Find Common Ground

Innovative retailers are partnering with national brands for store brand growth.

Store brands give retailers an opportunity to offer products shoppers cannot find anywhere else. And when those brands are paired with the right national brands to create enticing promotions, customers are given even more incentive to shop at a particular retailer's store. In the end, the category is strengthened, and all parties win: the retailer, the national brand and — perhaps most importantly — the consumer.

To ensure a successful partnership between a retailer and a national brand, both sides need to be involved in the category management process. Dan Kelly, vice president of sales and marketing at Tracy, Calif.-based Musco Family Olive Co., says his company has examined shopper data and helped retailers perform SKU rationalization.

"[There have been] instances where we've taken out numerous items and transferred sales to other products, at the same time growing the category," he says. "So we've become more efficient with the SKUs that we've had."

Another rule of thumb is "know thyself." Simon Mainwaring, founder and CEO of Los Angeles-based brand consultancy We First — and author of a soon-to-be-released book with the same name — says both sides need to clearly define core values and operate/communicate in alignment with those values at all levels to help connect with consumers.

Mike Friedman, partner with retail consulting firm Kalypso, Beachwood, Ohio, agrees.

"Clearly align on category growth goals, strategy, target shopper and consumer insight, and desired innovation plan for two to three years out — and the role of national brands and store brands in delivering these goals," he advises.

After deciding on approaches to engage shoppers, both sides should create a joint scorecard with key measures that can be tracked on a monthly basis, Friedman adds, to better optimize future programs.

Austin, Texas-based Whole Foods Market has done a good job managing both store brands and national brands to maintain a strong reputation in the organic/natural product market, says David Aaker, vice chairman of San Francisco-based brand and marketing consultancy Prophet and author of Brand Relevance: Making Competitors Irrelevant.

"Whole Foods has, from the beginning, been into organic and natural," he says. "In a similar fashion, they have partnered with national brands in order to create substance and credibility behind their strategy and brand message."

A balancing act

But partnerships between retailers and national brand manufacturers aren't always easy. Kelly says suppliers that provide both national brand and store brand products present a single-source solution, but the issue of favoring one side over the other could rear its ugly head. Kelly believes retailers need to make sure such a supplier is unbiased and working for both sides. Of course, it's only natural for each side's sales to fluctuate.

"Over the course of the year, you've got to make the numbers work on both sides so, ultimately, the category grows and the consumer wins," Kelly explains.

To make the numbers work, Gerry Gersovitz, president and founder of San Francisco-based Instant Combo Savings, says it is important to advertise and display national brand and store brand products together. Such promotions can be done under a theme (such as "Back to School"), a discount or a "buy one, get one free" promotion.

Joe Flannigan, vice president of sales and marketing for Mariani Packing Co., Vacaville, Calif., says Pleasanton, Calif.-based Safeway used a similar tactic by putting on a "mix-and-match" deep-discount promotion that included both national brand and private label products.

"Safeway was able to drive sales of both while increasing total basket ring," he says.

Flannigan also speaks to the benefits of pairing complementary store brand and national brand products in a demo. Retailers such as Whole Foods have had much success with cooking demos, in particular.

Recipe for success

Speaking of cooking, retailers could ask their manufacturing partner to print recipes combining store brand and national brand products on packaging, Gersovitz says. A retailer and a national brand manufacturer also could team up and develop a website providing recipes, videos and other tools that help shoppers pair national brand and store brand items in a meal.

Stanton Kawer, CEO of Northbrook, III.-based Blue Chip Marketing Worldwide, notes his recent success on the dessert side — pairing Blue Bunny Ice Cream with store brand products from The Great Atlantic & Pacific Tea Co. (A&P) of Montvale, N.J., and West Des Moines, Iowa-based Hy-Vee.

"Both retailers identified a desire to increase traffic to their bakery section, and Blue Bunny was desirous of extending the heavy consumption days of the ice cream season," he notes. "So, after analysis and thoughtful discussions and planning, we executed a campaign with each banner's store branded apple pies and Blue Bunny's ice cream."

But retailers are advised to plan ahead in co-merchandising. For example, John Boccuzzi, managing partner of Boccuzzi LLC, Newtown, Conn., says one retailer found out late in the game it lacked the necessary space for a planned co-display in almost 50 percent of its stores. The promotion couldn't be held, therefore, in those stores.

Two Brands, One Product

Partnering can go beyond category management and promotion, of course. Some retailers do an exceptional job in rolling out cobranded products — items that marry the equity of a national brand with the exclusivity and value of a store brand.

Issaquah, Wash.-based Costco Wholesale Corp. is known for teaming its Kirkland Signature brand with a number of national brands to create exclusive products that benefit both sides, including Filippo Berio for an extra virgin olive oil and Borghese for cosmetics.

"By researching where the retail and CPG shopper data positively intersect, certain national properties prove highly relevant to banner-specific store brand shoppers," Kawer says.

Rochester, N.Y.-based Wegmans Food Markets made an especially interesting cobranding move in 2010 when it launched a line of Swiss Crepes (wafer cookies) made by Swiss manufacturer Gottlieber Spezialitäten AG. Packaging displayed the manufacturer's name alongside the retailer's.

"It allows us to call attention to the authenticity and credentials of the Swiss manufacturer, linked with the confidence our customers have in Wegmans brand products," Wegmans explained in a blog entry on its website.

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The Dried Fruit Experts

Dried fruit long has been a family affair for Vacaville, Calif.-based Mariani Packing Co. For four generations, the Mariani family has grown, dried, processed and packaged high-quality dried fruit snacks and ingredient products. And consumer interest in such products is on the rise.

"The total dried fruit category — total U.S. food — is $620 million in retail sales, up 11.5 percent over the last five years," notes Terra Roisin, Mariani's private label business manager. "The private label segment now represents $110 million, or 18 percent of that total category."

Speaking of private label dried fruit, Roisin says raisins and pitted plums now account for 75 percent of sales here. But other dried fruit such as cranberries — which now actually account for a larger percentage of total category sales than pitted prunes — also spell opportunity for the store brand side.

"[Cranberries'] good-for-you perception and many diversified uses are driving this growth," Roisin says.

Boasting cranberry grower partners in Wisconsin and Massachusetts, Mariani Packing is ideally situated to help retailers here, she says. Moreover, the company currently is the number-two processor of pitted plums, one of the largest raisin producers in California, and an expert processor of other dried fruit ranging from apricots to strawberries.

And since its very beginning, Mariani has looked for ways to innovate in the dried fruit arena — from products to processes to packaging. The company was the first to introduce flavor-infused dried fruit and also the first to market with berries and tropicals, Roisin notes.

"Because our focus has been on growing the entire dried fruit category, we are constantly keeping a pulse on consumer and industry trends, using this knowledge to introduce products that will drive sales for the entire fruit category," she adds. "We consider ourselves the dried fruit experts!"

On the equipment side, Mariani's innovation focus centers on "best in quality" and food safety, Roisin says. Product and packaging options also are plentiful — the company processes every major type of dried fruit and serves up packaging options ranging from standup bags and pouches to cartons, boxes and canisters.

"We were the first to introduce the standup bag and see-through window," Roisin notes. "We have also just introduced a new Velcro®-like closure we call TouchLock™ Easy Seal to replace the often hard-to-close zipper on bags — another innovation first for Mariani."

Finally, Mariani brings more than innovation to retailer's store brand programs.

"We partner with our retailers to grow their overall dried fruit categories by working within the principles of category management, but at the same time taking into account a retailer's specific objectives and goals for the category and their store brands," Roisin says. "We then recommend tailored pricing and promotions on current events, as well as new products that will work together to augment total category sales."

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For more information about Mariani and how the company can be your dried fruit solution, please visit www.mariani.com or contact 707-452-2800.