Kroger’s private label hits get their own store-within-a-store

Discussion
Photo: Getty Images
Dec 27, 2018

Kroger wants foodies to have a special place on their shopping list for its private label products, so the company is carving out a branded section in the center store to highlight them.

Kroger has begun testing an in-store section called The Treasure EmporiYum, according to Supermarket News. The section, highlighted by bold signage, curates what the retailer considers some of its most distinctive private label food offerings. The branding is supported by its own dedicated section of the Kroger website and branded newsletter as well.

The piloting of the store section comes in response to positive comments from customers about specific private label products on social media. The retailer hopes to do a better job “unbury[ing] the treasure” of its unique private label food offerings.

As private label grocery products have shed the reputation of being low-cost, low-quality knock-offs of national brands, there have been big returns for players that can do private label right. A recent study published by Progressive Grocer indicated, for instance, that 56 percent of customers would consider purchasing a private label product at Trader Joe’s because of the store’s positive reputation for private labels.

Kroger has made numerous moves and announcements in the past year indicative of a big push for private label expansion. In fact the private label focus has extended beyond Kroger’s own store shelves.  This fall the chain announced the pilot of a partnership with Walgreens that will stock lines of products like Kroger’s Simple Truth brand in the retail pharmacy’s grocery section.

The private label push has also moved beyond grocery.  Over the summer Kroger announced the introduction of an exclusive apparel line called Dip in conjunction with Joe Mimran, the designer behind the Club Monaco and Joe Fresh brands. The line was introduced at 300 Kroger Marketplace and Fred Meyer locations.   

Earlier this year the grocer found a place for its private label products overseas, as well. Kroger inked a deal with Chinese e-commerce titan Alibaba to test sales of its private label products on the Tmall online shopping platform.

DISCUSSION QUESTIONS: Will Kroger succeed in getting foodies to check out its private label brands with this type of a special section? Is it a worthwhile strategy for retailers to create a store-within-a-store to highlight their own brands?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This makes ultimate sense. Highlight your private label. Make people feel you are standing behind it and it is special."
"The store-within-a-store concept is being tested by many retail categories and it makes perfect sense for grocery. We will continue to see this trend for quite some time."
"Kroger’s private label brand focus can be a positive if they back up the products with quality like Trader Joe’s who has built up a strong brand reputation."

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13 Comments on "Kroger’s private label hits get their own store-within-a-store"


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Bob Amster
BrainTrust

This is a twist on the Amazon 4-Star concept: put what you think, or know, are the most desired products in a special place. In the case of Kroger it is a shop-within-a-shop. In the case of Amazon 4-Star, it is a separate store. Hmmmm. We may may be on to a new trend here.

Ken Lonyai
BrainTrust

A dedicated “store” for private label items is a worthwhile and relatively inexpensive endeavor to pilot. Typically, private label brands exist alongside national brands with an identity largely based on lower cost. By giving these brands their own space and attention, it potentially signals better brand perception, especially among curious, less cost-conscious shoppers.

I’m doubtful that even with a dedicated space Kroger is going to do much more than add-on or loss-leader type sales in “fashion.”

Ken Morris
BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
3 years 7 months ago

This is a great strategy for Kroger. I suspect they are modeling much of this after Trader Joe’s. Trader Joe’s has curated a loyal fan base for their stores and their products and their Fearless Flyer newsletter is highly anticipated by customers and it drives store traffic and product-specific sales.

The store-within-a-store concept is being tested by many retail categories and it makes perfect sense for grocery. We will continue to see this trend for quite some time.

Neil Saunders
BrainTrust

This is a good initiative for Kroger to highlight its strong own-label offering. However, to be successful Kroger will need to change the product mix on a regular basis, showcase some very innovative products, and use themes like “meal ideas” or “healthy snacking” to attract attention.

As much as I think Kroger’s private brands are good, they are not cutting edge. I’d like to see a lot more innovation and development in 2019.

Dr. Stephen Needel
BrainTrust

Its success will in part depend on which level of product they are putting in that section — Kroger, Private Selection, or Hemisfares. That said, shoppers tend to shop by category, then brand. Now Kroger wants us to shop by brand first — I don’t think that will happen. Part of the appeal of their private label, which is getting better in taste quality, is that it is less expensive. Take away that price comparison and you lose an advantage.

Kai Clarke
BrainTrust

Making their private label products a destination location is a double-edged sword. The placement of private label SKUs next to nationally branded SKUs has always provided a hint of recognition and sales lift. It also allows for category bleed between the house brand and the national brand when they are placed next to each other. Placing all of the house brands in one location discounts this and makes it more difficult to consider a house brand when shopping for national brands. Who will go to an entirely different part of the store to purchase a SKU, when you are right in front of the category section?

Gene Detroyer
BrainTrust

This makes ultimate sense. Highlight your private label. Make people feel you are standing behind it and it is special. Don’t give them a chance to revert to their tried and true.

But the key is what they are going to discover. If it is “Hey, this is better than the national brand” or even “Hey, this is a good as the national brand, only less expensive” it is a big win. If the products are less-than, in any way, it only confirms what people think about private label and chases shoppers away from private label in the future.

John Karolefski
BrainTrust

A store-within-a-store will not work for every grocer’s private label. The store brand line must include premium offerings that would be showcased in the separate section. There would have to be many SKUs to justify the space. Run-of-the-mill private labels would not work there.

Adrian Weidmann
BrainTrust

Featuring private label brands will always be beneficial to those featured products — but at what price? Your traditional brand (CPG) vendor partners are watching this as well. They know that their MDF, marketing co-op, and slotting fees are paying for Kroger to promote their private labels — in direct competition with their brand products. This is yet another issue that continually strains the business relationship between retailers and their brand partners.

Shelley E. Kohan
BrainTrust

Kroger’s private label brand focus can be a positive if they back up the products with quality like Trader Joe’s who has built up a strong brand reputation. However, keeping all products in one section will be a big mistake. The whole drive in shopping is convenience so creating a separate area that shoppers have to go to first to select product then finish the shopping journey trying to figure out which items they need based on what was selected from Kroger’s own brands, spells confusion and added complexity to what should be a seamless journey. I understand that Kroger wants to “unbury the treasure” but better signing and kiosks may be a better choice.

Cynthia Holcomb
BrainTrust

The font, look and feel of the Treasure EmporiYum logo is so Trader Joe’s! Great concept for Kroger. Consumers and foodies, not privy to the daily news of the grocery world, will definitely take notice. Will this store-within-a-store entice Trader Joe’s shoppers to share their grocery dollars with Kroger? Maybe, but likely not so much. Trader Joe’s has a remarkable promise of “clean food” on the wall of every Trader Joe’s store. In a world of globally-sourced food, foodies especially will be reading the Kroger labels.

Mark Heckman
BrainTrust

I agree with most that an overt effort to create a special presence for private label is a good idea and worth the effort. I am not convinced that Kroger is well positioned to attract the true “foodie” to their stores on a regular basis. Their on-going product development and promotion will determine if that can change. Nonetheless, improving the quality, depth and breadth of store brands remains a smart strategy to expand brand loyalty to the Kroger banner, eliminating one more reason to shop somewhere else.

Richard J. George, Ph.D.
BrainTrust

Kroger and other retailers are realizing that a unique product offering provides the opportunity to claim a differential advantage. While branded products will remain the mainstay in most supermarkets, they do not create opportunities to differentiate, except for price (promotions, deals, displays, etc.). On the other hand, products that customers perceive as unique to one retailer, gives customers permission to drive past one or more stores to shop at the one offering this added value.

The store within a store highlights this treasure island and becomes an excellent marketing tool.

wpDiscuz
Braintrust
"This makes ultimate sense. Highlight your private label. Make people feel you are standing behind it and it is special."
"The store-within-a-store concept is being tested by many retail categories and it makes perfect sense for grocery. We will continue to see this trend for quite some time."
"Kroger’s private label brand focus can be a positive if they back up the products with quality like Trader Joe’s who has built up a strong brand reputation."

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