In a fascinating article from the Minneapolis Star Tribune the newspaper interviews Supervalue CEO Craig Herkert. He discusses his first year at the nations third largest grocer, the economy and of course Private Brands. His take on Private Brand is a unique reflection of both the economy and his time at Walmart. The following is an excerpt from that article.
Q. What was the most unexpected thing you’ve had to deal with over the past year?
A. The very challenging macroeconomic environment has been more troubling than I would have expected. Real American consumers have been challenged. It’s been well publicized — double-digit unemployment. But there are some places where we have stores — like Detroit and Southern California — where unemployment is well over the national norm of 10 percent. And underemployment is a huge challenge. So consumers have had to change their shopping habits and that affects our business. Moms across America have discovered in many cases there are times when private brands are an appropriate part of the solution for her family.
Q. Why are private brands, or store brands, so important?
A. The key thing is they are a value proposition for the consumer. So when a consumer comes to any one of our stores I want her to be able to make a choice. If she wants to buy a national branded product, I want to have that national branded product at a fair price for her. If however she chooses to want to buy something that is a better value, then I want to have that. We have a great private brand program. Quite frankly we haven’t stepped up and really shown off that fact to Mom.
Q. Supervalu‘s private-label sales as a proportion of its total sales have grown from about 15 percent to 18 percent in recent years, and you expect to take it to 20 percent by next year. But your key competitors’ private-label sales are already at or well past that 20 percent mark.
A. Yes, we’re well below our competitors. But until recent years, private label wasn’t really a big focus for growth.