Reporting this morning from Chicago…
There is a certain irony, being in Chicago for the Private Label Trade Show at the same time as the tussle has been occurring between Safeway-Dominick’s and the United Food and Commercial Workers (UFCW) union.
This became to clear to us yesterday, as we wandered through the trade show, sampling as many different products as we could stomach, and getting a sense of how this segment of the industry operates. According to the Private Label Manufacturers Association (PLMA), one in five products purchased in grocery outlets is a “store brand” product. Store brand sales, according to ACNielsen Scantrack exceeded $53 billion in 2001.
What private label really is all about is differentiation, because it allows retailers to find ways to establish points of unique advantage. That’s not to say that all retailers use private label that way; some just put them up on the shelves next to the national brands, and never promote them to any great extent. That seems like such a waste.
(By the way, we’d make the same criticism of how many retailers deal with national brands, promoting them only up the point that manufacturers fund the promotions, never accepting a shared responsibility to using packaged goods as a creative weapon in the supermarket wars. This doesn’t mean promoting price. Sometimes it means promoting food products as ways of improving people’s lives…)
Now, we happen to be big private label consumers. We do much of our shopping at Stew Leonard’s and Trader Joe’s, two prime and effective practitioners of the art of private label, so we have an appreciation for how it can establish a store’s identity.
So how does this relate back to the Safeway-Dominick’s dispute with the union?
A reading of the voluminous correspondence that has come to MNB over the past few weeks suggests very clearly that there are deep feelings about Dominick’s unwillingness or inability to embrace the vagaries of local brands and regional perspectives on food once Safeway took over the company. This hardly makes Safeway unique in the food industry or in business in general; consolidation and expansion is supposed to provide economies of scale, and the growing homogeneousness of the marketplace is supposed to make it easier to achieve mainstream marketing appeal.
But that’s not what happened to Safeway in Chicago. Or in Pennsylvania with its Genuardi’s acquisition.
For the moment, Dominick’s simply doesn’t seem to be differentiated enough, and there would be some who would argue that it is simply too late to recover.
Now, not all the answers to Safeway’s Chicago problems could be found at the Private Label Trade Show. But local sensitivity -- and expressing it through some effective combination of national brands, local/regional brands, and private label -- certainly would be a start.
And if it is too late for Safeway-Dominick’s, it is still a lesson that should be well learned by other retailers.
On a related subject…
What were the best things we tasted during our travels through the Private Label Trade Show?
The way to a customer’s heart and wallet is through his or her stomach…(which may make it onto the list of the Content Guy’s mantras…)
There is a certain irony, being in Chicago for the Private Label Trade Show at the same time as the tussle has been occurring between Safeway-Dominick’s and the United Food and Commercial Workers (UFCW) union.
This became to clear to us yesterday, as we wandered through the trade show, sampling as many different products as we could stomach, and getting a sense of how this segment of the industry operates. According to the Private Label Manufacturers Association (PLMA), one in five products purchased in grocery outlets is a “store brand” product. Store brand sales, according to ACNielsen Scantrack exceeded $53 billion in 2001.
What private label really is all about is differentiation, because it allows retailers to find ways to establish points of unique advantage. That’s not to say that all retailers use private label that way; some just put them up on the shelves next to the national brands, and never promote them to any great extent. That seems like such a waste.
(By the way, we’d make the same criticism of how many retailers deal with national brands, promoting them only up the point that manufacturers fund the promotions, never accepting a shared responsibility to using packaged goods as a creative weapon in the supermarket wars. This doesn’t mean promoting price. Sometimes it means promoting food products as ways of improving people’s lives…)
Now, we happen to be big private label consumers. We do much of our shopping at Stew Leonard’s and Trader Joe’s, two prime and effective practitioners of the art of private label, so we have an appreciation for how it can establish a store’s identity.
So how does this relate back to the Safeway-Dominick’s dispute with the union?
A reading of the voluminous correspondence that has come to MNB over the past few weeks suggests very clearly that there are deep feelings about Dominick’s unwillingness or inability to embrace the vagaries of local brands and regional perspectives on food once Safeway took over the company. This hardly makes Safeway unique in the food industry or in business in general; consolidation and expansion is supposed to provide economies of scale, and the growing homogeneousness of the marketplace is supposed to make it easier to achieve mainstream marketing appeal.
But that’s not what happened to Safeway in Chicago. Or in Pennsylvania with its Genuardi’s acquisition.
For the moment, Dominick’s simply doesn’t seem to be differentiated enough, and there would be some who would argue that it is simply too late to recover.
Now, not all the answers to Safeway’s Chicago problems could be found at the Private Label Trade Show. But local sensitivity -- and expressing it through some effective combination of national brands, local/regional brands, and private label -- certainly would be a start.
And if it is too late for Safeway-Dominick’s, it is still a lesson that should be well learned by other retailers.
On a related subject…
What were the best things we tasted during our travels through the Private Label Trade Show?
- There was this terrific new ‘fruit” called a Peppadew, which is sort of a cross between a pepper and tomato…and is absolutely delicious. The company selling it, Piquante International, says that it is the first new fruit discovered since the kiwi, is native to South Africa, and is available for olive bars, or bottled as a private label products. But most of all, it is delicious.
- Salmon filets, salmon sausages -- all were available from Heritage Salmon, and were excellent, robust and tasty.
- A company called Phil Chic made a great eggroll stuffed with spicy Buffalo chicken wing meat. Yummm.
- Brent & Sam’s Gourmet Cookies offered two wonderful varieties: a Raspberry Chocolate Chip cookie, and a Key Lime White Chocolate Chip cookie. Double yummmmm….
The way to a customer’s heart and wallet is through his or her stomach…(which may make it onto the list of the Content Guy’s mantras…)
- KC's View:
