- NEW FEATURE
Re-visit these pages during the month for updates and new items. Asterisks before a *Company Name indicates that company's current listing is in the 2013 Exclusive Brands SOURCEBOOK database.
While many retailers lately have been consolidating their private brands, Macy’s already marketing 40+ different private brands still keeps its branding iron hot, so to speak. Its penchant for creating its own brands, which represent 20% of its net sales of $27.7 billion (fiscal year ending Feb. 2, 2013), derives from a merchandising strategy designed to appeal to different demographics and customers. The so-called Millennial or Y generation, reportedly the country’s biggest generation group, is its latest target. Three new branded lines, set to launch late this summer, aim at these customers, who range from 13 up to 30 years of age. First, there’s QMack, a line for the working girl, encompassing 13 casual sportswear items, such as blouses, bomber jackets, cardigans, trousers etc. QMack is the contraction of a fictitious muse, Quincey Mack. Next is a French-style collection, called Maison Jules for women from 18 to 30. Finally, Macy’s has extended its Bar III brand to a label called Bar III Carnaby Collection, featuring sports coats, dress shirts, ties, suit separates, etc., inspired by London’s Savile Row styling. Pricing for the three Millennial collections starts just below $20 and ranges up to $300 per item.
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‘AT HOME’ & ‘ON TRACK’ WITH THRESHOLD PRODUCTS
What better setting for a ‘home’ than smack in the middle of New York City’s Grand Central Terminal, where uncountable commuters look to head home after work or travel! *Target Corp., Minneapolis, which knows how to hit the bulls-eye when promoting and marketing products, for two days (May 6-7, from 7 am to 7 pm) staged a life-size dollhouse in this crossroads setting (pictured above, right). The 1,540-square-foot, pop-up home, inspired by Target’s printed promotional flyers, was constructed out of interlocking 4-by-8 panels, fitted together as a two-story home, complete with a patio and lawn area. Dubbed the Threshold Dollhouse, it was furnished with some 3,000+ products, drawing from Target’s new, exclusive Threshold Collection of home décor, bath, bedding, and kitchen-dining merchandise. The “Threshold Quality & Design” line, which debuted this spring, was supported as well with print and TV advertising.
Just like shoppers being treated in Target stores, commuters could walk into the home and view the merchandise on display in different rooms (kitchen, bedroom, etc.), and, for the women, even to do some touch-up work on their hair or make-up in a bathroom, staffed by beauty experts. Target staff members in each room answered questions and encouraged hand-on inspection of the goods. As we reported in the December 2012 NewsPage, the Threshold Collection features different textures and hand-sketched treatments, adopting such themes as New England countryside, equestrian, heritage, Native American prints, etc.
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COLRUYT (BELGIUM) CONSOLIDATES ITS OWN BRAND PORTFOLIO
This month, *Colruyt, Belgium’s market leader in food retailing, announced plans to re-identify its collection of more than 50 own brands under a new flagship brand, Boni Selection (Bonus Selection), in all its food stores. The first category affected: fruits and vegetables. Next, brands like Eldorado juices, Galaxi cheeses, Belsy biscuits, and Lisa paper towels and toilet paper will be changed. The consolidation is expected to be completed by 2015. The Boni Selection name derives from the Boni banner used by the independent grocers it serves for decades. Colruyt also had used a Boni own brand for its fruits and vegetables.
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‘NYET’ FOR PRIVATE LABEL IN RUSSIA?
Not quite 'no,' A more telling translation of 'nyet' into English, when it comes to consumer shopping behavior in Russia, might be 'not yet.'
Taken in perspective, private label sales in Russia have barely reach 9% of total fast-moving consumer goods--lagging far behind most of those in European countries, where the average is closer to 25 to 30%, according to a recent *Nielsen report. Russian retailers who embarked on private label programs around 2000, have yet (nyet) to accelerate their market share penetration. In a consumer report released March 27, 2013, titled "How to win with the Russian shopper,' Maciej Przybysz, vice-president of Nielsen Russia and Northeast Europe, indicated that a recent online survey shows that 73% of Russian consumers do not buy private label store brands. Russians, while conservative, like new products; but shoppers are brand loyal. They also are short-term shoppers, buying only for immediate daily needs. Przybysz suggests "manufacturers should consider offering smaller package sizes and ready-to-eat options. Retailers should increase their express and to-go formats."
She also suggests that retailers should improve the in-store experience and introduce creative and appealing store displays "to soothe the stress of shopping and appeal to Russians' positive feelings about new products. " The Nielsen study found that only 16 % of Russians consider shopping enjoyable, compared with 26% globally.
Russian retailers lately have been busy consolidating their operations, acquiring other retailers, and especially opening new stores. Of the top three players, we found only number 3, *Dixy Group prioritizing private label as one of its main strategies. Its private label program launched in 2005 was spread through 40+ different brands. That changed in September 2012, when the retailer unveiled a new consolidated private brand, Dixy, for its Dixy neighborhood stores (comprising 1,436 outlets out of the company's total 1,544 stores as of March 31,2013). The big news: News reports now indicate that Dixy plans to push its private label share of revenues (estimated at about 10%) to 15% by 2015. For 2012, Dixy opened 380 new stores.
The country's number one chain, *Magnit, now with 6,884 stores (6,209 of them convenience stores) has been on fire in terms of store opening: 1,575 opened in 2012 and another 1,400 planned opening for 2013. Its private label share of revenues is reported at 13.2%; but this retailer's strategy may be a little behind the times. Magnit designs its private labels to replace the cheapest sku in the store and thereby maximize its return from that shelf space. Research studies on Russian consumers suggest that they still think of private label as a cheap product. Yet, Magnit isn't totally fuelling that fire: Its hybrid Magnit Family stores, which combine the hypermarket concept with the c-store operation into some 1,500 square feet of selling space, now allows for in-store production of ready meals.
While Dixy and Magnit both enjoyed strong 2012 sales results, +43.7% and +26.3%, respectively, the third leading player, *X5 Retail Group barely edged ahead in 2012 with sales up by 2.2%; since this retailer suffered a net loss for the year resulting from the closure of two hypermarkets and the sale of its non-food product range in those outlets. Its soft discount chain (3,220 out of the total 3,802 company-operated stores) did show a sales gain for the year. Its overall private label sales, we estimate at about 10% of its total 2012 results.
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WHO'S RIGHT, WHO'S WRONG
While *Walmart doesn't follow Magnit's "cheap" fill-in strategy with private labels (see above), Walmart's executive VP & CFO Charles Holley told financial analysts at a Bank of America-Merrill Lynch Consumer & Retail Conference in New York (March 12) that its private labels "fill in gaps" wherever there's a "value gap" for its customers. Unlike other retailers, Walmart isn't interested in "a strategy to replace or pump up profit(s)." Its focus is on being "a brand retailer" who "likes to sell brands."
This summary of Mr. Holley's comments in a FoodBusinessNews.net report (March 13) ignores an important industry trend: the growing presence of upscale, premium, sometimes unique products under an exclusive premium private brand. It may explain the apparent back-burner status or replacement of Walmart's Sam's Choice premium brand. We recently spotted some 40 Sam's Choice products on the retailer's website, the very last item, a 64-ounce Sam's Choice fruit juice cocktail, described alongside a picture of the product under the Great Value label.
Sam's Choice brand has been positioned as a premium quality tier, while the Great Value brand represents the national brand quality equivalent. Sam's Choice seemingly gets barely a nod of recognition. Yet the industry trend is definitely toward upscale, premium quality private brands. Retailers and manufacturers alike have hopped on this bandwagon. Recently, the discounter *Aldi, enjoying sales success with its Specially Selected premium product range in an economically troubled Europe, has rolled out this line with such products as German coffees, gourmet pastas and cheeses, into its second largest market, the United States. Says Aldi USA president Chuck Youngstrom: “Each Specially Selected product was developed with exceptional taste and at an excellent value – helping to meet our customers’ increasing demand for premium, quality food at affordable prices.”
*TreeHouse Foods, Oak Brook, IL, primarily a private label manufacturer, recently reported that the premium segment of the US grocery retail market "has been our fastest growing over the last two quarters at least." Since its formation in 2005, the company has acquired some half dozen companies, becoming a private label leader in a number of product categories.
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