Safeway Private Brands Outpacing National Brands


Take a look at this excerpt from the Seeking Alpha transcript of the Safeway Inc. – Q1 2009 Earnings Call

Mark Wiltamuth – Morgan Stanley
Okay. And if you can just give us a little update on the private label versus brand battle in the quarter. Where is your sales mix on private label now and how much of a margin boost do you think you got out of it in the quarter?

Steven A. Burd – Chairman, President and Chief Executive Officer
Well we’ve avoided giving specific penetration numbers and frankly, I have never found it particularly useful unless you know the book that people use and do they includes produce, what’s in there. But we continue to make major share gains in private level. We have a very strong private level program as you know. And I think I commented earlier in the call; I’m not sure if you were on where we are outpacing the growth in national brands by 1000 basis points. And so that says a lot. And I don’t see that dissipating. I don’t expect that number to get… to be much different in quarters two, three and four. And I’m not sure it’s going to be different in 2010.

Mark Wiltamuth – Morgan Stanley
And I think you had mentioned that you were seeing some promotional dollars coming back from the brands in response?

Steven Burd
We are. There have been some outright price reductions, but more often than not, we see some additional trade dollars coming our way. It allows a consumer packaged goods company to keep what they would consider their hard earned price increase, but to try to spend some money to get back up some share. And so I think that you will continue to see that happen. We don’t… we basically are trying to provide value to our consumers. And if today that value is best seen in private brands, then we’re going to shop (ph) those private brands, we’re going to merchandise them and we’re going to sell them. We’re more than happy to take trade dollars and sell branded items because they still are the lion’s share of what we sell. But we’ve got something to sell and create value for consumers regardless of what happens to price points of consumer packaged goods.

Mark Wiltamuth – Morgan Stanley
And then just lastly, how big are your external sales of private label now when you’re selling to third parties and other grocers?

Steven Burd
I don’t have a number, a current number on that. But we’re making good progress. We’ve always sold to outsiders for more than 20 years. We’ve stepped that out with organic meeting right. So the numbers are growing, but I don’t have a specific number for it.

Some intriguing questions from analysts to Mr Burd, I would love to know how O organics is doing as Safeway sells it outside their stores.

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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.