PLBuyer: Regional Retailing
By Kathie Canning
Through a special arrangement, what follows is an excerpt of a current article
from Private Label Buyer, presented here for discussion.
Somewhere between the single-store mom-and-pops and the multi-store national giants you’ll find an enthusiastic breed of retailer with an especially loyal customer base. That particular breed – the regional retailer – is very likely to cater to the unique needs and preferences of the shoppers in the geographic region in which it operates. And when shoppers believe that a store “understands” them, they’re likely to come back for more.
A solid private label program often plays a critical role in the regional retailer’s strategy – and its ability to meet its consumers’ needs. Even more importantly, such a program allows these retailers to stay competitive with larger national chains.
“I think first and foremost it provides us with a wonderful profit opportunity, because when you’re competing with some of the folks that are 10, 20, even 50 times your size, obviously you’ve got to be price-competitive on national brands,” said Steven Smith, president and CEO of K-VA-T Food Stores Inc., which operates 95 Food City and Super Dollar Discount Foods outlets in Kentucky, Virginia and Tennessee. “I think the way we’ve embraced our corporate brand program … allows us to have wonderful quality products that are well-accepted by consumers, and to enhance our margins so we can remain competitive on some of those national brand items you absolutely have to sell very cheaply.”
A spokesman for a Texas-based regional retailer that asked not to be identified echoes Smith’s sentiments.
“Our primary competitors are EDLP-type retailers who often price branded items at margins below our budgeted needs for the category,” he said. “In trying to stay competitive to these big box retailers, we are often forced to give up margin on national brands.
“Our private label products are not a lower-tier alternative, but rather national brand-equivalent, with quality being very important,” the spokesman added. “We price our private label products at a comfortable margin with a focus on being a value compared to the national brand.”
Discussion Question: How critical is a private label strategy for a regional retailer’s quest to differentiate itself from national competitors? What challenges do regional retailers face in developing successful PL programs that might be different than a larger national?