Private Label Magazine - November/December 2009

Conad Prospers With Multi-Tier PL Program

By Sabine Geissler

Conad can be considered as a network system, operating through strategic Italian and International alliances representing a widespread multi-channel presence in the EU market.

Conad is the second biggest retail chain in Italy with about 3000 stores divided in four basic formats: neighborhood stores, supermarkets, superstores, hypermarkets – operating under different retail brands.

In terms of terms of sales, turnover and market share, Conad is the largest cooperative of independent retailers in Italy. In 2006, the cooperative generated 8.2 billion euros in sales representing a 12.2% market share

Founded in Bologna in 1962 with the name Consorzio Nazionale Dettaglianti (National Retail Consortium), today the central basic structure operates at three levels:

1. The members (soci), who are the entrepreneurs/owners of the associated retail stores who share the project to promote the entrepreneurial culture and the principles of cooperation, with a special regard to a series of values which have been written on the Conad flags: attention to the individuals, solidarity, local traditions and innovation.

In the 1990s, there was a reorganization of the member base and today, these are about 3,000.

2. The 8 big territorial cooperatives, which have the role of supply and distribution centers: 1. Nordiconad, 2. Conad Centro Nord, 3. Commercianti Indipedenti Associati, 4. Conad del Tirreno, 5. Pac2000A, 6. Conad Adriatico, 7. Sicilconad Mercurio and 8.Conad Sicilia;

3. The Consorzio Conad (the National Consortium), which operates as a buying central and as a service centre which determines, creates and coordinates the general marketing policy, the communication, the private label range and new product and service development for the whole system.

International Alliances

Conad has created strong operative alliances with Italian partners, more precisely in December 2004, Conad signed an agreement for commercial and logistic collaboration with the REWE Italia group. In 2007 REWE Italia became a member of Conad, which means that it can be considered as the 9th cooperative of Conad.

The alliances which Conad has created on an International level include the partnership with the French retail group E. Leclerc, which was started in 2001 and which has been strengthened by the foundation of the Conalec srl (Conalec limited liability company) in February 2002, which is 60% owned by Conad and 40% owned by E.Leclerc.
This operation represented a significant change regarding the hypermarket strategy of Conad – from a simple presence to an active and strategic development of its hypermarket business.

The first visible change at that time was its rebranding from Pianeta Conad to Leclerc-Conad.

Conalec owns in exclusivity the licenses of the 29 hypermarkets with the brand Leclerc-Conad and takes care of their development. More precisely, Conalec manages the commercial and assortment policy, the promotions, the communication programs, the customer card programs and the IT systems, as well as the real estate policy of the Leclerc-Conad hypermarkets.

The International alliances have been increased by the creation of Coopernic (Coopération Européenne de Référencement et de Négoce des Indépendents Commercants), which is a cooperative company founded in 2006 in accordance with European laws.

The 5 Coopernic members are Conad (Italy), E.Leclerc (France), Rewe (Germany), Colruyt (Belgium) and Coop Suisse (Switzerland), representing about 17,500 stores and a turnover of about 100 billion euros, which represents 10% of the sales in Europe.

At the end of 2007, Coopernic has become the major shareholder of the Palink group, (founded in 1992), leader of the Baltic retail chains in Lithuania and Latvia with 243 stores of different formats, a turnover of about 623 million euros and 16% of market share.

Based on these figures, Coopernic is the largest retail network in Europe and the second worldwide (just behind Walmart).

Coopernic has been created with the aim to deepen the International collaboration of the cooperative movement and to be a platform for the exchange of know-how among its members, for the reduction of logistical costs, for the increase of product assortments, and for the development of new business opportunities.

National Retail Brands

In Italy, Conad operates the following retail brands:

• Margherita and Conad City, which are 1300 neighborhood stores with up to 250 square meters surface (Margherita) and up to 600 m2 surface (Conad City);
• Conad, which are the supermarkets with a surface up to 1500 square meters and Conad Superstore (between 1500 m2 and 3000 m2 surface), with about 1290 stores.
• E.Leclerc-Conad, which represent 29 hypermarkets with a surface between 3500 and 4500 m2.

The supermarkets represent almost 70% of the turnover (sales to consumer) of the group, while the neighborhood stores (12,7% of the group turnover) are very important for the detailed presence of Conad in the Italian market, representing 46% of the outlets.

Camillo De Berardinis (CEO of Conad since 1990) said in December 2008, that the strategies for the future format development will be focused on a reduction of the average surface of the hypermarkets (a trend already underway in France) and on the development of the Superstores, which offer a complete range of food and non-food products in a more compact surface area.

Conad aims to provide in these big surface stores not only a flexible, complete, and targeted assortment of food and non-food products, but also to transform them into “service centers.”

For example, as of today, there are 30 hypermarkets and superstores with pharmacy departments; furthermore, where possible and according to the French model, Conad is operating fuel stations.

Also, in March 2008, Conad activated a mobile telephone company called Conad Insim, with the philosophy to create a consumer-friendly mobile phone network with tariffs easy to understand and with no surprises. The mobile phone network on which Conad Insim is based is Vodafone.

Conad’s retail strategy can be summarized as: “Local approach with International efficiency.”

With the policy of creating different formats of stores, with assortments which are built according to the location, the social-economic environment and thus, trying to meet the specific customer’s requirements, Conad has obtained quite a wide base of consumers with a good fidelity and who are representing different targets.

According to De Berardinis, Conad’s primary customer target is represented by young, working families with a medium/high social-economical level, with children and who use regularly the Conad fidelity card.

In the present economic crisis, more than ever consumers are asking for safe, good quality products with fair prices, which has led to a growth of the sales of private label products as well as of the basic price products, which has resulted in a reduction of the value of the shopping cart contents.

Therefore, Conad has focused on an active strategy of “good quality at fair prices” and “value for your money.” This strategy is being implemented through an intense promotional activity in the stores, communications in the press and on television, as well as through the further development of its private label range.

The priority objective is to strengthen the corporate identity and to outline the difference and competence of Conad when compared to its competitors, working on the presence, the assortment, the layout and the design of the different store formats and on the private label range.

De Berardinis emphasizes Conad’s ongoing project of constant innovation of the network and of the in-store communication to transmit the Conad values: neighborhood, quality, and convenience.

“We want the consumer to be put ‘in the center’ of our activities, enriching the information level to assist her/his buying choices and to create ways to make the shopping easier and also on a functional level to help save time.”
The communication to the consumer is made through the classic channel of its Conad newsmagazine called Bene insieme (Well Together) and which is distributed monthly in all Italian Conad stores. In some regions, the newsmagazine is also sent to the home of the consumers who possess the Conad fidelity card.

The main topics treated in the newsmagazine are connected to cooking with traditional Italian recipes, and to offering tricks for quick and easy menus.

Furthermore, there are descriptions of wine and gourmet travel adventures, as well as tips for the home care and wellness.

Multi-Tier PL Program

The Conad private label assortment includes four brands:

1. Conad (a range including more than 1000 products of food and non food categories)
2. Conad il biologico (the organic range, including presently a small selection of product categories)
3. Conad Percorso Qualità (the fresh fruit, vegetables, fish and meat range)
4. Sapori & Dintorni (the range of Italian regional food specialties, DOP and IGT, i.e. with protected denomination of origin and typical geographical indication.)

In 2006, Conad began a process of restyling the label designs of various Conad brands to achieve better visibility and focus on the Conad logo.

The ranges which have been restyled are Conad, Conad il biologico and Conad Percorso Qualità, while the range Sapori & Dintorni has been kept with the same style, with its elegant navy blue & gold color design.

The re-styling has organized the colors as follows:

The basic Conad line is characterized by the use of the red color, the Percorso Qualità Conad by a dark green color and the Conad il biologico by a light green color, the text “il biologico” being designed with a script font.

During PLI’s store-checks in April 2009, PLI saw both Conad organic branded products with the previous design, where the Conad logo is on a intense, clear blue ground, as well as with the new, clear green design.

On the backside of the packaging, there is clear information for the consumer, with nutritional information, as well as how-to-use instructions and where appropriate, some basic information about the origin of the products.

Conad Brand Range

The Conad brand includes a range of more than 1000 products of all the main product categories, focusing on a good relationship between price and quality.

All Conad brand products undergo a strict quality control system and they exclude the use of ingredients or derivatives from GMO.

The positioning of the Conad brand products is really prominent, with items at eye-height on store shelves and with a significant presence, depending on the type of products and the depth of the Conad brand items inside their relative product categories.

For example, the Conad brand cookies range in a hypermarket covers about 3 shelves in height and about 5 meters each in width on store shelves.

Also, in each department, the upper shelf is filled with only one Conad brand item: in the cookies department, the upper shelf carries for the entire length of the shelf only Conad brand bagged cookies.

The Conad cookies range is divided in three families: La Tradizione (the tradition), La Semplicità (the simplicity) and Il Gusto (the taste).

In addition to the large assortment of cookies, there is quite a broad assortment of sweet bakery products such as croissants, as well as of breakfast cereals.

Conad offers a wide selection of crackers, pasta sauces and a real nice choice of preserved vegetables, while the pasta assortment covers the basics. The olive oil assortment offers three variations and also the tea and coffee, as well as the chocolate assortment are quite basic.

The Conad frozen vegetable, frozen pizza and frozen fish assortment covers the requirements of a standard food shopping session.

The label design of the Conad brand mainly follows the style of the A-brand of the relative product category. For example, the cookie range design is clearly inspired by the Mulino Bianco range (Barilla) and the breakfast cereal range by the Nestlé Fitness range.

Conad Il Biologico

The organic range for Conad private label includes some bakery products, jams, vegetable preserves, fruit nectars, honey, extra virgin olive oil, preparation for broths and yogurt.

The products have a highly visible shelf position among the relevant product category (no extra position of organic products) and they are accompanied with a shelf-talker indicating that the product is organic.

During PLI’s store-check, for example the “fette biscottate” (which is a type of double-baked, sliced, durable bread, very popular in Italy for breakfast) of the organic Conad range was present in both designs: the “old” one with the red logo on an intense clear blue background, as well as the new clear-green design.

Conad private label fair trade products include products such as chocolate, coffee, tea, rice and other typical fair trade products. However, as of today Conad’s fair trade products have not been combined with organic certification, where as such private label fair trade ranges are present in Coop Italia with the Solidal range and in Esselunga for a selection under the Esselunga Bio organic range (such as coffee, cocoa) in collaboration with the fair trade organization CTM.

Conad Percorso Qualità

The brand “Conad Percorso Qualità” identifies meat products, fish and seafood, fruits and vegetables sold in Conad stores. Conad carries out systematic controls on the whole production chain of its store brand products in this range with a complete traceability from the origin of the products to the store.

These products are cultivated, produced, packed, and transported according to precise agreements of which Conad signs up with the operators of the single production steps.

Also, regular controls of the storage and the display of the products in the stores are performed within the constraints of Conad’s regulations. The goal is to guarantee product safety, healthiness, and freshness.
In the Leclerc-Conad, PLI found an impressive choice of fresh fruits and vegetables, as well as a professional and clean display of the fish and meat products.

Sapori & Dintorni

Sapori & Dintorni means “flavors & surroundings” and this range of Italian regional food specialties with DOP and with IGT recognition is well developed and well positioned in the relative product category areas.

Sapori & Dintorni products, made only with ingredients of Italian origin according to the typical Italian recipes and taste, are represented in the main food categories, such as cheeses (with a ready packed DOP cheese selection), pasta, bakery products, cakes and cookies, fresh pasta, dried legumes and cereals, charcuterie products, oils, sauces, condiments, fruits and vegetables, alcoholic drinks (grappa and liquors, … excluding wines), preserved fish and vegetables, as well as olives, honey, jams, ice-cream and seasonal cakes such as Panettone.

The idea of exporting the Sapori & Dintorni brand of Italian food specialties to the International distribution partners inside the Coopernic network is being developed with the recent creation of a private label range called “Creazioni d’Italia” for a diffusion of Italian food culture in Europe (and in the future to other countries outside of Europe).

Creazioni d’Italia was launched in December 2007 and it is presently a range of about 60 typical Italian food items that are well known outside of Italy. This specialty line is identified with an exclusive packaging design. The logo “Creazioni d’Italia” is designed in an intense clear blue and white, placed within in a heart shape featuring the colors of the Italian flag.

The line includes, antipasto, sauces, condiments, extra virgin olive oils and various pastas.

When compared to other major retail chains in Italy, Conad’s regional specialty food range Sapori & Dintorni is very well developed – thus opening new opportunities for a private label export range, which is a quite new policy in the retailer’s private label strategy.