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As families look for ways to save on the costof they’re eating in more and the food they’re loading into theid shopping carts is increasingly private label, or “store instead of their brand-name That’s a win-win for the , Dierbergxs and Save-A-Lot supermarket chains and private-labell manufacturing heavyweights and “The economy is forcing customerws to try private brands, and I think they are likinh what they are finding,” said Schnuck Markets Inc. Chairmaj and CEO Scott Schnuck. “We have specific goals for our private-label penetration and we are ahead of that Way ahead.
Sales of Schnucks’ store brands have grown double digits over the past year and now make up more than 20 percen oftotal revenue. That puts Schnucks’ private-label salee at about $500 million and climbinvg based onthe company’s 2008 revenuer of $2.5 billion. The growing demand has Schnuck the region’s largest supermarket chain, expanding its Valu Time, Full Circle organics and other private-label Private label is more profitable for retailers as a percentagew of sales. Exclusive store brands and cost savings also can improvecustometr loyalty.
In a retail industry where competitiobn is fierce and marginsare thin, that is an attractive combination, said Bill Bishop, presideny of Chicago-based Willard Bishop Consulting, which focuses on the supermarket “It doesn’t take much for a well-run companu like Schnucks to realize, ‘Our world woulcd be better if we could increase our percentagde of private-label sales,” Bishop said. Sales of private-labep goods were up 9.2 percenrt to $54.6 billion at groceryh stores nationwide duringthe 52-week period ended Feb. 21. That does not includs Wal-Mart, which saw an 11 percent increaseto $20.76 billion, or drug where sales were up 14.4 percent to $5.
7 according to research by The Nielsen Co. similarlyt has seen increases inits private-labeo sales, especially over the past six months, said Chier Operating Officer Andy Pauk. The family ownede grocery chain is taking advantagwe of increasing consumer interest by expandingv its lineupof store-brand products such as cereal and ice “We are trying to keep a strategu where we put our private-label items in our ads, and we are installinv more displays of private label to make sure people are seeinyg them,” Pauk said. Even so, he said privat label doesn’t account for a huge part of the company’d total sales volume.
The company, headquartered in posted revenueof $675 millionn in 2008. At discount grocer Save-A-Lot, 80 percent of sales come fromprivatre label, Chief Executive Bill Shaner said. The Earth City-baseds chain offers 800 exclusivwe brands in itsnearly 1,20 0 stores and is working to broaden its Store brand green tea, for example, now complements private-label staples such as cereals and cheese. Shanerf declined to break out revenue at a wholly owned subsidiaryof Minneapolis-based Supervalu Inc. But he said the private-labelk “megatrend” is providing a boost. “We’re seeing positive sales trends and new facese inour stores,” Shane r said.
“People vote with their wallets, and they seem to be votinf ‘yes’ for what we Private label has come a long way fromthe no-name genericsd carried in stores a few decadesz ago. In many cases they are exactly the same producty and manufactured by the very companies that turn out the itemss that carry household but priced 20 percent to 40 percent lower sincethey don’y carry the advertising and marketing costsd of the brand name. Save-A-Lot’s store-brand for example, is made by a division of “People want to save moneuy but don’t want to sacrifice quality,” Shaneer said. “Our quality standard is a national-braned equivalent or higher.
” Consumer polling conducter in February by for the Private Labep Manufacturers Association found 75 percent of shoppersssaid “current economic conditions” are playing a big role in whetherf to buy private label items. Nearly 55 percenr said they buy privatelabel frequently, and three out of 10 said they are buyint more store-brand products now than they were a year ago. That’ more good news for supermarkets, whichy now find themselves in a betted position to negotiate lower pricesfrom brand-name companies.
“Privater label gives us anothere item we can push against theirbranded products, and they realize they have to be a littlse more aggressive to see their item get the ad, the displayg or the shelf space,” said Pauk. “We have Dierbergs snacmk nuts, and we want Planters to know they have to come strongedr with nuts through betterpromotional prices. In the frozebn pizza section, if the Jack’ and Tombstones know we have an alternative, they know we will give spacs to the ones who offer thebest
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