PL Buyer: Extreme Makeover – Health & Wellness Edition
By Kathie Canning
Through
a special arrangement, what follows is an excerpt of a current article
from Private Label
Buyer, presented here for discussion.
Building a successful
health and wellness destination – starring your store brands
– will require a workable game plan and oodles of hard work. According
to Thom Blischok, Consulting and Innovation president
for Information Resources Inc. (IRI), retailers must first develop a deep
understanding of the shopper behavioral changes taking place in this recession.
Consumers are seeking out affordable solutions, and the health-and-wellness
arena is no exception.
“In a time
of economic stress like this, people realize that they have tradeoffs,” Mr. Blischok said. “So
25 percent of America is now using the Internet and over-the-counter drugs
[for health-care issues]; they’re making fewer doctor visits. … There
is a movement toward healthier eating, healthier dining, healthier foods,
because they can’t afford to go to the doctor, can’t afford to get sick.”
Second, retailers
need to develop a health and wellness platform. Mr. Blischok points to Hy-Vee’s
“immersion-based” health and wellness platform as a great grocery
example, and also likes what Hannaford Bros. has done with its Guiding Stars
nutrition navigation system.
“I think
that Walgreens and CVS are working their strategies around a better quality
of life,” he added. “I think that’s also very important.”
Third, retailers
need to establish a believable brand promise for private label health-and-wellness-minded
items, Mr. Blischok said.
“After
brand promise, then you have to organize your marketing strategies and
merchandising around the idea that you can fulfill that promise – that
you have products that actually meet the needs of the shopper, and they’ve
been tried and tested to deliver that promise.”
Matt Walker,
director of marketing for Cliffstar Corp., stresses
that consumer expectations have changed, too.
“As more
and more consumers watch what they put into their bodies, they expect more
from every company they purchase from. … Every company that wants to
succeed in this economy has to find solutions for every consumer,” he
emphasized.
And retailers
are ideally situated to accomplish this with their private label programs,
adds Pat Nicolino, vice president of marketing
for Clement Pappas.
“One of
the huge opportunities here that private label has is to make good things
in life universally available to everybody – because everybody deserves
great opportunities,” she said. “[National] brands can’t pull
that off all by themselves, but a retailer that’s got 1,000 private label
items in a store can really pull together a very strong message.”
Discussion Question: What role should private
label play in helping a store become a health and wellness destination?
What else is required?
Retailers who are successful in healthy living must have a strong private label program. The margin opportunities are just too good to pass up. Having an extensive product mix is just one piece of the puzzle. Chains that consistently win in this category know that it is important to have associates who have detailed product knowledge working in this department. The last thing you want is customers having to wait for your pharmacist or no one at all.
Customers in this area always have questions and those questions can lead to upsells and bigger baskets. The key is to have the right people there who can offer advice and suggestions when customers are shopping the section. Some smaller groceries who have seen the opportunities have trained health and wellness captains who are responsible for the sections and those that work in it. This category is just too juicy to leave alone!
I don’t know what the consumer’s tendencies are towards private label in health care products, but I would guess that a shopper is more likely to purchase private label in something they are not ingesting than something they are.
To me, this is a huge opportunity for the private label merchandiser, but it will take a bit of a different thought process. In this category, private label has to move away from the idea that it is merchandising a cheaper knock off of the brands to an aggressive posture that it is a straight-up alternative to the brand.
Start with graphics. Don’t copy the brand graphics. Don’t make the graphics look like the product is cheaper. This is a drug to put in your body. Perhaps the best step is to develop a unique healthcare brand for the store.
Big pharma already has the reputation of overpricing products. Price does not have to be an issue. The retailer should advertise the unique healthcare brand as “FDA approved,” with whatever active ingredients, and for whatever symptom relief.
I find myself influenced by a very bad cold/flu I had recently. I went to get my favorite medicine and found it out of stock. Reluctantly, I purchased the PL alternative. I tried it, it worked. It worked very well. In checking out the ingredients, I found that the PL had a little more oomph to it. My second purchase was straight to the PL.
In reading today’s headlines on this board, I noticed that Great A&P is promoting a new line of health and wellness products under the Green Way, Live Better and Market Spa private labels.
Every supermarket retailer is rushing to expand their private label lines for maximum exposure and profitability.
Just think this is all started 129 years ago when Great A&P introduced its own label baking powder. Now tens of thousands of SKUs are devoted to private label products matching the high quality of national brands while being sold at a fraction of the price.
Both the consumer and the retailer have latched onto a good thing.
Purchase of any product that one ingests is a matter of trust. Generic drugs have gained huge consumer acceptance, making huge inroads into the market. They have become acceptable alternatives in most areas. If a particular store has a good reputation–i.e consumers trust them, and they are seen as leaders in offering good alternative brands (PL products) then it only stands to reason that if they provide the right image and products in a wellness line that the line would gain immediate consumer acceptance. As always, the proof will be if they keep that customer.
It’s always a good time to update private label presentations. I believe packaging/positioning is the biggest obstacle to most private labels.
The economic situation cuts both ways. When it comes to health, saving money will not be at the expense of efficiency.
Consumers are more apt to buy a known brand because they know it works–paying 30% premium above a private label is still more affordable than going to the doctor. Therefore, creating a platform and presentation around a private label brand, building an identity for the label, will pay dividends.
There are multiple studies confirming that consumers will always prefer a promoted brand, and the halo effect of a preferred product will ultimately cast the retailer in a positive light.
Private label is big and it is growing. Chalk it up to the economy, a realization by consumers that the product is indeed equivalent or simply better merchandising/marketing. But this trend will continue.
If we look to retailers such as Tesco in the UK, they actually offer value and premium brands for many of their private label items. This is a trend I expect to see in the US, also.
Furthermore, a leadership role by private label manufacturers is emerging. They are being asked for validation of merchandising strategies (assuming a co-captain role within categories) and they are creating some terrific packaging enhancements and delivery options.
Make no mistake, private label OTCs are here to stay.