Through a special arrangement, what follows is an excerpt of a current article from Private Label Buyer, presented here for discussion.
Ahold USA's banners are finding that their premium private labels Nature's Promise and Simply Enjoy are creating true differentiation.
The two premium brands, which complement established and strong national-brand-equivalent banner brands, plus a value line called Guaranteed Value, have helped upgrade each banner's image and made them known for more than just low prices.
"Giant of Carlisle stands for quality, selection and low prices, and a robust corporate brands program has been a key part of getting that message to consumers," says Stephen Vowles, senior vice president of marketing for Ahold USA. "Stop & Shop and Giant of Landover have stood for quality, strong variety and good sale prices. We really want to move to a more differentiated place than that, and we'd like to move forward our offering so that we help make consumers' lives and shopping a little simpler. We'd like to differentiate ourselves as a supermarket that way, and at the same time, stand for low prices. Traditionally we stood for great sale prices, but we want our customers over the next few years to know there are always good prices."
Simply Enjoy - offering "everyday, affordable indulgences" around frozen entrees, appetizers and desserts - was launched only six months ago and has expanded to 160 products across 20 categories. Nature's Promise, Ahold's first success in premium launched in 2004, has expanded to more than 160 products, thanks to a high level of consumer acceptance in the meat, deli and produce departments.
Much of the success of the initial launch of Nature's Promise was attributed to the commitment of operating companies embracing the program and driving sales with ads and displays. Packaging and in-store messaging enabled clean and clear comparisons for consumers making decisions, as most of them do. Also, the "wallet-friendly organics" line was sold in both its natural/organic sets as well as mainstream category sets.
"This gives us a lot more awareness with the customer and the chance to reach natural and organic consumers, as well as the opportunity to meet mainstream consumers who may trade up to Nature's Promise," says Rich Ryan, senior director of product development for Ahold USA.
Ahold USA's corporate brands team is sure to promote the strong foundation established with the national-brand-equivalent lineup - a true store brand carrying the company's banners (i.e., Stop & Shop, Giant). "Though it's less headline-grabbing, it is a very, very strong program," says Mr. Vowles. "It has come a long way over the past few years, and it is the backbone of a program in terms of volume...We can only do Nature's Promise and Simply Enjoy because we've got the basics set."
The success of Nature's Promise and Simply Enjoy have catapulted Ahold's private label program, both internally and customers.
"They show what can be done," Mr. Vowles says. "Those kinds of successes put us in a positive spiral with our customers. Customers are buying Nature's Promise and finding it to be a good experience. That comes back around to help with the national brand equivalent. They realize that we are delivering something that they can believe is as good as a brand. If you give them those positive experiences, it really helps the program rise up."
Discussion Questions: What do you make of the success of Ahold USA's premium private label programs in upgrading the image of their banners? What can other retailer's learn from Ahold USA's success? What are some key differences to building a premium private label program that might differ from a NBE (National-Brand-Equivalent) program?