Loyalty-Building Tools

Participants in our retailer-supplier roundtable discussed how differentiated store brands and store brand marketing efforts can strengthen consumers' loyalty to a particular retailer.

Unique store brand products and store brand marketing efforts can work to attract consumers back to a particular store or banner, thereby helping to build retailer loyalty. But developing the right products and programs — ones that resonate with a banner's particular shoppers — is easier said than done.

In an industry roundtable held during the Private Label Manufacturers Association's 2012 Private Label Trade Show in November,Private Label ⇒ Store Brands brought together retailers and store brand manufacturers to discuss opportunities that make the most sense for store brand product and marketing differentiation — and how they might be able to work together to pursue them.

Our roundtable participants included Wesley Bean, vice president, own brands for BI-LO, Jacksonville, Fla.; Melissa Billman, director of private label development, Kum & Go, West Des Moines, Iowa; Mark Coleman, vice president, retail division for Catania Spagna Corp., Ayer, Mass.; Paul DaRe, vice president, sales and marketing, Furlani's Food Corp., Mississauga, Ontario; Kim Hannaford, director of marketing, Morgan Foods, Austin, Ind.; Maryann Herskowitz, director of private brand strategy and execution, Family Dollar, Charlotte, N.C.; Dave Jentgen, business development manager, Mariani Packing Co., Vacaville, Calif.; Cristina Leon-Rivero, vice president, marketing and human resources, Navarro Discount Pharmacy, Miami; Lori Levy, director of trade and product development, Fairway Market, New York; Joe McKie, vice president, private brands, Food Marketing Institute, Arlington, Va.; Bobby Ray, vice president of retail and private brands, Select Store Brands, Ontario, Calif.; Amy Stone, vice president of strategy and marketing, Save-A-Lot, St. Louis; and Regina Tator, director of private brands, Weis Markets, Sunbury, Pa.

What follows are just a very few highlights from that retailer-supplier discussion.

Consider a cause

Several retailers pointed to cause marketing as a growing opportunity for store brand differentiation that enhances consumer loyalty. For example, Tator noted that Weis Markets created a special ice cream in support of breast cancer initiatives to sell in its stores.

"We went to a breast cancer fundraiser and served our ice cream and gave coupons away," she said, "We got a lot of positive feedback."

Although Weis has its own ice cream plant, it actually partnered with a supplier on another store brand-related cause marketing effort — one that aimed to fight hunger, Tator mentioned.

"Our supplier actually met us halfway on our donation, which was really nice, and we were able to give away 40,000 meals and got a lot of press out of it," she said.

BI-LO's Bean said his company partnered with Feeding America last year and relied on support from private label supplier partners.

"We set up business and metrics with the key strategic suppliers in terms of how many units and cases and velocity they had to turn in to be able to make it a positive ROI for them to even decide whether to invest in it," he stated, "but we also met them with a match in terms of promotional allocation dollars that we would do if it didn't hit those targets."

The result? Eleven of the 12 key suppliers saw positive ROIs more than 22 percent greater than the expected lift over the baseline, Bean added.

"I think [cause marketing] is always strong for the community, especially from a company that's tied to the community," added Mariani Packing's Jentgen.

Community-minded branding

In some cases, retailers can differentiate and build loyalty by tying the actual product branding to the local community. That's what Navarro had in mind, Leon-Rivero noted, when creating the Vida Mia brand for the heavily Hispanic Miami area in which the chain is located.

"We determined that there was a need to have a brand that really spoke in their language, which is another key point, I think, and differentiator," she said.

Since its initial launch, the brand has been expanded and goes across numerous categories, Leon-Rivero explained. The company is now looking outside of the Miami-area market to bring the brand to other retailers with a strong Hispanic shopper base.

Speaking of Hispanic shoppers, Stone said Save-A-Lot has been looking to go bilingual across the board when it comes to its store brand products. But with stores situated in geographically divergent areas — from rural Kentucky and Northern Michigan to Florida and Texas — the retailer needs to ensure it minimizes the complexity associated with some of its own-brand bilingual-type offerings to respect the various shopper demographics.

Changing relationships

To bring truly unique loyalty-building products to retail shelves, retailers need to rethink their relationship with suppliers, Select Store Brands' Ray suggested. When retailers demand the lowest bid, net price, from suppliers, they cannot afford to partner with those retailers on marketing efforts.

"I think we're at a tipping point in the industry where we have to break that paradigm in terms of what the relationship means," Bean responded, pointing to his company's recent move toward multiyear, open-book (on both sides) partnerships with key suppliers.

"Customers are looking for more out of store brands than just the price-value equation " he stressed. "It's changed. They're looking for much more value, but you're only going to get there through changing that dynamic in terms of what the business commitment is between the supplier and the retailer."

Catania Spagna's Coleman told Bean that he "hit the nail on the head," but said those types of relationships tend to exclude commodities (such as his company's edible oils).

"We know we're going to be in every single bid out there and driven down to that lowest price possible," he said.

But even commodities have room for differentiation, FMI's McKie said (and, presumably, a potential for retailer-supplier partnerships that go beyond the transactional).

Differentiation "could be the health benefits of your product," he said. "It could be the way the product is packaged. … I mean there are all these other nuances."

Morgan Foods' Hannaford suggested Starbucks could provide inspiration here.

"The first thing that came to my mind was coffee," he said. "I mean that it is a commodity, and look at what Starbucks did with it. They made it an experience."

On the flip side of the coin, Furlani's DaRe said store brand supplier need to view retailers as marketing partners.

"It's not just an us-versus-them, brand-versus-private label situation," he said, "where private label is a detractor from the brands. The supermarket could be a vehicle to which we could get good products to market, and with local expertise as well."