Supervalu launching national private label brand
May 5, 2011
by Eric Schroeder
CHICAGO — Supervalu Inc. is planning a move to a new national private label brand that company executives said may deliver a 100 basis point annual improvement in private brand sales per year over the next three years.
The brand, Essential Everyday, is expected to provide competitive value for customers, and it will replace existing store brands that are named for its chains, including Jewel-Osco and Albertsons.
“Here our focus is really on aligning our everyday shelf price so customers can feel good about filling their cart in our stores,” Craig Herkert, chief executive officer and president, said in a May 3 meeting with investors and analysts. “This idea truly covers the entire store, from top KVI (known value item) to commodity items to produce to center store. We know we need to bring better everyday value to customers and we will. However, we know value is more than just dollars. It’s about providing solutions for our customers.”
Mr. Herkert said the private label brand program will “appeal broadly to consumers and reinforces our value perception.”
Expanding on the program, Julie Dexter Berg, executive vice-president and chief marketing officer, said Supervalu is focused on developing and maintaining a portfolio of products that differentiates it from competitors.
“We’ve been working hard at creating compelling private brands and we’ve seen steady growth in penetration,” she said. “In the most recent quarter, private brand sales penetration was 19.3%, representing a 145% basis point improvement over the prior year. We know that we have a ways to go to reach parity with our national peers but that goal is in sight. In fact, we anticipate that our penetration rate will grow by about 100 basis points in each of the next three years.
“Nearly all of our shoppers, 94%, purchase private brands, and 20% of them always do. To capitalize on this explosion and interest in private brands and the inherent savings of a streamlined program we’re moving toward a single national brand equivalent, private brand, that will be available across all our banners. This flagship brand will replace existing banner-branded item like Jewel granola bars or Albertsons spaghetti.”
Ms. Dexter Berg said Essential Everyday not only will provide significant cost savings in packaging, but also will allow Supervalu to take a more holistic national approach to advertising and promotion.
“We’ve run extensive testing on the name and the packaging and we’re very encouraged by the results,” she said.
The introduction of Essential Everyday will be in phases, starting in the cereal aisle and in the pasta and pasta sauce categories, Ms. Dexter Berg said.
“These category selections were very deliberate,” she said. “We understand that these are high engagement categories for our shoppers and will provide a highly visible, active launching pad for the new brand. Other categories across the store will be rolled out throughout this fiscal year and next.
“Marketing support for the rollout will focus on establishing Essential Everyday to replace the banner brands. In-store signage will ensure that the product is easily located and that we are transitioning customers from their current brand to Essential Everyday. We are confident in this new brand and look forward to sharing information on the national rollout.”