Missed Our Collaboration Summit?
The second annual Store Brands Collaboration Summit, hosted by Deerfield, Ill.-based Stagnito Business Information and Store Brands, was held on Sept. 30 and Oct. 1 at the Loews Chicago O’Hare hotel in Rosemont, Ill. Featuring presentations from retailers and their supplier partners, as well as other industry experts, the event provided attendees with the strategies and tactics they need to take store brand-related collaborative efforts to the next level.
In case you missed the event, we’re pleased to provide a brief overview here of many of the summit’s top-notch presentations.
Metro, Leclerc partner for store brand growth
Some time ago, Montreal-based Metro Inc. found itself without a store brand cookie and cereal bar supplier when its original cookie manufacturer went bankrupt, Marie-France Gibson, Metro’s vice president, private label, told attendees during an Oct. 1 presentation at the 2014 Store Brands Collaboration Summit. At a trade show, she met Frederic Langlois, who currently serves as senior vice president, private label sales, innovation, R&D, marketing and communications for Leclerc Group Inc., Saint-Augustin-de-Desmaures, Quebec.
Langlois promised Gibson that his company would work with Metro to grow the retailer’s line of Irresistibles-brand cookies, biscuits and bars. Their success and the relationship the two companies created along the way “is why we are here today,” Gibson said in the session, titled “Metro: Irresistibles by Leclerc.”
“Leclerc has kept their entrepreneurial spirit, their civility and their adaptability,” she said. “Working together [with Leclerc] has not been just profitable, but it has been enjoyable as well.”
To gain the category growth it wanted, Metro realized it not only would need to work closely with Leclerc, but also would need to invest in its relationship with Leclerc, Gibson said. So Metro and Leclerc began using a business model with specific steps for new product development, packaging design, go-to-market strategies and retail execution. And each company agreed to take on specific responsibilities when it came to the development of new products.
For example, each company agreed to do its respective homework related to food trends. Metro looked at internal data gathered from sales and loyalty cards — as well as from research companies — while Leclerc looked to outside sources for consumer insights data and current food trends in markets outside of North America, Langlois said. The two companies worked together on packaging, merchandising and promoting the new products as well. And both companies came together to review product performance for products that were performing well and not so well.
“Communication is key to good execution, as is responsiveness,” Langlois said. “Metro and Leclerc agreed to share the responsibility of a product’s success and failure. If we have success, we have success together. If we fail, we fail together.”
During the presentation, Gibson highlighted Metro’s most recent success: the launch of several new cereal bars. After discovering that its store brand breakfast bars had a 68 percent repeat purchase rate, Metro decided to give some extra attention to the category. After studying sales and consumer trends, it decided to work with Leclerc to create a multi-unit family pack of cereal bars under Metro’s Selection brand. The multipack offers Metro’s top-selling flavors all in one box.
Additionally, Metro and Leclerc realized consumers wanted affordable, healthful cereal bars to fit their on-the-go lifestyle. So they partnered to launch nine new cereal bars under the Irresistibles Life Smart brand: two Greek bars, two low-calorie breakfast bars, two protein bars and three gluten-free bars.
“But even if we are pleased with what we have right now, we need to constantly be looking to the future,” Gibson said. “We need to be able to rejuvenate and to always answer customer needs in the market.”
— M. Escobar
Take advantage of the omnichannel opportunity
Much has been said about retailers developing an omnichannel strategy. But what exactly is the purpose of such a strategy? In his Sept. 30 presentation at the 2014 Store Brands Collaboration Summit, Jim Wisner, president of Libertyville, Ill.-based Wisner Marketing Group, said a successful omnichannel strategy — which incorporates print, broadcast, in-store, online, social and other media — enables consumers to shop anywhere, any way, at any time.
“It’s really about bringing together all the ways we communicate and sell to customers into one seamless experience,” he said.
Wisner noted that U.S. online grocery sales are projected to jump from $6 billion today to $9.4 billion in 2017. This estimation shows that strong opportunity lies in the digital channel.
And given that 81 percent of consumers’ shopping preparation and execution time is spent online, brand owners’ greatest opportunity for engagement is while shoppers are connected via computer or mobile device, Wisner said.
But on the store brand front, much competition is coming from the national brand side. Procter & Gamble spends $1.7 billion (35 percent of its marketing spend) on social and digital media, while Kraft Foods spends 10 percent on just mobile, Wisner said. So how could retailers compete? By looking at what the shopper truly wants, he said.
Wisner noted that shoppers expect a seamless experience that allows them to connect and interact across any channel at any time. They also demand relevant offers when and where they need them and compelling content that finds them, captures their attention and makes them want to share it.
To meet these demands, retailers need to have a mobile app, which Wisner referred to as the “Swiss Army knife of shopping.” Today’s integrated app should replicate the web experience, contain loyalty card information, provide nutrition info, recipes, demonstrations and electronic coupons, and more.
Wisner also recommended that retailers make store brands a lead component of their digital strategy. They should approach their private label vendors and tell them how they can play a part — and if they don’t know how they can, then find out.
“Just ask … ‘How can you help? How can you help me blaze trails?’” he said.
One way suppliers could help retailers “blaze trails” in a cost-efficient manner is via social media platform YouTube. During the presentation, Tom Cotter, vice president of consumer healthcare marketing with store brand pharmaceutical manufacturer Perrigo, Allegan, Mich., noted that his company has incorporated YouTube videos into its store brands media campaign, which retailers can use to educate shoppers on the benefits of purchasing store brand over-the-counter medicines instead of their national brand counterparts. Advertising on TV is very costly and spots are limited to 30 seconds. By using YouTube, retailers and manufacturers could better communicate the advantages of purchasing store brand products.
— R. Hofbauer
Alliance Boots, Walgreens collaborate on a global scale
When two iconic retailers headquartered in different countries come together, challenges that threaten successful collaboration can be expected. Executives with Bern, Switzerland-based Alliance Boots and Deerfield, Ill.-headquartered Walgreen Co. certainly anticipated challenges related to distance, dominance in certain areas, dissonance and discomfort as the two companies moved closer to a merger. In an Oct. 1 presentation at the 2014 Store Brands Collaboration Summit, however, Fiona Pearson, Alliance Boots’ director of brands for health & beauty, UK & Republic of Ireland, and Beth Stiller, Walgreens’ group vice president, retail brands and global sourcing, told attendees that the process has been relatively smooth.
“I think we’ve got all but the distance nailed,” Stiller said.
One reason the companies have been able to partner so effectively is that they have similar histories and a strong heritage, Pearson noted.
And both companies understand the importance of making products “accessible to all” via strong store brand programs — thanks, in part, to the pioneering spirit that Jesse Boot (Boots) and Charles Walgreen (Walgreen Co.) had many years ago.
“I have a feeling that if Jesse had met Charles Walgreen, this merger would have happened a long time ago because there are so many similarities,” Stiller said.
Both companies also have a history of innovation. Boots, for example, invented ibuprofen, Pearson said, and built its No7 brand into the leading skincare brand in the UK via a commitment to continuing innovation.
Walgreens, meanwhile, was the first company to launch child-resistant caps on products — back in 1968, Stiller said, as well as the first to introduce drive-through pharmacies.
“Both companies are good at “knowing what they’re fantastic at and knowing when to look outside,” she added, pointing to Walgreens’ acquisition of the Duane Reade chain as an example of looking to the outside for additional innovation.
And both companies are standouts when it comes to knowing their shoppers. Recognizing that customer expectations on how to engage with brands are changing, Alliance Boots and Walgreens will continue to collaborate around those touch-points with customers to ensure success for the combined company, Stiller said.
“Our future is based on knowing our customers,” she said.
— K. Canning
Keep the shopper at the center of your collaboration efforts
It’s a well-known adage that “the customer is always right.” And by keeping the customer at the center of collaboration efforts, retailers will be able to deliver the products shoppers desire, said Beth Stiller, group vice president, retail brands and global sourcing with Deerfield, Ill.-based Walgreen Co., during a Sept. 30 retailer-supplier panel discussion at the 2014 Store Brands Collaboration Summit. The discussion was moderated by Steven Lichtenstein, brand director of Store Brands and a vice president with Stagnito Business Information.
But what do shoppers want? Stiller explained that today, they want more than just a good price — they also want quality and differentiated products.
Kevin Broe, vice president, center store merchandising and sales with Weis Markets, Sunbury, Pa., agreed, noting that shoppers have more options than ever in terms of where they can shop — both in physical stores and online. Therefore, it’s especially important that retailers and suppliers collaborate to develop truly unique products with the customer in mind.
To do so, retailers must bring their expertise — their shopper knowledge — to the table, merging it with suppliers’ expertise related to categories, products and ingredients. Broe also recommended that retailers operating in multiple markets study shoppers in each market and work with manufacturers to develop market-specific products to target consumers even better.
In certain categories, when they get truly consumer-focused products on their shelves, retailers are able to shrink price gaps and make more money. Stiller notes that some categories where differentiation and quality matter more than price have an unnecessarily wide — 25 to 40 percent — gap between store brand and national brand price points.
Still, price does matter a lot more to consumers in certain categories. Mark Coleman, vice president, retail division with Ayer, Mass.-based Catania-Spagna Oils, pointed specifically to oils, a commodity category, where competition tends to depend more on price alone. Describing the category as a “cutthroat business,” he said retailers and suppliers need to continue collaborating to drive down the cost on store brand oils by understanding, for example, the best time to source certain oils.
And perhaps as important as knowing what matters to consumers is knowing what doesn’t matter to them. Stiller noted that if a retailer is looking to add value for the shopper when the cost is already as low as it can go, it should invite its supplier partners to examine ways to remove waste from the supply chain and drive out costs.
“It’s amazing how much time and energy gets wasted on non-value-added exercises for the customer … things she never sees, she doesn’t care [about],” she said. “We need to find ways to put value back in by pulling waste out of the system.” — R. Hofbauer
FreshDirect is committed to transparency
Online food retailer Fresh Direct LLC (FreshDirect) knows more about its consumers than any brick-and-mortar retailers know about theirs, Tim Milano, the company’s senior vice president, merchandising told attendees of the 2014 Store Brands Collaboration Summit in an Oct. 1 presentation. And FreshDirect’s consumers basically want two things: to know what’s in their food and to know from where that food was sourced.
So the New York-based retailer made a commitment to transparency in both areas, Milano said. And that commitment extends to the retailer’s private brand products.
“It’s important to communicate to consumers where the food is coming from,” he said. “We don’t just slap our name on it.”
FreshDirect also is open and honest with consumers when it comes to communicating product quality. Its website features a five-star quality rating system for both branded and private label products, Milano explained.
But honesty and transparency are not the only differentiators FreshDirect has going for it. With the tagline “First in Fresh,” the retailer is all about delivering a fresh food experience to customers. That means it butchers its meat to order, picks its produce to order, cuts its deli meat and cheese to order and much more, Milano said. And local food also gets an emphasis.
The retailer also is very active within the social media arena, he said.
“If you’re not doing social, you’re making a mistake,” Milano added. “The No. 1 thing people talk about on social [media] is food.” — K. Canning
Baby boomers spell store brand opportunity
Baby boomers aren’t willing to let a little thing like aging get them down. Almost half of them are on a constant search for methods to prolong their health and vitality, noted Steve French, managing partner for Harleysville, Pa.-based Natural Marketing Institute, in a Sept. 30 presentation at the 2014 Store Brands Collaboration Summit.
In three years, half of the U.S. population will be 50-plus, he told attendees. And that 50-plus group — containing a significant boomer population — controls 70 percent of the nation’s disposable income.
But despite their desire for health- and wellness-minded products, boomers remain an under-represented target market for national brand and store brand products. Only 5 percent of advertising dollars, for example, target adults 50 and older, French noted.
Yet boomers account for a very significant chunk of annual retail spending — $200 billion across all channels, $38 billion of which is spent on store brands. Moreover, 84 percent of them use store brands, and 24 percent of them have increased their store brand usage within the past year. Boomers, therefore, represent a “huge opportunity” for retailers’ store brands, French said, on the health and wellness side.
But to find success here, he said retailers will have to keep in mind the most significant drivers behind boomers’ purchasing behaviors: disease prevention concerns, the desire to maintain a healthful and nutritious diet, willingness to take increased responsibility for their own health so they can remain independent as they age, heart-health concerns and concerns related to being a caretaker for a loved one.
“The number one reason boomers want to maintain a healthy lifestyle is to have energy,” French added.
He pointed to store brand opportunities in energy-related and heart-health-related foods and beverages, as well as in foods and beverages that help boomers “maintain a healthy mind, help them stay active and keep a healthy body.”
Functional and fortified foods also are important to boomers, French noted. The top added benefits surveyed boomers cited as being present in the foods they had eaten in the past 30 days were, in order of importance: high-fiber, antioxidants, vitamin-/mineral-fortified, specific health claims, protein-enriched, low-carb, organic, omega-3-fortified and vegetarian.
“But they want more,” he said, especially when it comes to fiber and “heart-healthy” ingredients.
Meanwhile, the top purchase influencers for boomers are, in order of importance, the package label, sales/reduced pricing, coupons and shelf tags with nutritional information, French said.
— K. Canning
Ingredients, flavors and fragrances could be dfferentiators for store brands
Retailers are experts in a number of areas — shopper insights, category management and more. But when it comes to developing truly innovative store brand products, many of them lack an understanding of how ingredients, flavors and fragrances could create differentiation, agreed members of a Sept. 30 panel discussion during the 2014 Store Brands Collaboration Summit. The discussion was moderated by Harry Stagnito, president and CEO of Stagnito Business Information.
“Unless they have their own manufacturing operations, retailers today tend to not understand ingredients,” said Evan Hyman, manager, private label business development for Westchester, Ill.-headquartered Ingredion Inc., adding that they want ingredient, flavor and fragrance suppliers to show them what products and capabilities are available.
Once retailers understand what flavors, fragrances and ingredients are available — and how they can be used in product development — many readily take advantage of them, said Kim Holman, director of marketing for Wixon Inc., a St. Francis, Wis.-based manufacturer of seasonings, flavors and technologies.
“It’s a big ‘a-ha!’ moment to them,” she explained.
However, while some retailers are happy and ready to work with flavor, fragrance and ingredient suppliers, others don’t know where to start, Hyman pointed out. And because his company has limited resources, it must be choosy about the retailers with which it partners.
Partnerships, though, are not all about the retailer and ingredient, flavor or fragrance supplier. Retailers need to partner with both the ingredient, flavor or fragrance supplier and the manufacturer for success, stated Skip Rosskam, president and chief operating officer at David Michael & Co., a Philadelphia-based flavor provider. The three companies then must create an environment of trust, understand their roles and find a point of difference.
The retailer’s role, in particular, is to understand the customer. The retailer then must share this understanding with its partners to develop with the consumer in mind, Rosskam noted.
Retailers also will want to make sure the ingredient, flavor or fragrance provider has a cross-functional team of experts in various fields. Gary Sycz, director of business development for Arylessence Inc., a Marietta, Ga.-based supplier of flavors and fragrances, said the team could include a perfumer, flavorist, marketer, regulatory team member and more.
And the retailer should make sure every member of its store brand team partners with his or her counterpart at the manufacturer or ingredient, flavor or fragrance supplier, Holman suggested. She also noted that all team members need to understand necessary product claims, the target consumer and more from the beginning. The more information shared upfront, the more likely the product will turn out right on the first run.
— R. Hofbauer
Don’t walk away from a good thing
No self-respecting Southerner would buy his or her beef anywhere other than Winn-Dixie, home to “the Beef People,” West Herford, managing partner for On Ideas Inc., Jacksonville, Fla., told attendees of the 2014 Store Brands Collaboration Summit in an Oct. 1 presentation. With a heritage that goes back more than 60 years, Winn-Dixie’s WD branded beef is the brand Southerners trust to be tender, tasty and consistent in quality. But trust in this store brand didn’t happen overnight.
In the 1960s, the Jacksonville, Fla.-based retailer began promoting its Beef People campaign with Western-style television commercials built upon the popularity of Bonanza. In the decades that followed, Winn-Dixie remained at the forefront of innovative advertising when it came to the WD brand. For example, it was one of the first to use billboard extensions and to light up billboards at night. And it put its Beef People slogan on the outside of its physical stores. And in the ‘90s, during the heyday of NASCAR, Winn-Dixie even sponsored a racecar featuring the company’s logo and the Beef People slogan, Herford said.
But Winn-Dixie went through a rough patch and was eventually forced to file for Chapter 11 bankruptcy in 2005. As the company regrouped, it no longer advertised itself as home of the Beef People. Instead, it apologized for letting consumers down with the slogan: “Getting Better All the Time,” Herford said. But consumers were still willing to buy their beef from the retailer because of the nostalgia and trust they had in the brand.
After turning itself around, the retailer wanted to bring more customers back to its stores, so it collaborated with On Ideas to regain the trust that had been lost, he said. Fifteen years later, Winn-Dixie began to advertise once again using the Beef People slogan. However, it modernized its campaigns to be relevant to today’s consumers.
On Ideas and Winn-Dixie decided to use social media to their advantage, Herford said. One promotion called on customers to print out a sign that said “I’m Beef People,” take a photo of themselves holding the sign, and post it to a Facebook page. Another promotion was an online mix and match game, where players could win free steaks for a year or gift cards in different amounts to purchase steaks at Winn-Dixie stores. More than 50,000 people participated in the game; the average age of participants was 28. The new marketing campaign proved to be a great way to draw in millennials — both to the Winn-Dixie banner and to the WD brand.
At the end of the day, Herford said, retailers should never walk away from a good thing — especially when that good thing is a store brand with a strong past. They should take the time and make the effort to evolve brand-related marketing efforts, because consumers want to rediscover heritage brands and want a reason to come back to them. — M. Escobar
Diversity critical to collaborative efforts
Diversity, including gender diversity, drives stronger creativity and innovation in collaborative efforts. Yet only 14.6 percent of U.S. c-suite positions are filled by women, and women account for only 4.9 percent of U.S. CEOs, Maureen O’Brien, CEO of the Batavia, Ill.-based Global Women’s Leadership Forum, told attendees of the 2014 Store Brands Collaboration Summit.
The lack of gender diversity in top-level management is “a serious business issue,” O’Brien said, in a Sept. 30 summit session titled “The Importance of Diversity in Collaborative Efforts.”
Companies boasting gender diversity outperform their sector, noted co-presenter Rita Johnson, senior vice president of the Global Women’s Leadership Forum. She pointed to research showing a 35 percent higher return on equity and a 34 percent better total return to shareholders for such organizations. Moreover, gender diversity is particularly valuable in areas where innovation is critical.
New York-based research organization Catalyst found that when a company has three or more women in senior management positions, it scores higher on top measures of organizational excellence, Johnson said. The same finding applies to companies with three or more women on the board of directors. From a financial standpoint, “women make more balanced decisions,” she said.
The diversity-related business issue is a solvable one, O’Brien emphasized. Companies, including those tied to the store brand space, first need to engage in what the Global Women’s Leadership Forum has coined as an “Awareness Inventory.” They need to take a look at their own numbers, make sure their leaders know the statistics, and tie compensation to diversity initiatives. They also need to launch, support and grow women’s business resource groups; recognize unconscious biases; and “meet people where they are” — no finger pointing. For the store brand segment, supporting Women Impacting Storebrand Excellence (WISE) — an organization with the mission to foster diverse collaboration and provide leadership that drives the continued success of the store brand industry — also would help.
The top purchase influencers for boomers are, in order of importance, the package label, sales/reduced pricing, coupons and shelf tags with nutritional information.
When a company has three or more women in senior management positions, it scores higher on top measures of organizational excellence.