Over the last few years Private Brands have been significantly more than just a tactically lever for retailers to increase margin and drive profitability. Private Brand has become one of the key strategic pillars of an evolving retail business model that is attempting to discover how to create and grow both relevant consumer brands. This shift has been demonstrated over and over by the increase of high-caliber, well-educated professionals to lead evolving Private Brand programs. Vice Presidents, Directors and Brand Managers are being plucked from the ranks of national brand CPGs, consulting firms like McKinsey and other successful retailers.
This article from the San Francisco Chronicle by Matthew Boyle of Bloomberg Businessweek presents the story of the hiring of Diane Dietz by Pleasanton California-based grocer Safeway from Procter & Gamble as their chief marketing officer and the corresponding development of their CPG like Private Brand team.
Grocers boost private labels to reach deal hunters
Like many U.S. grocery chains, Safeway wanted to improve its private-label offerings during the economic slump, when consumers were eager for brands that offered better value. So three years ago it poached veteran marketer Diane Dietz from Procter & Gamble and named her chief marketing officer.
Since joining Safeway, Dietz has been digging into P&G’s bag of branding tricks. In June, to promote the introduction of Safeway’s Open Nature line of antibiotic-free meat, she had a 305-foot-long picnic table (a Guinness World Record) constructed in San Francisco’s Marina District, where celebrity chef Tyler Florence of Food Network fame helped prepare a meal for several hundred people. The resulting buzz was a publicity bonanza for the house line.
Store brands have come a long way from their copycat days, when they confined themselves mostly to yellow boxes of faux Cheerios and black-and-white cans labeled “beans.” Back then, grocers were loath to anger the Kraft Foods and PepsiCos of the world by pushing their own labels too hard.
Now, with deal-hunting shoppers increasingly brand-disloyal, Safeway, Kroger, and Supervalu – which together account for 40% of U.S. retail food sales, according to Citibank analyst Deborah Weinswig – are increasingly willing to devote more shelf space to their own merchandise.
As of mid-November, store brands accounted for 31.4% of the 14,400 new food and beverage items introduced in the United States this year, according to market researcher Packaged Facts, based on data from Datamonitor’s Product Launch Analytics. That’s double the share logged in 2010 and up from just 8.7% in 2009.
To fuel sales of their in-house lines, retailers are recruiting veteran marketers to help out-innovate traditional packaged goods companies.