Pushing Private Labels and Retailer Brands

While most P-O-P programs are conceived by product manufacturers seeking to boost their own sales, retailers also develop branded P-O-P displays to highlight their own brand image, shopping experience, exclusive products and services, and private label products.Not to be confused with generic store fixtures, these displays incorporate retailers' logos and imagery to reinforce their own identities and build shopper loyalty. While these displays often compete with manufacturer-supplied P-O-P for floor space and attention from consumers, manufacturers aren't always left out of the picture. Many retailers are eager to promote their relationships with powerful brands via co-branded display materials, for example. But with a retailer's own private label products, which go head-to-head with respected name brands, the manufacturer-retailer relationship can get a bit less cozy.Last year, for example, retailer Nash Finch Co. set up semipermanent floorstands in its stores to help promote its Cinnfully Good private label lines of bakery and coffee products. Designed for the store's perimeter, the metal and laminated wood rack stocks whole-bean coffee on its ends while its sides feature cinnamon rolls, coffee cakes and syrup. The displays' adjustable shelves can be angled for improved visibility or left flat so fresh-brewed coffee can also be offered.The floorstand is in more than 40 corporate stores as well as 10 independents that Nash Finch serves as a distributor, says Brian Numainville, director of research at the Edina, Minn.-based retailer. More displays are rolling out to stores this year. "The margins are there on the products, and retailers are responding to this display, so it creates a win-win situation for all of us," he says.Nash Finch is looking at a variety of ways to create display options for its private-label products, says John Paul, director of store brands. "Displaying private labels is a key component of making them a success," he says. "For a long time, private label was a follower of national brands. But now, we look at these products as Nash Finch 'exclusives' that we can use to break out of the mold."The Store as BrandRetailers also use P-O-P to strengthen their own image with consumers and build shopper loyalty. In many cases, these branded displays seek to position the retailer as an exclusive provider of some product or solution. Typical examples include:Category management systems that organize products from several manufacturers under the retailer's banner, such as the Publix Health Care Center pictured on Page 64. By helping shoppers find what they're looking for quickly and easily, these displays help to reinforce the image that the store is well organized and easy to shop. In many cases, product manufacturers whose brands are included on the display are called upon to offer input during display development and help defray costs of the display program.Displays that promote a retailer's own exclusive relationship with a product manufacturer. Shoe retailers, for example, commonly use co-branded signage or displays to link their brands with popular new lines of shoes offered only at their stores. Promoting these relationships in-store helps to position the retailer as a pioneer with the latest, most sought-after styles.Displays that position the retailer as a comprehensive "solutions provider" for a range of related products or services. Sears, for example, promotes a variety of home improvement installation services alongside its extensive line of Craftsman private label tools.Last June, the Hoffman Estates, Ill.-based retailer rolled out 300 updated Sears HomeCentral kiosks. The vacuum-formed kiosks feature backlit graphics and phones that allow customers to schedule appointments for a wide range of installation or repair services.Jeffrey Tuuk, director of store synergy for Sears, says the displays were designed to make customers more aware of the available services and to reinforce the Sears Home-Central brand. The program was typical in that it was initiated in-house, developed with the help of a display vendor, and ultimately approved by Sears' construction/visual department, which oversees visual standards for the entire chain, Tuuk says.Shoe retailers are also aggressive in promoting their stores with display materials. Matt Georgi, director of advertising for The Finish Line, Indianapolis, says the company is currently developing merchandisers that can be easily updated to showcase either individual brands or entire collections of shoes built around specific themes, such as women's shoes that all feature blue colors. The collections approach helps to reinforce that Finish Line is the place to find a wide selection of the latest styles."We've tried to bring our message and our colors more into the stores," Georgi says. In the past, the company might showcase multiple angles of one specific shoe on top of its shoe walls. More recently, he says Finish Line has incorporated more consistent use of Finish Line's blue and light blue colors on the displays along with "sport lifestyle" messages that help to brand the stores. "It's important to us that people know they're in our store," he notes.Pumping Up Private LabelPutting more display resources behind private label brands is also becoming a key strategy for some retailers. Private labels help differentiate retailers from the competition and the products can garner higher margins for the store than national brands offer. At the same time, however, finding the budget to fund P-O-P for private labels can be difficult, especially since these products are typically lower priced than national brands. But more retailers are realizing that the potential in private label makes it worthwhile to find a way to make it work."Everyone is looking to do something cutting edge with their private label products, and that's a new trend," says Sue McCabe, vice president of merchandising for Drug Trading Co., a drugstore chain based in Markham, Ontario, Canada. "Many people have realized that putting more focus on the way they display the products can make a difference in sales. I see that as the next step in helping private label products become a more important entity. That's the way they will compete with national brands."Drug Trading's belief in its private label products affects what displays she wants from both types of products, McCabe notes. "I want national brands to give me temporary displays that are small and sell in a minimum length of time. But displays for private label products are mine. I want them to last two years."That attitude indicates an evolution in the role of private label products in-store since they were first introduced. Originally designed as low-cost, at times "generic" replacements for national brands, they have become accepted in some situations as an equal-quality alternative. In a few instances, the premium positioning for the products has created differentiation points for the retailers.Private label products are growing in both sales and breadth of lines, reports Private Label magazine. Its 2001 survey reported that respondents expected growth of about 5% to 8% in total private label sales, shelf space and SKUs during 2002. The top six ways respondents said they were promoting these products included in-store displays, on-package guarantees, shelf signs, store circulars, compare-and-save programs and in-store sampling.Unit sales have reached the 20% mark in supermarkets, according to the Private Label Manufacturers Association in New York. Sales of store-brand products grew by more than $1.2 billion in 2000 across the three major U.S. retail channels of supermarkets, mass merchants and drugstores. That represents an increase of 2.6% over the previous year, according to the group's 2001 Private Label Yearbook. Overall, store brands accounted for $47.3 billion in sales overall, a new high.That growth, generated in part by consumers' growing acceptance of the products as quality alternatives, is leading to better display presentations, says Vicki Williams, president of Signature Sales & Marketing, Toronto, a consulting firm. "Retailers are becoming more sophisticated in how they promote their products and are using better-quality P-O-P overall to project a higher-quality image for them," she says. "They don't want their brands to suffer in comparison to what national brands are doing."National vs. Private LabelIn some cases, the national brands are also manufacturing the private label brands, creating a unique competitive situation. "In some cases, we do compete with our own brands when we create private label products and displays," agrees Jim Rochford, director of customer brands for Georgia Pacific in Norwalk, Conn. "But we view it as a complementary situation that gives us more facings and adds another of our products. We want to help our retailers achieve their goals however we can."Adds Tom Swain, sales manager for McCormick & Co, Hunt Valley, Md., "Space is at a premium, and who gets part of the footprint is a constant fight. The goal with our private label products is to complement the branded materials rather than compete directly, and to provide differentiation for the retailer. That's the way we approach it."Manufacturers of private label products of all types say they are receiving more requests for display options. "In the last six months, I've seen more freestanding displays and merchandising in general compared to 1-1/2 years ago," says Dan Lynn, sales development manager for Dandy U.S. Corp., Hampshire, Ill., the domestic division of Dandy A/S, Vegle, Denmark. The company makes private label chewing gum, a category where visibility is required for impulse purchases. He reports that three of the five programs he has developed in the first few months of 2002 include display programs, a significant upturn over past years.The major challenge in producing displays comes in providing the quality of presentation that national brands can provide with their large budgets while maintaining the higher margins that make private labels so attractive to retailers. "Retailers are challenging us not only to follow what the brands are doing but to be creative and more sophisticated," says Rochford. "They want us to take a leadership position and provide high quality."But it can be cost-prohibitive to create those displays on private label budgets, manufacturers agree, and that can become a problem. "Some of our clients show us national brand displays and ask us to compete with that," says one private label manufacturer. "We tell them we can do that -- but it will cost more than they've budgeted to do it. We have to walk a fine line between providing what they want and still having it be profitable for us. They want all the frills but not the price that goes with those. It can be hard to provide the extras with the thin margin we get."One way to overcome that is to point to the sales lift that can potentially be achieved with displays. "Retailers are beginning to understand that displays cost more, but they bring in volume that will more than offset the cost," says Signature Sales & Marketing's Williams. "The key is not to create the biggest displays but to create ones that are effective and productive."Some suppliers have found creative ways to produce generic displays that then can be customized to each retailer's approach. Dandy, for instance, uses a generic white countertop sampler for its gum that is printed according to the account's specifications. For Walgreens, it replicated the gum package's graphics on the panel face and added the retailer's name in the corner. The same approach is taken with the header on a generic floorstand it offers."It becomes cost-prohibitive to create unique displays for each account," says Greg Baskin, corporate manager at Hormel Foods Corp., Austin, Minn. "We try to do as much as possible, but we often create generic displays and let the product's packaging promote the individual products." Supermarkets then apply their own in-store labels and graphics to the display.Key Display AttributesSuppliers and retailers are both looking to streamline display production to offset costs. "Everything has to be functional and flexible," says Nash Finch's Paul. "Where the displays will be used varies by store layout and adjacencies, so we need to provide options."Speed to the floor has become a key ingredient, all agree. Nash Finch uses a variety of pallet programs, Paul says, "because they're display-ready and create labor savings." Reducing assembly labor time provides added value for the store and enhances the display's appeal. As a result, quick-set PDQs and other pre-assembled formats are gaining in popularity, just as they are with national brand displays.Drug Trading is focusing more attention on providing informational resources with displays, says McCabe. She finds that element critical, because private label products must reassure and inform customers while more well-known national brands can sell on image and special promotions. Many of her private label displays, especially for lines such as health and beauty aids, include brochure racks and slots for coupons. "Incorporating educational material is a step beyond what most national brands do, so it sets us apart," she explains. "We may not be able to convince consumers that we're better than the national brand, but we can convince them that we're just as good"Better IntegrationSome retailers are taking steps to better integrate their programs, says Signature's Williams. "We're seeing more account-exclusive programs in Canada that include both branded and private label P-O-P produced by one supply house so there is continuity of size and design for the store and better control by the managers." In some cases, that leads to complete category-management programs that include national and private label brands, she says. "More often now, the person responsible for branded products is also responsible for private labels in that category. There is a better balance between the two in the mix." McCabe agrees. "It's been common in Canada in the past for the private-label department to work isolated from the national-brand buyers," she says. "Now, more often, they work together, because who knows better than the national brand buyer what's hot and what's coming from the marketers?'Such strategic coordination and planning can ensure that private labels survive, says Frank Dell II, president of Dellmart & Co., a Stamford, Conn.-based consulting firm. "Retailers realize they can't replace their highest-selling brand names on the display floor with private label displays," he says. "But there are a lot of opportunities for doing some secondary displays."Two key areas for placement, he suggests, are endcaps at the back of the store and cross-merchandising areas, such as promoting private label buns during a sale on hamburger or hot dogs. "Cross-merchandising is where the next edge can occur."The key problem, he says, is that retailers aren't approaching their private labels strategically and managing the lines as if they were brands. "We've reached a point where half the products in the supermarket lose money for the store, and that includes some of the private label lines," he says. "Retailers have to understand how to make money, and private labels can do that. But they have to make efforts to ensure private label products are highlighted, so they can make it easier for consumers to find these products and consider them."

Pushing Private Labels and Retailer Brands

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