Spotlight On The Dairy Department

Informative signage and strategic cross-merchandising are just two ways to get your customers to consider store brand dairy products.

Consumers turn to their local retailer's dairy department to stock up on a wide variety of perishable products that fit into every meal of the day. But as these products add up in the cart, so does the ring-up at the register.

Fortunately for consumers, many retailers offer plenty of high-quality store brand options that cost less than their national brand counterparts. Still, retailers could make it easier for consumers to locate — and compare — these products by enhancing efforts on the merchandising side.

To learn what retailers are doing well and not so well here, we visited the dairy departments of three stores located in Peoria, Ill.: Kroger, Hy-Vee and Schnucks. Our visits took place on a Friday in early February, between noon and early evening.

The dairy department was located in the back left-hand corner of all three stores (looking into the stores from the front entrances).

Kroger

General observations: This Kroger's dairy department runs in an "L" shape along most of the store's left-hand wall and a small portion of the back wall. Ice cream and frozen novelties make up a separate aisle three aisles away. Foot traffic in the store — especially in the dairy department — was pretty strong.

Of the three stores we visited, Kroger featured the widest selection of own-brand products in the dairy department. Most national brand products here had a national-brand-equivalent (NBE) counterpart under the Kroger brand. Two other private brands made an appearance in the dairy section: Simple Truth, a niche brand for organic items, in the milk and egg subcategories; and Private Selection, a premium-tier brand, in the ice cream subcategory.

The upside:

• The shelves were organized and well-stocked.
• The store gives a large number of facings to Kroger milk, Kroger cheese (shredded, bar, singles and deli-sliced), Kroger yogurt and both Kroger and Private Selection ice cream.
• The store had many signs above the dairy cases touting particular Kroger dairy products at special prices. One sign read "3 for $5 Kroger Shredded Cheese," while another read "$2.19 Kroger Break 'N Bake Cookie Dough."
• In the ice cream section, the store featured special signage on freezer doors to draw attention to its Private Selection line of premium products. Racks hung on the doors cross-merchandised jars containing Kroger toppings.
• In a coffin case, the store merchandised Kroger shredded, deli-sliced and bar cheeses alongside Kraft singles.
• The store cross-merchandised several Simply Potatoes SKUs and Kroger English muffins with national brand and Kroger brand egg products in the egg portion of the dairy cases.

The downside:

• Although the store placed a wide variety of Edy's and Turkey Hill ice cream cartons in an end-cap freezer, it placed only a few SKUs of Kroger Deluxe ice cream of Kroger Deluxe ice cream in the lower right-hand corner, making them far less noticeable to shoppers. Large, hard-to-miss signs denoted a sale on the national brand products, while a smaller, more obscured sign in the bottom right-hand corner denoted a sale on the Kroger Deluxe products.

Hy-Vee

General observations: This Hy-Vee's dairy department takes up much of the left-hand corner of the store. Ice cream, frozen novelties, milk, juice and yogurt line the wall. Meanwhile, three additional aisles house cheese, butter, eggs and sour cream. Foot traffic was heavy in both the overall store and the dairy department.

Like Kroger, the Hy-Vee store boasted a large number of private label products. With an exception of several ice cream SKUs under the premium Hy-Vee Select brand, all products in the dairy department were merchandised under the NBE Hy-Vee brand.

The store makes wide use of NuVal nutritional scores, printing them on most price tags for both national brand and store brand products. (Hy-Vee introduced the nutritional scoring system — which was developed under a partnership between Skokie-based Topco Associates and Griffin Hospital of Derby, Conn. — to its stores in 2009.)

The upside:

• The shelves were well-stocked and neat.
• The store gives a large number of facings to Hy-Vee milk, Hy-Vee cheese (shredded, bar and plain and deli-sliced), Hy-Vee yogurt and both Hy-Vee and Hy-Vee Select ice cream.
• The store placed aisle violators promoting mostly store brand products on freezer doors throughout the ice cream and frozen novelties aisle. Each violator communicated a price discount and a NuVal score.
• The store separated Hy-Vee brand shredded cheeses from their national brand counterparts by a block of shelves cross-merchandising the cheeses with a variety of national brand and Hy-Vee brand products, including chorizo sausage, taco shells, flour tortillas and more.
• The top two-thirds of an end cap refrigerator displayed Hy-Vee single-serve yogurt cups with a sign advertising a "3 for $1" deal.

The downside:

• Although the butter subcategory boasted a large number of NBE butter and margarine products (under the Hy-Vee brand), product placement was very inconsistent, making it difficult to find them in a sea of white and yellow containers. Some NBE products were merchandised above or below their national brand counterparts, while others were merchandised to the right or to the left of them.

Schnucks

General observations: Of the three stores we visited, Schnucks had the least amount of foot traffic in its dairy department. Traffic most likely was light here because the half of the store dedicated to fresh and prepared foods seemed to be more of a draw to shoppers than the half dedicated to packaged goods.

Scanning the dairy department — which runs along the back left-hand quarter of the store's perimeter — we found that the store's selection of private label products was rather modest compared to Kroger's or Hy-Vee's. Of the store brand products available, nearly all of them were NBE products offered under the Schnucks brand.

However, the retailer did offer a small selection of premium private label products, including organic orange juice, milk and eggs under Topco's Full Circle brand, as well as premium ice cream flavors under the Schnucks Select and Culinaria brands.

The upside:

• The shelves were clean and well-stocked.
• Like Kroger, Schnucks featured special signage on freezer-case doors to draw attention to its premium ice creams (Schnucks Select).
• The store featured a shelf-talker near the butter and margarine section of the case to educate customers about the health benefits of Schnucks vegetable oil spread.
• Inside a coffin case, the store merchandised bags of Schnucks shredded cheese, which were on sale along with their Kraft counterparts. The Kraft products were priced at two for $5.00, while the Schnucks products were priced a little lower at $2.38 each.

The downside:

• We could not find any store brand products in any dairy department end-cap displays.

Failure to inform

When it comes to merchandising in the dairy department, even the best retailers could improve their game a little. While visiting the three stores, perhaps the most noticeable merchandising misstep we noticed was the lack of in-store product information — including product descriptions and recipes.

All too often, retailers put little excitement into promotions of their own-brand dairy products, mainly because they perceive the products to be commodities or staples, says Jim Dimataris, director of processor relations with the California Milk Advisory Board (CMAB) of South San Francisco, Calif. Retailers often place dairy products on shelves without providing any additional information.

However, information — especially at the shelf level — that details a product's quality and taste is an excellent way to grab consumers' interest, says David E. Freedheim, sales consultant with CMAB.

"This is particularly important when showcasing new items that the potential customer would have difficulty understanding without additional product information," he says.

Shelf-level information also could inform consumers about ways to use a product, says Stan Woodward, senior vice president, channel management with the Wisconsin Milk Marketing Board of Madison, Wis. This kind of information works particularly well in subcategories boasting a wide selection of products — such as cheese.

"With so many new cheese varieties and styles on the market, the shopper has many choices," he explains. "Our research tells us consumers want to try new cheeses — but often don't know how to use them. So give an easy recipe and serving ideas in your cheese merchandising."

And for customers on a health-and-wellness kick, retailers would do well by showing how certain dairy products could fit into a balanced diet, says Rebecca MacKay, vice president, strategy, insights and planning with the Rosemont, Ill.-based Innovation Center for U.S. Dairy. Retailers also could merchandise select dairy products with healthful products from other categories to provide a healthful snack or meal solution.

"With its healthy halo, [the dairy department is] in a real position to strongly leverage this growing opportunity," she explains. "Point-of-purchase displays that offer consumers convenient access to 'snackable' dairy products — such as snacking cheese, single-serve yogurt and cottage cheese, as well as granola bars, nuts and fresh fruits and vegetables — are a proven way to capitalize on this trend."

Of course, any merchandising strategy could fail if a product's packaging is barely noticeable. Suley Muratoglu, vice president, marketing and product management with Tetra Pak Inc., Vernon Hills, Ill., notes that dairy packaging should sport vibrant labels communicating relevant information that draws consumers in.

"Most consumers decide their purchase before going to the store, so having a chance to make them switch towards something different requires high visual impact on the shelf," he explains. "The graphics on the package itself and the ability to provide relevant information through the package can drive this visual impact."