A compelling marketing article appeared in Brandweek titled “The Story of O” that was published on September 7th. It’s terrific because it also enables me to follow up on my recent post dubbed “Sharing the Wealth.”
The article centers on California supermarket chain Safeway’s O Organics private label food line, which generated $300 million in volume in 2007 and is expected to bring in $400 million this year. Safeway’s Eating Right private label line which debuted last spring, is expected to generate $200 million in sales this year, as well.
As you may recall in “Sharing the Wealth,” Safeway plans on offering supermarket chains across the country, including regional competitors, opportunities to purchase and distribute these brands, as well.
“We think we’ve hit on something magical with consumers,” said James White, SVP-Consumer Brands. Why magical? First of all, Safeway has successfully repositioned its “vast array of private label products under a unified brand message–one compelling enough for discriminating shoppers.. .not to mention retail competitors.. setting an example for the entire industry.” Hmmm… sounds like value to me.
Let’s face it: while all major retailers continue to position private label lines, some are doing it more successfully than others. In a nutshell: improving quality, packaging and advertising has been key to Safeway’s private label success. Ergo, it competes with national brands head to head quite favorably. Hmmm… sounds like value to me.
Moreover, Safeway President Mike Minasi, acknowledging consumers “are taking more visits to different types of outlets to fill their shopping needs,” is intent on changing that. “Our strategy is to build brand solutions so they no longer have to do that.” Hmm… sounds like value to me.
By operating like a CPG company within a retail environment, Safeway has taken a unique approach to supporting its private label lines by turning to extensive consumer research capabilities. Safeway also taps outside creative consultancies to create sophisticated package designs and agencies to develop consumer advertising.
Having a CPG mentality enabled Safeway to consolidate 70 store brands into 10 super brands instead. Sounds like a smart idea.
Here’s what Safeway learned in its research:
- When the store’s healthier frozen entrees’ flavor profiles were improved, consumers responded favorably.
- When packaging was redesigned to focus consumer attention on key attributes they specifically cared about: “low fat,” “high fiber” or “whole grain,” consumers responded.
- When packaging and advertising positioned organic offerings close to the point of origin: the earth and the farm; focused on the simple goodness of nature, or shown in their purest form, and the complicated aspects of “organic” were simply explained, consumers responded.
But here’s the most important point in all of this: while Safeway acknowledges the tremendous growth in private label food–these products account for one-fifth of all grocery sales at present and will continue to grow in a challenging economy–it isn’t just about price. Safeway: “The key to success in any economy, is giving customers the kinds of products and brands they crave.” Hmmm… sounds like value to me.
So, value in brands, even in a tough economy, isn’t just about price is it?
- Why do so many marketers seem to equate “value” uniquely with price structures?
- Do you as a consumer equate “value” merely with price? If not, what other motivators besides price connote value to you?
- Which brands–that are not price driven–represent value to you, and why?
- Which “values” motivate your purchase decisions most?
I’d love to hear from you.