PL Buyer Cover Story: Organic Outreach

Discussion
Nov 22, 2006

By Jill Rivkin


Through special arrangement, we offer this excerpt from PLBuyer’s recent cover article for discussion on RetailWire. Click to view the entire article,
Organic Outreach.


Having already established roots in the natural and organic market, Wild Oats Markets is broadening its store brand reach. The chain is pushing its private label in its own stores
while moving them into traditional supermarkets, such as Pathmark, Price Chopper and Ahold businesses – Stop & Shop, Giant and Peapod.


David Young, senior director of Wild Oats corporate brands, said, “We know that Whole Foods has dramatically increased the size and number of its stores. So how are we going
to compete? We’re going to compete two different ways: new stores and with our brand. We have found that over the past two years this brand has resonated within the grocery industry
and garnered a lot of attention.”


Over the past two years, the Wild Oats brand has proven it has legs outside its retail stores. In the Chicagoland market, the Wild Oats brand currently is the No. 1 selling brand
sold through Peapod. Approximately 300 Wild Oats natural and organic store brand products are available through the online grocer.


Since mid-September, Peapod shoppers in Washington, D.C. also have had the opportunity to buy Wild Oats items, with more than 120 items available thus far.


The Peapod venture offers Wild Oats access to a larger customer base and helps build brand awareness in markets with only a few stores or untapped potential. Chicago, for example,
is home to only two brick-and-mortar Wild Oats stores. The deal with Peapod helps Wild Oats set a foundation to potentially open more locations around Chicago because the retailer
is building brand equity.


In Washington, D.C., there are no Wild Oats stores – yet – but a demographic indexing particularly high for interest in natural and organic was a solid starting point for Wild
Oats to build brand equity through Peapod sales there.


Though only in the early stages of development, web retailer Amazon.com has ventured into selling groceries, and Wild Oats also has a partnership to sell Wild Oats-branded items
through Amazon.com’s system.


Wild Oats executives talk gingerly about additional opportunities for the Wild Oats brands beyond their stores and the Internet.


“We have been contacted by several retailers domestically and internationally wanting to talk to us about accessing the Wild Oats brand,” said Mr. Young. “They don’t have their
own program, they don’t understand the industry entirely, and it would take them years to develop what we have to offer them today.”


Mr. Young says they are considering partnering with these retailers in markets where Wild Oats does not have a presence and where a retailer has the appropriate demographics.


“We’re taking a very cautious approach and being very careful with what we do,” he added. “But I think we have a real opportunity to potentially grow this program significantly.”


Discussion Question: What is your assessment of where Wild Oats is headed with its store brands inside its own locations and in other retailers’ stores?

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7 Comments on "PL Buyer Cover Story: Organic Outreach"


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Charles P. Walsh
Guest
Charles P. Walsh
15 years 5 months ago
This is a smart play and could prove to be ground breaking in its concept. The Wild Oats brand is one that is immediately recognizable and valued by those familiar with their operations and it is my guess that those who are not familiar with Wild Oats stores will still recognize its inherent connection with organics on a subconscious, perceived recognition level. That part is a gimmee. The strategic part – placing their PL Wild Oats Brand within grocers where they do not operate – is brilliant. Creating perceived and real recognition in advance of their entry allows them to tap sales in these markets and in my mind doesn’t carry a tremendous down side upon entry. While its presence in these competitor retail chains may seem to run counter to common sense it may well be another outlet for retailers to leverage their brand recognition outside their walls. I am trying to envision Sears Holdings making their Kenmore product line available to other retailers to sell (Kenmore is in the top 100 most recognizable… Read more »
Mark H. Goldstein
Guest
Mark H. Goldstein
15 years 5 months ago

Smart play by Wild Oats. In terms of real-estate, they are contracting and it’s not clear the world needs a Whole Foods clone after all, especially given the success traditional supermarkets are having, organizing themselves pretty nicely.

The Wild Oats supply chain and private label brand lends the traditional grocers some market ‘cred’ and better profitability than going purely with branded product.

Warren Thayer
Guest
15 years 5 months ago

To me, it’s just exactly like the President’s Choice program from years ago. That worked very well until different chains started buying each other up, and conflicts developed over exclusivity in different markets, if I recall correctly. Right now it’s a good solid move for Wild Oats. Depending on where, and how fast, Wild Oats (and its new private label customers) grow, it could be a good long-term move, too. Time will tell.

Al McClain
Guest
Al McClain
15 years 5 months ago

This is probably a good thing for all involved. The only concern I have is whether Wild Oats may lose some shoppers who regularly shop at traditional supermarkets once a week with a supplementary monthly trip to Wild Oats. Will they find enough Wild Oats product in their weekly trip and so eliminate their monthly visit or will it perhaps whet their appetite and cause them to go to Wild Oats more often?

W. Frank Dell II, CMC
Guest
15 years 5 months ago

Wild Oats has achieved something that only one other Private Label has and that is creating a true brand. Eight O’clock coffee was a private label that became a brand. Wild Oats understands that private label must be created and managed as a brand. Further, they understand that natural/organic products will unlikely create a new crop of CPG companies of significant size. By expanding product availability, they achieve economies of scale. Since Wild Oats will never have stores in every town, they can focus their resources where they have the greatest probability of succeeding.

Odonna Mathews
Guest
Odonna Mathews
15 years 5 months ago

This move makes a lot of sense to me as it provides Wild Oats additional opportunities to reach consumers beyond their own stores. It also provides consumers with additional choices at existing retailers as well as home delivery through Peapod.

Seems to be a win-win.

Mark Lilien
Guest
15 years 5 months ago

Since Yucaipa bought part of Wild Oats, it’s reasonable for the Wild Oats brands to enter the other Yucaipa stores, such as Pathmark.

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