Inside This Issue - News
Walgreens rethinks its approach to private label
June 25th, 2012
DALLAS – The role of private label has changed, and that means a more sophisticated approach in developing them is required, according to Laura Sturdevant, Walgreen Co.’s director of product development for private brands.
Sturdevant spoke at the Food Marketing Institute’s recent FMI 2012 show here, as part of a panel discussion called “Building Strong Retail Brands Through Multi-Faceted Collaboration.”
“Private brands are no longer just the low-cost solution on the shelf,” Sturdevant explained, adding that retailers are now behaving more like consumer packaged goods manufacturers in their own right, trying to develop products that will resonate strongly with consumers and differentiate themselves from the competition.
“Product placement has also changed,” she said. “Ten years ago it was not unusual to see the private brand on the bottom shelf. Today it’s front and center with many retailers.”
All that has dramatically raised the stakes when it comes to the development of store brands.
“When private brands were just ‘me too,’ it was really easy,” Sturdevant said. “It was just a matter of having the right label profile and the right product quality and putting it on the shelf at the right price. Now we’re going down a different road with unique products, and it’s much more complicated.”
As a result, collaborating effectively with design agencies and private label manufacturers is more critical than ever. Retailers need partners that have excellent category management capabilities and progressive research and development departments focused on delivering innovation. Keeping up with market trends is also critical, Sturdevant argued, and that means going beyond syndicated data on what is selling in the United States to consider ingredients and flavor profiles that may be catching on internationally as well.
“External agencies can provide insight about what the consumer is looking for,” she said, adding that it is also critical for the retailer to have a clear understanding of who its target customer really is.
“That’s done through talking to your consumers in the stores or to your prospective consumers,” Sturdevant said. “Another thing is knowing what you want to be and where you want to play and then going after that business.”
Collaboration and communication within the retail company is also critical, the Walgreens executive pointed out. “You need your internal stakeholders on board,” she said, “whether its the marketing team, the merchandising team, the category managers or the supply chain and logistics part of the business. It’s all-encompassing.”
Having a plan and a strategy in place is another key to success, even if that plan inevitably evolves over time.
“If retailers, working with manufacturers and design agencies, set a very strong strategic position for their private brands and hold true to that, they’re setting themselves up for a win,” Sturdevant said.
Other participants in the FMI panel included George Miketa, executive vice president of sales at Snacks Holding Co., and Todd Maute, a partner at the branding firm CBX.