Take a look at this article from the NYSE magazine website. NYSE magazine is a quarterly publication of NYSE Euronext, provides insights into the world’s best companies, giving readers a close-up look at the leaders that make up the NYSE community. This article examines the re-design and development of DG Baby diapers at Nashville based dollar/discount retailer Dollar General.
The decision over which brand of diapers to buy for little Susie or Sam is practical, financial — and emotional. Just ask Kyle Tucci, senior vice president at Valor Brands, a maker of private-label diapers based in Alpharetta, Ga. “If a private-label diaper leaks or somehow doesn’t hold up, the customer isn’t going to buy it again, even if it costs less,” he says. Back in 2004, Valor began supplying diapers to Dollar General to sell under the retailer’s own brand name. It was a good business, Tucci says, but it would soon be turned upside down when Dollar General Chairman and CEO Richard “Rick” W. Dreiling overhauled the company’s private-label offerings.
Early last summer, during a meeting with Valor, Dollar General executives, including Chief Merchandising Officer Todd Vasos, explained the new rules of the game. “They said to us that they wanted to build brands, not just sell the product,” Tucci recalls. That meant connecting in the consumer’s mind the Dollar General name with a premium diaper that just happens to cost less than the national brands. Armed with its own extensive consumer research, Dollar General laid out its expectations of Valor. “The basic conversation was that we were the diaper experts,” Tucci says. “They wanted to know what parents were looking for, what features appealed most to moms, and how merchandising, display, packaging, technology and price would all play into the decision to buy the DG brand versus the national brands they carried, such as Luvs and Huggies. The emphasis over and over again was on improving the quality.”
Valor also worked closely with Dollar General’s design group to make sure the packaging was crisp and bright, and that the colors exactly matched the ones used on the packages of private-label baby wipes, creating a cohesive DG Baby product line on the shelf. “They were very thorough, to say the least,&rdqou; Tucci says. And the results? Since last August, when the new DG Baby diapers hit the shelves, the company reports, private-label diaper sales have increased by double digits.
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