Cover Story - Message From Canada by Private Label Buyer Magazine


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Patrick Rodmell of Watt International weighs in on what U.S. Retailers can learn from the Canadian Private Label experience.

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Cover Story - Message From Canada by Private Label Buyer Magazine

  1. 1. Cover Story PL LESSONS FROM CANADABY LYNN CELMERBY LYNN CELMERMessagefrom Canada While Canada has been a private label hot spot in the past, PL market share has dropped there for six consecutive years. Here’s why, and what U.S. retailers can learn from the Canadian private label experience. A lthough private label can be found in global private label report. every household in Canada, private label Private label’s dollar share in Canada market share has remained relatively stood at 18.1 percent across all categories in static over the past year as national brands have 2010, according to the Canadian Private Label met Canadians’ thirst for value by driving more Review, another Nielsen publication. That’s sales through feature pricing, according to The down slightly from 18.4 percent in 2009, and Rise of the Value-Conscious Shopper, a Nielsen represents the sixth consecutive year market share for private label has fallen in the Great White North. Does the Canadian experience mean that North American consumers will only buy so much private label and no more? And do market share declines there bode ill for U.S. private label retailers? Not exactly, say veteran Canadian food retailing experts. Canada’s private label slide has more to do with retailers not treating their private label offerings as brands than it does with reaching a shopper saturation point. Quite simply, what happened in Canada is that private label brand support dropped and consumers shopped elsewhere. This year, though, Canadian retailers are charging back, rolling out new store formats that emphasize private label, introducing a wide range of new private label products and even repositioning their private label to better connect with consumers and the changing demographic trends in Canada. “I don’t think there’s anything pressing to say that this trend will continue,” said Jeff Doucette, principal for Alberta-based retail consulting firm, Sales Is Not Simple, regarding PL sales declines in Canada. “I think what was happening was many retailers, outside of In the summer of 2010, Toronto-based drugstore chain Shoppers Drug Mart launched Etival Loblaw, were consolidating their private label Laboratoire, an exclusive dermatological skin care line. brands and probably creating a bit of brand24 PLBUYER J U LY 2 0 11 WWW.PRIVATELABELBUYER.COM
  2. 2. PL LESSONS FROM CANADA Cover Story “Retailers are recognizing that it’s not a mass market anymore and that you really have to have special formats targeted to very specific segments. We’re in a very micro-merchandising, micromarketing environment.” — John Torella, global research consultant, J.C. Williams Groupconfusion with the shoppers in J.C. Williams Group. “Retailers company had such success last “Our customers response tothe stores.” are recognizing that it’s not a year with down-sized private our line of President’s Choice Ice mass market anymore and that label offerings that it decided to Cream Shop Flavours has beenNew Formats you really have to have special stick to the mini theme. Some nothing short of phenomenal,”In 2010, Stellarton, Nova Scotia- formats targeted to very specific of the new President’s Choice said Allan Lindsay, vicebased food retailer Sobeys, segments. We’re in a very micro- brand mini products for 2011 president of marketing atlaunched Freshco, a hard merchandising, micro-marketing include fully cooked fire- Loblaw Companies Ltd. “Sodiscount format which some environment.” roasted sweet Italian mini pork much so, we’ve had to doublesay took some inspiration from sausages, Smokin’ Stampede production for some of the mostTesco’s Fresh & Easy chain. New PL Products brisket sliders and Blue Menu requested flavors.”In addition to the Freshco The largest national food retail Angus sliders. Other products Sobeys, Canada’s secondbrand line, the stores also store in Canada, Loblaw, No. include a S’mores kit, coconut largest food retailer and No. 11carry selected varieties of the 6 in our exclusive PLBuyer cream pie, spicy tzatziki on our Top 30 list, revampedCompliments and Sensations Top 30 Private Label Retailers yogurt dip, peanut butter-filled its private brand portfolio lastby Compliments private label ranking(See PLBuyer, September pretzels, The Decadent ice cream year. The company conductedproduct lines, as well as Sobeys 2010) saw private label sales of sandwiches, and yes, five new consumer research and foundvalue private label brand, Signal. $8.2 billion, or 26 percent of total ice cream flavors. out that customers were Not too long after Target grocery sales, in 2010,announced its plans to enter down slightly fromthe Canadian market, taking 2009, according to theover leases for up to 220 former Canadian Retailer YearZellers stores owned by retailer in Review from Sales isHudson’s Bay Co., Loblaw Not Simple, an Alberta-announced plans to open 20 based retail consultingstand-alone Joe Fresh stores Canada. The stores feature In 2010, Loblawprivate label apparel for men launched 1,200 newand women, a kids collection, private label products,intimates and sleepwear, including 14 President’sswimwear, sunglasses, jewelry Choice Ice Cream Shopand beauty and bath products. flavors, Angus sliders Expect to see more retailers mini beef burgers,rolling our alternative formats sparkling fruit juicein an attempt to sell more and bite-size miniprivate label, according to tarts. It also redesignedJohn Torella, global retail packaging on a furtherconsultant with Toronto-based 300 products. TheWWW.PRIVATELABEL BUYER.COM J U LY 2 0 11 PLBUYER 25
  3. 3. Cover Story PL LESSONS FROM CANADA trends poll for Sobeys by Harris/ Decima revealed that Canadians are increasingly choosing private label products in fresh categories such as dairy, fresh produce, fresh meat and fresh baked goods, so to meet consumer demands, the company last summer launched products in several fresh categories, including fresh salad kits, a variety of fresh Pesto flavors and sundried tomato and basil goat cheese, all under its Sensations by Compliments label. Just in time for summer 2011, Sobeys has introduced two new items in its Sensations by ComplimentsCNW Group/Loblaw Companies Limited line: Korean-style beef burgers and Angus beef sliders. The third major player in Canada’s retail food sector, Metro, is looking to tap into the growing health and wellness demands of consumers by Brampton, Ontario-based Loblaw sampled its newest President’s Choice brand minis by bringing a barbecue trailer to its launching its Irresistibles 170 stores throughout the summer. Gluten Free product line this May. Metro’s gluten-free line misinterpreting the positioning is said to be the only Canadian of its three-tiered private label private label gluten-free line Est. 1973 3791 tsE 3791 tsE 3791 .tsE 379 79 79 79 9 products. Sobeys private label program had taken a good, and includes no fewer than 24 products. Thank You better, best approach and On the drug side of the “The problem with private label in To O Loyal Customers That Suppo ted Us This Year o Our Loyal Customers Custome s Customers Supported Supp Suppor This Year Year ea Canada and, in fact, throughout North America, is that many big players in the retail industry are digressing back to programs that look and feel more like the generic, systematic programs that were prevalent years ago,” Excellence in Private Label Partnership Programs — Patrick Rodmell, president and CEO, Watt International National Brand Equivalent New “Good For You” Snacks had the Compliments brand Canadian shopping aisle, Full Line Snack Manufacturer appearing on all three tiers. Shoppers Drug Mart also is After seeing the results of its showing its commitment to Production Plants in Perham, MN & Phoenix, AZ consumer research, however, private labels. In the summer it decided to rebrand its of 2010, the retailer launched economy line as Signal, to keep Etival Laboratoire, an exclusive 1-800-346-4910 Compliments as its national dermatological skin care line www.b e f s a k c wwwww barre ofunsnac www.wwww www.barrelofunsnacks.commm m m m m m m m m m m m m m k k k k k k k k k k k f f f f f f f f f f f f fu moc skcansnufo errab www moc skcansnufo errab www moc skcansnufo errab www moc skcansnufo errab www moc skcansnufo errab www moc..skcansnufollllllerrab..www b w ww b w ww b w ww b w ww b w ww b w ww b w ww b w ww b w ww b w ww b brand equivalent and add Sensations by Compliments as said to be uniquely tailored to address the skin care needs of all its “affordable indulgence line.” age groups and skin types. The A spring 2010 consumer retailer, in 2010, also launched 26 PLBUYER J U LY 2 0 11 WWW.PRIVATELABELBUYER.COM
  4. 4. Cover Story PL LESSONS FROM CANADA an exclusive bath line called Bath Retreat and introduced new sun care products under its Life Brand. The other major Canadian drugstore player, Jean Coutu, also has been expanding its private label offerings with the rollout of two exclusives in beauty: StudioMakeup and The Balm. The retailer also launched an Eco Nature line of feminine hygiene products under its Personnelle brand and a co- branded Personnelle-Shrek line of diapers and training pants. In 2012, it plans to introduce several new private and exclusive label products as well. On Trend Private label represents big business in Canada, bringing in nearly $11.4 billion of revenue, according to The Rise of the Value- Conscious Shopper, a NielsenIn 2010, Stellarton, Nova Scotia-based food retailer Sobeys, launched Freshco, a hard discount format which carries selected global private label reportvarieties of the Compliments and Sensations by Compliments private label product lines, as well as Sobeys value private released this March. Private labellabel brand, Signal. performance varies by category. TM TM DIFFERENTIATE INNOVATE PROFIT NEW PINK LATEX FREE GLOVE ULTRA PLUSH RAYON LINING BUILD CUSTOMER LOYALTY PRODUCT & CATEGORY LEADERSHIP BRANDED AND PRIVATE LABEL SOLUTIONS 1-800-FOR-GLVS sales@cleanones.com28 PLBUYER J U LY 2 0 11 WWW.PRIVATELABELBUYER.COM
  5. 5. Cover Story In Canada, private label Patrick Rodmell, president andoutperforms national brands CEO of Watt International, aonly in produce and health and Toronto-based integrated retailbeauty. agency. “The gap between the “In both produce and HBC, quality perception of privateI don’t believe that consumers label and national brands isfeel there is a decided difference widening. I think this trend willin quality,” said James Fraser, reverse only when retailers startpartner with Toronto-based investing in their private brandsdesign and branding agency as opposed to only looking toHunter Straker. “They can be take costs out.”a smart shopper by saving on “I believe we are just enteringthose items where quality is into a tougher economic climateequal or better and they spend and consumers increasinglymore on those items (outside are going to be trading up andof produce and HBC) where PL down depending on the categorydefinitely has a halo of inferior they’re shopping in,” said Dougquality or performance. It’s all Stephens, president of Retailpart of the consumer practice of Prophet, a Toronto-based retailtrading down so that they can consulting group. “The mid-afford to trade up.” tier offerings will continue to Every household in Canada take a beating. I believe we’llbuys private label, with an see a renewed level of growthaverage spend of $844. Heavier in both private label and luxuryspenders tend to be concentrated offerings.”among younger households with What’s important for and also with higher than retailers to take away from allaverage incomes. this is that the private label Private label share is strongest market share declined in Canadain the Maritime provinces on when retailer focus was takenCanada’s East Coast and in away from marketing private • SALAD DRESSINGS • MARINADES • TARTAR SAUCE • BARBECUE SAUCE • MAYONNAISE • MARINADES • TARTAR SAUCEWestern Canada, but losing label as brands.share. “I think that Loblaw over the While private label is themost developed in the grocerychannel, it is gaining share past couple of years has gotten really caught in managing its supply chain and reorganizing, Trust ®within the drug, warehouse andmass merchandiser channels fortypical grocery categories. while Metro was caught up in a merger and Sobeys in a merger and rebranding,” said Doucette. with your reputation. We know that your label is only as good as the product Look to see continued “The private label business inside. At Cains we strive to provide quality products thatCanadian private label needs to still be a main part of will enhance your image and build repeat sales and profits.growth in the health and your competitive steering wheel Cains offers a wide array of product formulations andbeauty aid category due to as you go through any change. packaging to match market leadersunderdevelopment, according to When you take your foot off of and meet all your private label needs.the Nielsen report. the gas like some of them have The private label household in the past couple of years, youin Canada is becoming smaller, see the results.older (boomer), adult only with “Like any national brand BARBECUE SAUCE • MAYONNAISEhigher incomes, according to company, the pipeline needs • MARINADES • TARTAR SAUCE •Nielsen. to continually be full of newWith this shift comes a unique innovations, ideas and freshset of needs: smaller sizes, health packaging and you need to& wellness, premium and adult continue to push and find thatpreferences. real, star product that will allow you to stand out from all of yourLessons to Learn competitors.”“The problem with private Therein lies the major lessonlabel in Canada and, in fact, U.S. retailers can learn fromthroughout North America, is their Canadian cousins. Growingthat many big players in the private label sales requires a brandretail industry are digressing commitment that includes beingback to programs that look innovative with new products,and feel more like the generic, being well-positioned and being For information on customizing a private label program please contactsystematic programs that were supportive with marketing and Cains Foods L.P. • • 978-772-0300prevalent years ago,” said other brand necessities. PLB SALAD DRESSINGS • MARINADES • TARTAR SAUCE •WWW.PRIVATELABEL BUYER.COM J U LY 2 0 11 PLBUYER 29