Time To Go Local?

'Planning for a long-term commitment might leave you with unwanted stock, but too little stock could drive consumers to other stores for the products.'

American consumers are fickle — we all know that! They tend to run from one fad to another, putting all their heart into a new trend — low carb, low fat, lycopene, etc. — until another one comes along.

However, this is not necessarily bad for food marketers, as you can make profits from fads (just ask the fashion industry). There are "riches in niches," but one must not mistake fads for trends.

Right now, consumers love locally produced food. The question is: To what extent should retailers make private label commitments to get into that local food business for either their shelf-stable or local fresh products? To make an informed decision, retailers need to understand what consumers think about foods and the advantages and disadvantages of local supply.

Based on research I conducted on apple consumption, it seems that there are myriad reasons why consumers like locally produced food. Some think it is fresher, healthier and safer; some think it is organic; and others just say they like the idea of helping their local farmers.

I certainly don't want to discuss the merits of any of those beliefs, but for whatever reason, consumers like local foods and seem to be willing to spend more on them, at least for now.

If a retailer is going to position its private label brands with the best branded products, then it must respond to what the consumer wants, when he or she wants it. Private label today is an "all in" strategy. Retailers cannot just pick and choose; it is consumers who pick and choose.

Locally sourced products are important to consumers; therefore, they should be important to store brand programs. Retailers cannot say, "Trust our brand," and then fail to innovate to bring the newest and most desired products to market under that brand.

The downside is twofold. First, everyone is competing for locally sourced products, and the competition will be fierce — and pricey. Mistakes made here threaten to hurt not only the locally sourced products, but also your entire private label brand portfolio.

False claims, pricing that's too high, not enough variety or any other negative will sully your store brand's reputation. Be vigilant with the suppliers; if they slip up, you pay the price many times over. Don't make a mistake.

Second, be ready for consumers' interest in locally produced products to wane. We know from the past that consumers will move on. Retailers must carefully maintain management of the locally produced products. Planning for a long-term commitment might leave you with unwanted stock, but too little stock could drive consumers to other stores for the products.

The old adage "Make hay while the sun shines" is true for locally produced private label products. Consumers will be looking and expecting that the best retailers will have the store brand products they want.

Managing private label in today's marketplace is not as simple as just finding cheap sources and putting ugly labels on cans. Store brands make a statement about a company, and the strength of these brands is a statement of trust between the retailer and the consumer.

For now, locally sourced products are part of that trust. They help retailers say: "I will provide you with the products you want; you can count on me."

John L. Stanton, Ph.D., is a professor of food marketing at Saint Joseph's University in Philadelphia. He has published a number of articles on local and organic foods and is a regular speaker at many private label-focused events.