The editors of the trade magazine, Private Label magazine announced the retail winners of their publication’s 2009 Store Brand Leadership Awards and 2009 Store Brand Retailer of the Year Award. The awards are dedicated to honoring North American retailers for their contributions to the growth of Private Brands.
The retailers have were selected from nominations submitted by the readers of Private Label magazine based the following criteria:
Marketing–including Advertising and In-Store Merchandising,
This year’s 2009 Store Brand Leadership Award recipients are:
Supermaket Segment: Montvale, NJ based A& P
Supermaket Segment: Jacksonville, FL based Winn-Dixie
Discount Store Segment: Memphis, TN based Fred’s Inc.
Canadian Retail Segment: Toronto, ON based Shoppers Drug Mart Corp.
A & P, The Great Atlantic & Pacific Tea Company, was selected as Private Labels overall 2009 Store Brand Retailer of the Year Award recipient.
Company profiles of the above winners will appear in the upcoming Private Label July-August 2009 issue.
According to this article from the June 6th edition of Brandweek “Private Brand Growth Slows” It is an interesting interpretation of data from a number of sources looking for a trend. I am not sure if this crystal ball is accurate but it is optimistic for publication that has traditionally focused on National Brands.
Private Label Growth Slows
Since the recession began, private label has become a major threat, biting into food earnings among companies like Kellogg and Kraft. Now, with signs of an economic recovery on the horizon, price increases abating and consumer confidence on the rise, sales of store branded products—though still growing—are tapering off, analysts say.
Data by The Nielsen Co., owner of Brandweek, for instance, shows that private label actually lost a 0.8 unit share point in the food, drug and mass channels during the four weeks ended April 18, compared to the same period a year ago (Wal-Mart sales are included).
Moreover, in a research note published May 29, J.P. Morgan food analyst Terry Bivens wrote that private-label share gains, while up on a year-on-year basis in most categories, “remain relatively steady” rather than growing quickly as they had previously.
At least one food marketer is expressing some relief. In Heinz’s fourth-quarter earnings call last month, CEO Bill Johnson noted: “Private [label’s] growth, while still a major concern, does appear to be easing somewhat, albeit at higher sustained share levels.”
Indeed. While most of the nation’s largest food purveyors aren’t dropping their guard against private label anytime soon, certain socioeconomic and market factors are lessening private label’s menace—if only a bit. The Congressional Budget Office, for instance, now expects an official end to the recession by the second half of 2009—and that’s without the trillion-dollar stimulus.
Though consumer confidence and the economy go hand-in-hand, Matt Arnold, a food analyst at Edward Jones, argued that perception aside, not much has really changed.
In this excerpt from an article published this week in Brandweek, they take an interesting look at the combination of licensing and Private Brand. Although licensing is an intriguing option for many retailers in this economy, one has to ask if retailers chose to invest the licensing fees in their Private Brands, would the long-term returns be higher? Would they build credible brands that become corporate assets and points of differentiation?
The article correctly makes the point that:
“Retailers have traditionally not been good brand builders. They know how to sell on price, but they don\’t know how to build brands.\”
Will this era of opportunity allow retailers to evolve into Brands and Brand Builders.
Shelf Interest: Licensors Cut Exclusive Deals with Retailers
Step into an Office Depot these days and you\’ll see crayons, markers, glue sticks and other items from Scholastic. Best known as a publisher of children\’s books and educational materials, Scholastic initially linked with Office Depot for an exclusive branded product line of schoolbooks for teachers, but now it\’s a sort of house brand for the chain. \”Sort of\” because such licensors are expanding the definition of private label and, along the way, providing a bright spot in the otherwise moribund licensing industry.
\”It guarantees us shelf space, and it gives them something exclusive and a product array from a brand that has recognition with teachers, kids and parents,\” says Leslye Schaefer, Scholastic\’s svp, licensing. \”Plus, the economics of them producing it themselves are favorable — from a margins or price standpoint, they can be more competitive.\”
Welcome to licensing, 2009 style. In this craptastic economy, traditional thinking is out (bye bye retail-channelwide entertainment deals!) and creativity (Let\’s make up a deal!) is in — and retailers and licensors are finding common ground.
\”They usually mix like oil and water, but they\’re working together in this recession,\” says Steven Ekstract, global publisher of License! magazine. He notes that the emerging trend of exclusive licensing deals between a brand and a retailer allow the best of both worlds. \”You think people are going to buy the cheapest thing they can, but they also want things they can trust because everyone wants comfort.\”
Or, as Jamie Salter, CEO of Hilco, which has exclusive Tommy Armour and RAM Golf equipment and apparel lines selling at Sports Authority, puts it: \”Retailers have traditionally not been good brand builders. They know how to sell on price, but they don\’t know how to build brands.\”
MARRIAGE OF CONVENIENCE
Years ago, retailers were primarily seen as distribution mechanism for companies like Procter & Gamble, Kraft and General Mills, which spent millions in advertising and creating brands. But the balance has shifted, and retailers learned long ago that sprucing up their house brands with new packaging and, in some cases, advertising, can reap dividends. According to the Private Label Manufacturers Association, such store brands now account for one of every five items sold in U.S. supermarkets, drug chains and mass merchandisers.
But there are some downsides to store brands. Retailers don\’t like taking all the risk, and traditional store brands-those that were created by the retailer — don\’t have the draw that a brand created elsewhere does. \”Cyclically, retailers fall in and out of love with private label on a regular basis,\” says Martin Brochstein, svp-industry relations and information for the Licensing Industry Merchandisers Association (LIMA). \”What happens is, they\’ll be selling a lot of brands, and they have a private label business. They look at those margins and say, \’Wow, these are great-let\’s get me some more!\’ And then they beef up the private label a lot, and that\’s great until something doesn\’t work. And then they say to themselves, \’Where do I go for the markdown money? Oh, wait a minute, it\’s us — we own it.\’\” At this point, brands start looking attractive again, and the next stage of the cycle begins.
Meanwhile, the licensing business has its own issues. The competition is tighter than ever, and there are fewer breakthrough properties. Promising entertainment up-and-comers such as Wow! Wow! Wubbzy! and Yo Gabba Gabba! haven\’t turned into Dora the Explorer dollarwise. Even Disney seems to have run out of steam.
A marriage of convenience for licensors and retailers makes sense, especially as retailers have gotten much more sophisticated about private label. \”They now have in-house departments,\” Brochstein says. \”And so they have much more of a vested interest in making private label work because they have infrastructures to feed. So it\’s more entrenched than it\’s ever been.\” Brochstein points out that companies such as Iconix and Cherokee are \”making a very nice living\” doing direct-to-retail licensing of their brands. Such brands are basically house brands.
LICENSING FOR THE TIMES
One such program was via Kohl\’s, which has an exclusive arrangement to sell Food Network-branded housewares in a deal brokered by licensing agency Brandgenuity, New York. Kohl\’s also has a line on Chaps, Dana Buchman, Simply Vera by Vera Wang, Mudd, Hang Ten, LC Lauren Conrad and other exclusive brands. According to the company\’s last quarterly statement, exclusive and private brand sales comprised 44 percent of total store receipts.
\”These are exclusive to them, and they are responsible for the sourcing,\” Brochstein says. \”It works like any other licensing deal. The brand owner has approvals, and all that. It\’s just there\’s no third-party manufacturer who is supplying Kohl\’s.\” Wal-Mart, meanwhile, has launched several brand exclusives, such as one with CBS Consumer Products for an America\’s Next Top Model line.
Last December, the superstore debuted fashion-forward togs, bags, hats and room decor for juniors and young women. Apparel is being added for spring/summer.
Here are a few of the Simply Vera by Vera Wang commercials from Kohl\’s
Take a look at this excerpt from this extensive article published in this months Private Label Buyer. It paints a picture of some great Europe and and Canadian retailers and their Private Brands. Book a ticket today, and walk a store there is a lot to discover. This is only a small portion of the article, if you like Private Brand TV don\’t miss the european commercials a the end of the post.
Spying on the Neighbors Modern private label has European origins, which significantly influenced Canadian retailers. So what can U.S. retailers of private label products learn from the retailers up north and across the Atlantic?
Much like hopping across puddles on a dreary day, U.S. retailers of private label goods could stay comfortable during this stormy recession by hopping across the pond and learning a thing or two from what retailers overseas are doing with their private label programs. In fact, Thom Blischok, president of Consulting & Innovation for Chicago-based Information Resources Inc. (IRI), wrote in IRI’s “Times & Trends Special Report: U.S. & Europe Private Label 2008” that U.S. retailers historically have looked at European programs for inspiration in developing their own private label programs.
According to the Nielsen Co.’s (of New York) market share statistics from the Private Label Manufacturer Association’s (PLMA) PLMA 2008 International Private Label Yearbook, the European country enjoying the largest private label share is Switzerland, at 54 percent. The United Kingdom, Belgium, Germany, Spain and France followed, at 43 percent, 42 percent, 40 percent, 34 percent and 32 percent, respectively. The report says private label’s market share increased in each of the 11 countries Nielsen audited during that period compared to five years ago. Back then, private label volume had a share of 30 percent or more in only four countries.
Canada, too, has been a private label hot spot for some time. That’s no surprise — Canadian retailers learned a lot from European private label programs.
In its March/April 2009 issue Private Label Magazine announced the Private Label Hall of Fame–Class of 2009 they included:
Joe Coulombe of Trader Joe\’s
As Joe Coulombe tells it, Trader Joe’s has gone through three significant makeovers in its evolution into what it is today.
Says Coulombe: “The concept of Trader Joe’s is difficult to explain, but let me put it into just one phrase:
“Trader Joe’s was designed by me in the 1960s and 70s to serve people who are over-educated and underpaid.”
Coulombe retired from Trader Joe’s in 1988. Previous to this, in 1979 he sold Trader Joe’s to Theo Albrecht, one of the co-owners of the Aldi discount chain based in Germany.
Kenton Gast of Kroger
“We were one of the first retailers to support the new PLMA Trade Show,” points out Kenton Gast. “As I recall, the early PLMA Shows were held in hotel ballrooms.”
At the time, Gast was director of Kroger Brands procurement — a position he assumed in 1975 and held for eight years. In 1983 he was promoted to vice president of Kroger Brands procurement. “From the outset, I saw the PLMA Trade Show as an ideal place to meet my needs as a buyer of private label finished goods. It allowed me to make contacts among new private label manufacturers and to see new private label products coming onto the market. It was a place where I could pick up new ideas.”
John Huffman of Fleming Cos.
John Huffman knows the private label food business — from start to finished goods.
Huffman began work in 1953 at age 18 in a Safeway private label manufacturing plant in North Texas. While working the night shift, he attended Southeastern State University where he earned a B.S. degree in Food Chemistry.
By 1969, Huffman had risen to become a general manager
overseeing five plants.
In 1970 Huffman joined the distributor Fleming Cos in Topeka, KS, and later moved with them to Oklahoma City.
“The reason Fleming recruited me was to help them vertically integrate their food supply chain. They bought every type of business including food manufacturing that they felt fit their business model of vertical integration.
Don Spellman: Cornerstone of PLMA
Don Spellman is one of the founding members of the Private Label Manufacturers Association. He participated in the special meeting of industry representatives held at the Chemist Club in New York City on October 23, 1979, to form PLMA.
He served as the 2nd vice chairman of PLMA’s first board of directors that held its first annual meeting in St. Louis at the Marriott Hotel, March 27-28, 1980.
Spellman began his career in private label manufacturing in 1952 when he joined the Eppens, Smith Co. one of the largest private label coffee and tea packers on the East Coast and based in Secaucus, NJ. ( Eppens, Smith at the time also owned the Holland House brand.) The company was founded in 1855.
He served as the company’s sales manager, and then served as the firm’s advertising and marketing director. Eventually, he worked his way up to become vice president of sales and marketing for Eppens, Smith. Through his position, Spellman dealt with coffee buyers for all the leading East Coast supermarket chains at the time—from Maine to Florida.
Karl and Theo Albrecht of Aldi
Karl and Theo Albrecht are co-founders of the Aldi chain of limited assortment discount stores, based in Germany. The brothers opened their first grocery store in 1948 in the Ruhr Valley and began operating under the name ALDI in 1962. The name is an abbreviation of Albrecht Discount.
Karl developed Aldi Süd, based in Muelheim, and Theo developed Aldi Nord, based in Essen.
Although Karl and Theo share the same store name — ALDI — the brothers have conducted their operations separately in northern and southern Germany both financially and organizationally, according to Dieter Brandes who during the 1970s was Theo Albrecht’s fugelman (meaning “wingman” in German or second in command.)