Western Wonder
The year was 1915. Babe Ruth hit his first career home run; the Panama-Pacific International Exposition in San Francisco celebrated the completion of the Panama Canal’s construction; and an act of Congress designated the United States Coast Guard as an official branch of the military.
And in Portland, Ore., 50 independent grocery retailers made news of their own when they combined to form United Grocers, a purchasing cooperative dedicated to improving the efficiency of its retailer members’ business. The move was a long-term success; the company’s membership grew to several hundred stores that purchased nearly $1 billion in groceries from the cooperative by the late ‘90s.
During the 20 years following United’s founding, two other West Coast purchasing cooperatives formed — and also grew over the following decades. Certified Grocers, which began in 1922 as a cooperative of Los Angeles grocery retailers, reached annual sales of around $2 billion with members throughout California, southern Oregon, Nevada, Arizona and Hawaii. Meanwhile, Associated Grocers, a cooperative of independents in Seattle, began in 1934, growing to approximately $1 billion in annual sales and serving grocery retailers throughout Washington, Oregon, Alaska and parts of Idaho.
It was only a matter of time before the three successful cooperatives, all serving the West Coast, decided to come together. In 1999, Certified Grocers merged with United Grocers to create Unified Western Grocers, a $3 billion wholesale grocery cooperative based in the Los Angeles area. Around the same time, Unified Western Grocers significantly expanded its specialty business by acquiring four companies and later reorganizing its specialty foods subsidiary under the Market Centre name. And eight years later, Unified Western Grocers acquired Associated Grocers, changing its name to Unified Grocers Inc. shortly after.
Today, Unified is the largest retailer-owned wholesale grocery cooperative in the western United States. Headquartered in Commerce, Calif., the company supplies more than 2,800 stores in the western United States and Mexico, says Jan Tiel, Unified’s executive director, corporate brands.
“We serve 20-plus ad-group banners across that geography, [which] represents over 450 stores,” he says, adding that ad-group banners are “independent grocers that have one, two, three or [more] stores that have chosen to do co-advertising under a banner group, and so we service their needs through our products and programs.”
Each of the stores Unified supplies falls under one of four formats: neighborhood convenience stores, conventional grocery stores, discount stores and upscale stores, Tiel explains.
Unified notes that it also operates six distribution centers — four in California (Commerce, Los Angeles, Santa Fe Springs and Stockton), one in Seattle and one in Milwaukie, Ore. — as well as a bakery and a dairy, both in Los Angeles.
And Unified has enjoyed impressive performance lately. For 2014 alone, the company expects to report sales of almost $4 billion. Although 2014 has been a challenging year for independent retailers, Unified’s corporate brands still achieved 2 percent year-over-year sales growth, Tiel says.
This performance — in addition to Unified’s outstanding recent work with its corporate brands program and commitment to helping its retailer customers leverage this program for success — makes Unified truly worthy of Store Brands’ 2014 Wholesaler of the Year honors.
Corporate brands breakdown
In conjunction with its cooperative partners, the Chicago-based Independent Grocers Alliance (IGA) and Tigard, Ore.-headquartered Western Family Foods, Unified manages around 4,560 SKUs under seven brands, Tiel says — brands that help independent retailers across the West Coast differentiate themselves and compete better in today’s tough retail market.
For opening-price-point products, Unified offers Special Value, which comprises 350 SKUs, Tiel says. Introduced in Southern California in the late 1990s, the brand now ships to retailers operating in all of Unified’s markets.
“One thing that’s unique about Special Value is its bilingual labeling,” says Mark Johnson, vice president of procurement, Unified. “That’s really done for two reasons: One is because of the large Hispanic consumer base that we supply in Southern California, and second, it allows us to sell across the border of Mexico — as far down across the border as we might choose.”
As for the national-brand-equivalent tier, Tiel notes that Unified offers two classic regional brands: Western Family (through Western Family Foods) and Springfield.
With more than 2,600 products, Western Family has been available in the Pacific Northwest since the 1940s, Tiel says. It currently is available to independent retailers in Northern California and the Pacific Northwest.
Meanwhile, Springfield — which originated in 1947 in Southern California — boasts 1,600-plus SKUs. According to Tiel, it currently sells mostly to independents in central and Southern California, Arizona, Nevada and Mexico and, unlike Western Family, is owned and managed completely by Unified.
Unified also offers several niche brands to its customers. Natural Directions, a Western Family brand that Unified helped develop and launch about five years ago, offers around 230 SKUs of natural and organic products, says Joe Falvey, senior vice president, Unified, and president of Unified’s Market Centre subsidiary.
Meanwhile, Unified’s Golden Creme dairy products (42 SKUs) are produced in the company’s dairy, while its Cottage Hearth baked goods (18 SKUs) are manufactured in its bakery. According to Tiel, those two brands distribute throughout Southern California.
Additionally, Unified distributes 300 SKUs of IGA brand products, Tiel explains. Unified began its distribution partnership with IGA in 2007.
Spring(field) cleaning
Several of Unified’s brands underwent a complete revamp in 2014, which Tiel calls a “heavy-lifting year.” Unified’s main accomplishment of the year was completing the refreshment of several brands and preparing the 2015 relaunch of Springfield, arguably Unified’s most classic brand.
The idea of relaunching the brand came after Unified polled Southern Californians, discovering that while shoppers have a very favorable view of the Springfield brand, its packaging appeared a bit dated, says JoAnn Murdock, executive director, marketing for Unified.
“Springfield might have previously been viewed as mom’s brand or grandma’s brand because it’s been around since 1947, so we needed a refresh to make it appealing to all consumers,” she says.
To give Springfield the makeover it needed, Unified teamed with San Francisco design firm Murray Brand to speak with consumers via focus groups and online surveys, Murdock states. The two companies also spoke with Unified’s retailers, brokers, associates and other stakeholders.
“We feel like we got a good handle on what Springfield means to Southern California consumers and what we needed to do to reenergize the brand,” she says, noting that using the research, Unified and Murray created the new logo and fresher look.
Tiel says Murray helped Unified go through all consumer comments to develop a dozen concepts, which then were narrowed down to five. Consumer surveys narrowed those five concepts down to one.
“The new design is going to be more [of a] uniform label across all structures, whether it’s cello, cardboard, plastic, paper,” he explains. “And it’s going to be a consistent brand message across all categories, wall to wall. … The consumer will be able to look at the product [from] 20 feet away and say, ‘I know that’s Springfield.’”
The new design also incorporates Facts Up Front labeling from the Grocery Manufacturers Association and the Food Marketing Institute.
“I think that’s going to make our packaging more relevant to today’s consumer,” Tiel says.
To relaunch the brand, Unified is developing what Murdock says is likely the brand’s biggest consumer-facing marketing effort to date, tailored to each of the wholesaler’s customers. It will include both traditional and newer elements, including a sweepstakes, digital advertising, social media and in-store activities. Retailers have shown tremendous enthusiasm about the relaunch plan, which will execute shortly after Super Bowl XLIX.
“I think any time you can offer retailers a turnkey program that’s easy to execute, creates excitement at their stores, [and] will help them reach their shoppers — maybe on a different level than they’ve been able to do previously — they’re excited about it,” she says.
Another Unified brand that had not received a redesign in several decades is Golden Creme, Murdock says. So Unified teamed with Murray Brand to redesign the dairy label and make it more engaging to consumers. The brand is scheduled to launch in or around June 2015, and the launch will incorporate social media and a recently created mascot for the brand: Goldie the cow.
“Goldie represents the essence of California — very cool, fun and engaging,” Murdock explains. “We introduced her in a low-key way already; she appears at the occasional grand opening, and she was showcased in June at our expo, Unified’s largest annual selling event for our customers.”
Unified recruited Placentia, Calif.-based marketing agency The Marconi Shop to help with the Springfield and Golden Creme launches, Murdock says.
Natural refreshment
Even though it’s a much newer brand than Springfield and Golden Creme, Natural Directions also is getting a redesign.
Originally conceived about a decade ago, the brand began as a line developed by Western Family under the Western Family brand, but consumers on the West Coast did not find it very “attractive.” So Unified, according to Falvey, worked with Western Family to give the brand a makeover, taking the Western Family name off packaging and creating the “Natural Directions” name, a color scheme and more.
With a mission to help both Unified and Western Family’s retailer customers offer more healthful versions of mainstream commodity products their shoppers could not find at their local chain grocery stores, Natural Directions took off and performed better than expected, with its dollar sales growing 30 percent every year since. And it has performed well across various formats — discount stores, upscale grocers, natural grocery stores and traditional supermarkets, Falvey says.
“And we’re starting to expand the line. We’d like to get up to somewhere around 500 items eventually, but right now, we’re at 230 items,” he states, noting that the brand is “starting to get to that critical mass we need to do significant expansions.”
But Falvey says that despite the tremendous performance, Natural Directions’ packaging needed some reworking. Its color scheme was a bit too bright and needed to be dimmed a little. And its verbiage also was a little too simple — each product sported labeling that popped on shelves but didn’t always feature the callouts intended to attract that particular item’s target consumer.
“So on the new packaging, we’re kind of highlighting what may be particularly important to that particular product line,” he says. “We did that, and in the story on the packaging, you’ll see a little bit more information on the process that was taken to develop the product. That kind of varies by product line.”
In addition to its packaging, Natural Directions’ website — created to help the brand “break away” and have its own identity outside of Western Family — is undergoing a revamp, Falvey explains.
Let’s work together
But it’s not enough to have the right products in beautiful packaging; the products also need merchandising and marketing muscle put behind them. Unified shows tremendous dedication here to its retailer members.
Take Unified’s corporate brands staff, for example. According to Tiel, the company boasts a combination of 76 professionals across several departments and companies to build and support its corporate brands program: 13 dedicated sales and marketing people across its four regions, four dedicated QA/QC experts and two dedicated brokers — Acclaim Marketing (with 15 dedicated field representatives) for Southern California retailers and DeJarnett Sales (with 27 dedicated field representatives) for retailers around Northern California, Portland and Seattle.
These professionals work one-on-one with each of Unified’s retailers to custom curate the appropriate assortment of own-brand products, Murdock notes.
“That can be challenging because we have a lot of retailers with different formats and different consumers, but kind of like anybody in the industry, at least in this market area, we understand that our retailers are different and that you can’t have a one-size-fits-all [solution],” she says.
To make the curation process a little easier, Unified’s retail service and marketing department launched the Scan Advantage program, Tiel says.
“We have over 700 retail locations that are feeding back front-end movement. This allows us to generate analytics and create insights related to product mix,” he says. “And that gives us the confidence to make fact-based recommendations that will drive sales. “We are working closely with each of our retailers to optimize decisions related to selection, shelf-placement, space allocation, promotional mix and frequency, and advertising.”
Tiel notes that Unified reports at three levels to help retailers develop the right assortment, create promotions and sell more products.
The first level, Tiel says, is quarterly distribution reporting to identify voids in itemization on shelves. With that reporting, sales rankings are created for each category, allowing Unified to recommend the bestsellers appropriate to the amount of shelf space available.
The second level is reporting to identify the “sweet spot” between growing sales and maintaining profitability, which always has been Unified’s goal for its members, Tiel explains.
“Historical reporting provides depth of deal and sales results for individual lines in past promotions,” he states. “And by applying that knowledge, we are able to improve future promotional strategies.”
And the third level is various category- and item-level reporting that allow Unified to monitor sales successes and opportunities within individual retailers. In some cases, simply communicating missed opportunities to members can result in quick sales turnarounds, Tiel says.
Unified also is developing a SKU rationalization scorecard for existing itemization, which will allow the company to compare various item-level metrics within each category and determine if increased trade support would increase long-term sales and profits, Tiel points out.
Show ‘em support
In terms of support tactics for corporate brand products, Unified creates everything from in-store radio ads to point-of-sale materials, offers support for retailer events and grand openings, and more, all custom-tailored to the individual retailer, Murdock states. With Springfield and Western Family, in particular, Johnson notes that Unified runs a “pretty aggressive” high-low promotional program to ensure that Western Family and Springfield items are on displays, front pages of ads and all other marketing vehicles.
For out-of-store private brand support, Unified creates radio ads, billboards and more. It even is revamping its entire fleet of trailers to bear the new Springfield logo, Murdock explains, helping to get the name in consumers’ minds as Unified’s products are trucked up and down the West Coast.
Unified also is getting stronger than ever in the digital arena for store brand promotions, Tiel says.
“We’re heavily bent towards print advertising, but we’re getting more and more into the digital aspect of it,” he says. “In fact, we just started a digital department within our retail services, and we’re getting a lot of support from the retailers and getting on board a platform where we can start text mobile and digital coupons — and the likes of that.”
And on the merchandising front, Unified recently launched a program called eDeals, which helps retailers better merchandise and market Unified’s brands in-store, Johnson states. The program begins with a web video delivered to retailers that features a category or department manager talking about a certain product’s key features and introducing a “super hot” price point for the product.
“It’s kind of unique and different — the whole idea as leveraging the web and technology from a standpoint of being able to produce a video and deliver it to our customers via the web,” he notes. “But also, we used it as a springboard to get our retailers more familiar with our intranet site that we built for our retailers, which allows them to place orders directly on the web app electronically versus the old-fashioned way of faxing in an order form or calling somebody on the phone.”
Praise for its partners
Like all other wholesalers, Unified does face its share of challenges. Johnson notes that manufacturer consolidation has “changed the game” in the private label world.
“In private label marketing, there’s fewer manufacturers that get involved in private label production, which can be a good thing and a bad thing,” he says.
Another challenge in meeting retailers’ needs is the ability to respond quickly when consumer packaged goods manufacturers make bold moves — a change in promotions, packaging or something else, Johnson explains.
“We talk all the time here about responding to packaging changes as branded manufacturers take ounces out of their product,” he says. “It’s tough in the private label industry to try to react to that, but you have to be relevant, to stay competitive on a price-per-ounce basis and keep spreads against those private label items.”
But Unified understands that its success in overcoming challenges amid a competitive market wouldn’t be possible without its partners.
“I think we have great broker partners; we have great vendor partners; Western Family Foods is a wonderful partner,” Murdock explains.
And the retailer customers are especially outstanding partners. When Unified’s retailer members sell a lot of Unified’s products, Murdock states, everybody in the partnership wins.
“I feel like we have a really good group of stakeholders, whether it’s a vendor or the agencies working with us — a strong, strong network,” she says.
And everyone within that network, Murdock explains, is dedicated to providing only the best products at the best prices to Unified’s retailers, which work very hard get those products into consumers’ pantries — and their hearts.
“While we’re proud to earn this prestigious award,” she says, “we’d like to thank our retailers for truly making our brands successful.”
“We are working closely with each of our retailers to optimize decisions related to selection, shelf placement, space allocation, promotional mix and frequency, and advertising.”
— Jan Tiel, executive director, corporate brands