Under Wraps
The food storage segment presents a number of store brand opportunities for retailers that emphasize quality, features and value.
Although the overall food storage category is flat, store brands continue to grow — at the expense of the national brands. However, retailers also are seeing some purchases shift from grocery stores to dollar stores, mass merchandisers and club stores, as consumers seek out low-cost options.
"The economy is driving consumers to make special trips for value outside of their regular grocery trips," says Howard Kirschenbaum, vice president of sales for Peabody, Mass.-based Webster Industries.
Still, food storage products present a good value-based opportunity for any retailer choosing to stress the value attribute.
"In the disposable area, given the short life of the product, the private label option could really be positioned as a value offering and promoted as same," says Richard J. George, Ph.D., a professor in the Department of Food Marketing at Saint Joseph's University in Philadelphia.
Offer more choices
Certainly, a successful private label product can lead directly to store loyalty and trial or adoption of additional products across multiple categories. However, Bob Raymond, marketing manager for Pleasant Prairie, Wis.-based Mid-America Bags, still cautions against cutting out choices for consumers.
"Several retailers have decided that they only want to stock the [largest] national brand and their private label offering, thus cutting the tier-two or value brands off the shelf," Raymond says. "Limiting choices or product variety forces consumers to either buy another product on the shelf or look for their preferred brand elsewhere."
In general, most retailers have moved from offering value-tier food storage products to offering national brand equivalents (NBEs) during the past 10 years, Raymond says. And retailers are continuing to position their private label offerings closer to top-tier products, so there is continued emphasis on quality and savings.
"The opportunity may become offering consumers 'choice' of value-tier brands for commodity goods that can help stretch their bi-weekly grocery dollars and budget," Raymond says. "A two-tier private label strategy is in place in some stores. For example, Loblaw uses both no name and President's Choice within the food storage category in the same stores."
Product technology hasn't changed much with food storage, Raymond says, but features have evolved to mirror the national brands'.
"For instance, we are seeing more use of gusseted zip bags to replicate expandable bottoms, making it easier to fit larger sandwiches in without squeezing them," he says.
However, sales of one-zip slider bags are down, Kirschenbaum notes, because consumers have been hesitant to pay more for them.
"The trend is more toward double-zipper products," he says. "Ziploc, for example, had made a big effort with this, and we recently began seeing them in store brands as well."
On the storage container side, The Great Atlantic & Pacific Tea Co. (A&P), Montvale, N.J., will be launching a new lid/tub matching system in a few months, says Tom Whitby, the retailer's vice president of center store.
"Data has shown that over 80 percent of consumers will pay more for soup and salad containers that have matching systems," Whitby says. "Matching systems have been around for awhile, but our approach will also be innovative and cutting-edge."
Whitby notes that A&P tries to focus on consumers' decision trees when considering proper store brand assortment and value pricing for its store brands.
After a stringent product development process, A&P views a quick speed to shelf as an opportunity for its brand — similar to national brands' new product approaches, Whitby says.
"Then we support the new item with correct placement in our store planogram and proper assortment," he says. "Also our own-brand [quality] pricing strategy applies every day."
On the supply side, retailers have created an ultra-competitive market, and regularly "bid" this business now through the use of online auctions, Raymond says.
"While this process may benefit the retailer's accountants, it typically comes at a tradeoff of product innovation and promotion, since investment budgets tend to get compromised with lower pricing," he says.
Go green, with caution
Although much innovation has taken place of late with greener storage products and packaging, consumers still are hesitant to pay more for these products.
"Consumers won't generally pay more for environmentally friendly products," Kirschenbaum says. "If given the choice of a regular or green product in the same price range, then they will feel good about buying the greener product."
For example, Ziploc's evolve sandwich and storage bags are "source reduced," Kirschenbaum says, so they are thinner and use 25 percent less plastic — and are manufactured using wind power. But the products haven't caught on with consumers yet, perhaps because of pricing.
However, Kirschenbaum believes manufacturers will use less plastic in their storage products in the near future anyway — regular bags are over-engineered to begin with, he says, and they face increased scrutiny in terms of waste.
Yet for those consumers who are very focused on environmentally friendly products, their desire for green products will supersede even the fragile economy, Whitby says.
"Everyone is very earth-conscious today, and green products are very top-of-mind for us," he says.
Raymond also believes sustainability is a huge factor today.
"From reducing the 'air' inside the packaging, to using high-recycled-content paperboard, to finding optimum pallet and container space utilization and minimizing freight costs, suppliers have made substantial time and energy investments in finding better ways of getting the product packaging right," he says.
In addition, Raymond notes that retail-ready packaging (RRP) is another trend that seems to make sense to retailers looking to improve the efficiency of getting products from the receiving docks onto shelves faster.
Create a strong shelf presence
Creating a strong shelf presence is the first step in designing a noteworthy store brand program in any category, notes John Stanton, Ph.D., chair of the Department of Food Marketing at Saint Joseph's University.
"The retailers who are most successful with private label look at their products as premium but competitively priced products that are targeted to different kinds of customers," he says, noting that Publix and Kroger follow this model. "To me, the biggest mistake is not having a presence in every category and not trying to match the number-one brand — just treating the store brand as a cheap choice."
Retailers certainly could use their food storage containers as a differentiating factor, George adds.
"In this case, the retailer could position its food storage containers as a one-stop solution," he says, encompassing disposable, permanent and even pet food storage. "The permanent containers might be designer in nature or designed for specific foods — hot, cold, shelf stable."
Keeping up with packaging changes and partnering with innovative manufacturers are crucial for retailers, Stanton says.
"A key flaw of retailers is not partnering with innovative and exciting manufacturers," he notes. "They don't want to spend the money to be innovators, but need to be available to copy the number-one brand quickly."
Communicating any product or promotional changes will help prevent consumer confusion, Kirschenbaum notes.
"Some things I saw during the single- to double-zipper change or retailers' transition to NBE products is that retailers were not communicating effectively to consumers," he says. "Grocery has to maintain its focus on quality and promotional activities such as during the back-to-school period."
Moving forward, store brand food storage still has room to grow, as retailers such as Walmart, ALDI and Save-A-Lot already have siphoned off customers who are interested only in low prices, Stanton says.
"The recession helped encourage more customers to sample store brands, and they discovered that they are pretty good," he says. "Now, retailers are recognizing that their name on the store is a brand, and becoming more sophisticated with their branding approach."
Do stress the value attribute of store brand food storage products.
Don't limit choices/variety so severely that consumers are forced to go elsewhere to purchase the items they want.
Do remember that consumers are still hesitant to pay more for "greener" food storage products.
Don't forget to feature store brand food storage bags and containers during back-to-school season.