Private Label Magazine - July/August 2010

Meijer Taps Team To Build Brands

By Peter Berlinski

This Midwest retailer is the supercenter pioneer – opening its first 100,000 sq. ft. combination food and general merchandise store in 1962.

Meijer, Inc., Grand Rapids, MI, founded in 1934 as a grocery store in Greenville, MI, continues to reinvent itself. In 1962, it opened the first supercenter in the United States – a 100,000 sq. ft. store in Grand Rapid, MI. Today, it operates 190 stores that average 200,000 to 250,000 sq. ft. The stores features more than 40 departments that include such diverse merchandise as groceries, apparel, electronics, home furnishings, and toys.

Earlier this year, the retailer has refocused on its food store roots by opening a 102,000 sq. ft. grocery-focused supercenter in Niles, Il. The new format is designed to serve densely populated markets such as suburban Chicago. As part of its renewed emphasis on fresh foods, Meijer has instituted its Home Grown initiative which sources fresh produce from local farmers. The program is highlighted on the retailer’s website with profiles of individual farmers who tell their farm-to-table story.
In recent years, Meijer has aggressively developed its own brand portfolio as a way to build customer loyalty and to compete against its giant mass merchandise rivals.

“As we looked at how to build own brand penetration within our stores and most importantly how to grow own brand perception and reputation among our customers, we set out to build a team to develop our own brand and that meant investing in dedicated product development resources,” says JK Symancyk, executive vice president of merchandising.

New Team, New Process

“It meant bringing in culinary resources including an executive chef and set of people who bring both the qualitative and quantitative expertise to build product. We also went out and brought in particularly for the food side a director of product development who brought the kind of background from a consumer product goods environment that really helped put our mind around the importance of building our brand and bringing process to the product development side of the business.”

Symancyk points out that Meijer does not add new own brand product lines just to keep up with the competition or to be trendy.

As he explains it: “Meijer Organics could have just been we as a retailer saying ‘Organics are becoming popular, let’s go do that.’

“Developing Meijer Organics for us meant looking at our own brand portfolio and understanding: • where the business opportunity is, • where customers give us credit, • where we know we have this type of customer within our box. Through research, we know who our customer is who values organics and is going to appreciate both the breadth of assortment and extended value that we can provide to them.

“Meijer Organics started as a new platform within Meijer and from that we then expanded into Meijer Naturals and eventually this new product development process led to a revitalization of our Meijer Gold brand.

“The Meijer Organic initiative evolved into the kind of planning process that gave us the flexibility to go build new frontiers as well as maintain, rebuild, and recreate lines of products within existing brands in order to always keep them fresh.”

Symancyk joined Meijer in 2006 as group vp perishables and assumed his current position in 2008. Prior to that he spent 13 years with Walmart and Sam’s Club.

Taste Comes First

With its family tree taking root in the retail food business, Meijer takes great pride in its attention to detail when it comes to developing own brand food offerings.

“When I think about own brand in terms of our food offerings, it is first and foremost about how can we make our own brand food have the greatest possible taste,” says Ralph Fischer, group vice president of food merchandising.
Meijer benchmarks its mainstream own brand food products against the leading national brand in terms of taste and ingredients. In recent years, it has included nutrition to its food benchmark.

“We now are making sure that our own brand food is not only the national brand equivalent in terms of the taste, look, and feel, but it also has the nutritional equivalence of the national brands. This is a piece of the formula in which we now take a much more intense viewpoint than we did in the past.”

To demonstrate its commitment to helping its customer make healthy food choices, in April 2009, Meijer adopted in all of its grocery departments the NuVal Nutritional Scoring System. The NuVal System scores food a scale of 1 to 100. The higher the NuVal score, the higher the nutrition. NuVal is sponsored by the Topco buying group to which Meijer belongs. NuVal scores are posted on store shelves.

In terms of own brand product development, Fischer lists three criteria that a new product must meet. He says:
“First it has to taste great.

“Second, it has to represent great value, “Third it has to be a nutritional equivalent to the leading national brand.”
Own Brand Improvement According to Fischer, product improvement is a continuous process within the own brand team.

“We continually work to improve our own brand food items. For instance, we were among the first retailers in our market to take artificial hormones out of our own brand milk,” he points out.

“We also have made all of our Meijer Naturals food products to be GMO-free. We did this to insure to our customers that when we say all natural they know it also means it is a GMO-free product.

“We have a whole team of folks that now work with us in product development that includes Chef Ray; and they are constantly working to come up with new flavors and new trends in food that we can quickly put into our own brand line-up.

We have had good success with this approach,” says Fischer.

As is the case with most retailers, Meijer’s first own brand initiative was to build national brand equivalents.

“Every retailer follows that approach,” notes Symancyk. “When we decided to customize our own brand portfolio, we said: Here are the customers that we serve. Here is the way that they shop and the kinds of things they are looking for. How do we have our own brand products be an extension of what our own store brand is as a retailer to fulfill those customer needs?

“In this regard, we started this new process with Meijer Organics. Rather than just going out and peppering our shelves with products, we built a team so that we could truly manage the product development process in which we can identify other opportunities, maintain these lines of product, and have the kind of development cycles, planned obsolescence cycles, the kind of base improvement cycles that you would want to have in any business so that there is always a reason to continue to shop those categories.”

It is interesting to note that Meijer realizes that while national brand equivalency is a safe bet for store brand retailers, own brand innovation is what sets the store brand leaders apart from the national brand followers.

“This comes from a culture of being able to innovate but also there is a failure rate that comes with that and that is usually a tough thing to deal with when you talk own brand,” notes Fischer. “When you are use to being a follower or copier of national brands, your success rate is usually very high and may be close to 100%. But now, when you are innovating and coming up with new products – possible failure is something that you have to be willing to accept. Our team has done a pretty good job with getting the right items in our stores by knowing our customers and knowing what gaps to fill. So our team is really doing good job in terms of our new product success rate.”

Holistic Approach

“As we learned through the process of developing Meijer Organics, we not only identified other business opportunities in terms of new product launches, we also identified how and where we wanted to strategically invest our time, what we wanted to own ourselves and be best served within our own manufacturing environment, and where we wanted help from our suppliers with new product development,” says Symancyk. Meijer primarily self-manufactures fresh commissary-type products with short shelf-life.

In terms of product development, what type of Consumer research does Meijer employ?

“Pretty much any type of consumer testing that is out there we will use at one time or another,” notes Symancyk. “We have a number of ongoing online survey mechanisms that we use These surveys could be specifically for product development feedback, ongoing feedback as related to our retail operations, and our brand performance overall.
“We also do a fair amount of targeted work throughout the development process ranging from panel testing, preference testing, final product testing, concept testing. We also will do focus groups. To some degree it depends upon where within the cycle we are picking something up. If we are creating something on whiteboard space, then we will start at the beginning of our research process. On the other hand, if it is an idea born of wanting to be a fast follower, but we would like to do something different with it or manage some other differentiations, then we would start our consumer research process a little further downstream.”

Packaging Design

Own brand packaging design plays an important role in Meijer’s go-to-market strategy.

“As you build a brand portfolio and you build a master plan for brand development, packaging is one of those elements that you start with early in the product development process,” says Symancyk.

We have established a strong sense of how we want the family of products to look as well as what is the best delivery vehicle for the product. This includes the form of packaging and the amount of and types of information that we are communicating to people on the package. We want these families of products – be they Meijer Organics, Meijer Naturals, or Meijer Gold — to be clearly identifiable across the store.”

We set these parameters at the same time that we are building our process around our own brand portfolio in general.”

Says Fischer: “Keeping our own brand products fresh and innovative — packaging has so much to do with accomplishing this and how we stay relevant with our customers with our products. The graphic design of our packaging drives home the message of what we stand for and who we are as a retailer.”

Meijer employs an internal design team and also utilizes outside creative resources to work on packaging design and graphic systems. In terms of outside resources, on occasion they use the resources of its in-house broker Daymon Worldwide, and Topco. In such cases, final approval is handled by Meijer’s internal design team.

Meijer’s approach to package design in the grocery department is to employ a family look for its major own brand lines tied to the Meijer name.

“We are a Midwest-based, family-owned retailer that has got a 76-year history in most of the communities that we serve,” says Symancyk.

“That family name carries with it a level of recognition and specifically brand recognition that is consistent with what we want to deliver to our customers which is ultimately a value proposition that is about the best quality at the best price.”

Adds Fisher: “The Meijer name on our own brand products reflects our company’s heritage. This is reinforced by the fact that one of the family member’s signature is on every label as a guarantee. And it reflects one of the fundamental things that we stand for.”

The on pack guarantee reads: Since our family opened the first Meijer store in 1934, we have been driven by a simple goal: your satisfaction. Today, we continue that commitment to you and your family by insuring that only top quality products carry the Meijer name. I am proud to put my name on this product. Think of it as your guarantee that we have done our best to bring you the best.

Fred Meyer. Quality Assured.

Hank and Doug Meijer have started to sign off on own brand products as well, including Meijer Organics and Meijer Naturals.

Quality Assurance

“There are a couple of different sides to quality assurance,” says Symancyk. “There is the quantitative and the qualitative read on the front side as we develop product to make sure that we in fact deliver what we intended to deliver. I point this out as being critical. We are better in this today and we now have an integrated product development system that we are using and we are still in the process of refining so that there is transparency across the organization in terms of what we are doing and we manage that all the way through the quality assurance cycle.”
Meijer employs its own test kitchen to monitor on an ongoing basis the quality and taste of its own brand food lines.