category growth. Just as important is ensuring quality throughout the entire supply chain.
Palmer: First of all, a private label program needs a senior management commitment that considers private label as a key component in the overall competitive strategy for the organization. Second, you must have store associates involved in the process. They are your best salespersons once they get engaged. And third, there has to be a willingness by the organization to “lead” instead of “follow.” Innovation will succeed only if retailers are willing to take a risk now and then. (Fortunately, I have all three at A&P.)
PL Buyer: What challenges lie ahead for private label programs, and how could/should retailers respond?
Bloomquist: Retailers and manufacturers need to continue to understand and anticipate consumers’ attitudes and behaviors in determining marketing strategies in the future. Private label needs to take share in growth categories. If successful, this becomes a double positive, as opposed to taking share in declining categories. We must make our exclusive store brand become a destination for the consumer.
Fischer: As we take share from national brand players, we will have to be prepared for their competitive response.
Gerrity: The primary challenge will be to continue building consumer awareness as the economy improves. Some customers may have more discretionary income and will spend more for a branded product rather than spend time exploring lower-priced alternatives. The retailers that build loyalty today around their store brands and develop innovative products will win in the future.
Palmer: The challenge for most private label programs will be to sustain their recent gains in sales. The economy has “jump started” private label gains, but [retailers] will not be able to maintain this growth without keeping consumers focused on their brands. A “platform” of innovation, new items and marketing should be created now to facilitate future growth.
DeCory: What is most rewarding about my job is the ability that we have to make a difference in the lives of our customers with [the] Wegmans brand. Our mission at Wegmans is to help our customers make great-tasting meals healthy, easy and affordable, and we are constantly looking to develop Wegmans brand products to deliver that mission. Nothing is more rewarding than hearing our customers share their experiences with Wegmans brand products that have made their lives easier, offered them exceptional value, helped them make healthier meals, etc.
Fischer: Seeing our own brand being accepted and chosen over the national brand products. Our customers choosing our brand over national players tells us that we are doing things correctly and we are relevant.
Gerrity: The most rewarding factor is seeing the financial success of private label products in our stores. It feels good knowing that I played a key role in bringing these products to market through a team approach with our suppliers, the entire 7-Eleven management team and our franchisees. The excitement of seeing and talking with our franchisees who embrace the program motivates me. What would I change? I would have started expanding our portfolio of private label products one to two years earlier for the benefit of our customers and franchisees.
Palmer: The most rewarding factor in my job is working with a team that is passionate about what they do. Their hard work and commitment make it a pleasure to come to work each day. I also enjoy working with suppliers that are flexible, innovative and willing to entertain a new idea. When I find a supplier that is passionate about an idea as I am, it usually results in a big sales opportunity for both of us. Finding that “diamond in the rough” product and supplier is a daily motivation for the team and me.
When you enjoy what you do and the people you work with, I can’t think of a reason to change anything.
A Note from the Sponsor
Dear PL Buyer Readers:
West Liberty Foods, in conjunction with PL Buyer, is pleased to recognize this year’s recipients of the prestigious Retail Executives of the Year Awards. Through input from suppliers across the country, these industry leaders were selected for having superbly demonstrated a dedication to innovation and quality in their supplier/retailer partnerships during 2010.
As a leading private label supplier of quality further-processed proteins within several meat categories and across numerous channels of distribution, West Liberty Foods understands the importance of building partnerships that ultimately lead to mutual success. Just as we have partnered with our customers to produce, slice and package the finest private label protein items available, this year’s recipients have demonstrated expertise in developing superior relationships with their suppliers, built on trust and understanding. At West Liberty Foods, we understand the importance of recognizing the experts that truly leave their mark. That is why we are proud to applaud these people who have made a real difference in our industry.
Again, congratulations to these outstanding individuals who have demonstrated leadership, superiority in building successful relationships, and efficiency in delivering innovative products across all channels within the rapidly growing private label sector.
President and CEO
West Liberty Foods LLC is a leading co-packer, private label manufacturer and foodservice supplier of sliced and processed meat, cheese, and poultry products. The company supplies products to many well-known chains nationwide, including Subway, Costco, Walmart and Denny’s. West Liberty Foods strives to exceed its customers’ needs by using state-of-the-art technology, innovation and award-winning food safety practices.
West Liberty Foods is privately held by the Iowa Turkey Growers Cooperative, consisting of 47 area turkey growers. The company has a corporate office in West Liberty, Iowa, as well as four processing plant locations: West Liberty; Mt. Pleasant, Iowa; Sigourney, Iowa; and Tremonton, Utah.