A strong second quarter at SpartanNash included double-digit increases in its private label sales. Alongside a 9.4% increase in its overall revenue, which totaled $2.18 billion for the quarter ended July 11, the Grand Rapids, Mich.-based company reported a 24% increase in its private label retail sales.
Executives at the company said that these results point to big potential for its private brands, promising to keep an eye on the category, growing its share by focusing on value and availability of product.
“Private label sales were also up over 24%, as consumers look for quality products, at a valued price or for alternatives to sometimes unavailable national brands,” said Dennis Eidson, interim president and CEO of SpartanNash. “We believe our inviting store atmosphere and mix of fresh foods, along with local, national and private-label products positions us well in the long-term in this retail segment.”
On a call with analysts, Eidson said that there is room to grow SpartanNash’s private label share of the market.
“We haven’t been exceeding the national average in the recent past — and historically Spartan had that reputation of having a more powerful brand than maybe the averages,” he said. “I think we can get back there and our team is focused on doing that. I think our most current relationship with dunnhumby is really helping us with some insights and how important private brands are.”
Making a value play will be critical to this effort, particularly as consumers’ budgets get tighter and retail sales growth — which has been on the rebound — begins to slow down.
“As you look at the economy moving forward — and who knows what’s going to happen with the unemployment level — but it’s probably likely many consumers are going to feel even more stretched in the near-term than they did in the most recent past,’ Eidson said. “They are going to be seeking value, and private brand is a great place to find that value.”
There also is a growing online opportunity for SpartanNash to promote its private brands. The retailer noted that on a year-over-year basis, e-commerce sales were up 300% for the quarter, comprising 5.6% of its overall store sales coming from e-commerce. New users accounted for 63% of the increase — creating a sizeable audience to market own brands to.
While new users are a big opportunity online, loyalty also plays a critical role in the company’s private brand strategy. Eidson cited internal research that found 86% of loyalty card customers surveyed saying they had bought a private brand, and 88% of those shoppers said the quality was good to excellent.
“Thirty percent of them said they plan on buying even more going forward,” he said. “So I think that’s a harbinger of good things to come. We’ve to work hard to get that done, but we are on it.”
SpartanNash currently operates 155 supermarkets, primarily under the banners of Family Fare, Martin's Super Markets, D&W Fresh Market, VG's Grocery and Dan's Supermarket.