Take a look at this fascinating article the Cincinnati Enquirer on Kroger’s award winning Private Brand products and how they bring them to market. This would stand as a excellent example for retailers all across the country.
How Kroger tests its private brands
By John Eckberg • May 15, 2009
Four of Kroger’s Private Selection pies won blue ribbons in the commercial category at the national Great American Pie Championship sponsored by the American Pie Council in Lake Forest, Ill.
The designation belies any suggestion – at least in the pie category – that Kroger Co.’s branded products are cheap and inferior versions of national brands.
Shopper Kathy Beall of Blue Ash never needed any convincing. While price drives many consumers to turn to private brands, not so with Beall.
“I look and shop for them,” Beall said on a recent weekday morning, as she reached into a Kroger shopping bag at the still-new Kroger at Kenwood Towne Place.
“This Bacon & Honey French salad dressing only cost 88 cents. That saved me $2 or more.”
Taste and quality aside, a rough economy has led a growing number of households – including affluent consumers – to turn to private brands as a way to stretch their food dollar.
According to a recent report from Chicago-based NPD Group, 24 percent of all food and beverages served in American homes in 2008 were store brands. That is an increase of 33 percent from the 18 percent tally in 1999.
Today, 97 percent of all households shop for private-label foods, NPD found.
During 2008, 26 percent of Kroger’s grocery sales came from private brands, and Kroger brands reached a record-high 34 percent of grocery unit sales.
Kroger is a trend-setter when it comes to private brands, said Sue Welch, chief executive of Tradestone Software, Gloucester, Mass., a software company that focuses on retailers with private-label initiatives.
A typical Kroger store stocks about 14,400 private-label items – nearly double the 7,800 items stocked in 2003.
“The consumer has looked and said private label isn’t a bad thing,” Welch said. “Many private labels are becoming brands, to the point that consumers are not aware it’s a store label.
“Grocers can put ads behind them with in-store brands, displaying with prominence, and that gives the private labels a huge advantage.”
Also, Private Selection, the company’s premium tier of store brands, exceeded $1 billion in sales in 2008.
“In this environment, people are more willing to try our brands and we are seeing that month in and month out,” said Meghan Glynn, a Kroger spokesperson.
For Kroger, the epicenter of the company’s private-brand initiative is in downtown Cincinnati in a laboratory and test center tucked away in the first floor of the corporate headquarters.
Few of those thousands of products make it to store shelves without first passing muster with consumers who come to the laboratory to sample items each week.
Three afternoons a week, anybody who works in the building – many if not most are Kroger employees – line up to rate a variety of foods on a bank of computers.
On one recent afternoon, the offering was a cranberry, mango, vegetable and fruit medley in honey-lime seasoning.
All of the potential brands are judged with a rigorous survey. Testers cannot talk.
They must rank foods across a number of detailed categories, such as overall liking, flavor, appearance and texture.
A nine-point rating scale is nuanced with impressions such as “like extremely, like very much, like moderately, like slightly and neither like nor dislike.” The dislike category is equally detailed.
Testers are paid with chocolate candy, cookies and free coupons for their trouble – as well as the free plate of food being tested.