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 Retailer Close-Up - July/August 2009  |
Smart & Final Rebrands Mix
To accelerate growth, this West Coast warehouse retailer is refashioning its private brand lines to broaden customer appeal. For several years, non-membership warehouse grocery chain Smart & Final has observed a shift in its customer base, with household consumers significantly increasing their share of the chain’s sales volume. Traditionally, the Smart & Final customer base has been split between business and household customers. Smart & Final’s business customer base includes clubs and organizations, and small, independent restaurant operators which the foodservice trade refers to as cash & carry customers. Household customers traditionally have looked to Smart & Final for stock up and save opportunities or event purchasing. More recently, households have increasingly turned to Smart & Final for their weekly grocery shopping needs, shopping more frequently and leading Smart & Final’s management team to adapt its corporate brand strategy to better address the specific needs of this growing customer segment. New Store Brand Mix
To this end it has undertaken a major consolidation of its portfolio of 17 corporate brands and relaunched many of them under one core brand called First Street which was an existing private brand line of deli items. Most significantly, the First Street brand has replaced the Chef’s Review multi-tier line that was embraced by Smart & Final’s foodservice customers but not clearly understood by its household customers, according the retailer’s customer research. “The First Street brand resonated the strongest among our business and household customers. We evaluated their impressions of our brands to help us make the right decision,” notes Raymond Swain, vice president, corporate brands. “Now without qualification we can talk about our First Street brand as our national brand equivalent.” He points out that many of Smart & Final’s previous brands had several quality tiers in their assortment. “We dropped all the value tiers in our different corporate brand lines under our brand consolidation program and created a new umbrella brand called Simply Value,” says Swain. “All of our value items are now under this brand. It is extremely easy for our customers who are primarily motivated by price to identify our value products under the Simply Value brand. “By having a separate brand for national brand equivalent products called First Street and another for value products under the Simply Value brand, we have made it much easier for our household customers to understand our branding system. “From a purchasing point of view and a customer communications point of view, our goal is to achieve better economies of scale by reducing the number of store brands that we carry.” Premium Private Brands Notwithstanding its push toward brand consolidation, Smart & Final has chosen to keep a number of its premium specialty brands that enjoy strong customer loyalty. They include:
New Acquisition Apollo Management acquired Smart & Final in May 2007. In October 2007, the company acquired 35 natural and organic food stores under the Henry’s Farmers Markets and Sun Harvest store banners from Whole Foods Market, which in turn had acquired them through its Wild Oats acquisition. Smart & Final plans to maintain these two store banners but roll out a new line of natural and organic products under the Sun Harvest brand that will be marketed in all of its store formats. New Label Design To help create new label design systems for its new corporate brands of First Street, Simply Value and Sun Harvest, Smart & Final has recruited the creative services of Marketing by Design (see accompanying sidebar). Design work on the First Street brand was begun in mid-2008 and is now complete for the 1,600 items in the line. Rollout of products with the new label is occurring in waves by category and will be complete by the end of this year. The Simply Value project started at the same time and was introduced during the first quarter of this year. Design work on the Sun Harvest brand line is underway and rollout of products with the new label designs will be substantially complete this year. Smart & Final Facts Founded in 1871 in Los Angeles, Smart & Final operates nearly 300 retail stores in the Western U.S. Owned by private equity firm, Apollo Management, it posted estimated total sales of more than $2 billion in 2008. Store banners include Smart & Final, Smart & Final Extra, Cash & Carry Smart Foodservice, Henry’s Farmers Markets and Sun Harvest stores. Warehouse format stores carry a range of 7,000 to 9,000 total SKUs (depending on store size) including approximately 2,400 corporate brand items.
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