Private Brands: A Perishable Opportunity
By Steve Rubow*

Perishables offer a unique opportunity to restart the private brand paradigm.

I wonder if the consumer knows whether they buy Dole lettuce or Chiquita bananas or Driscoll strawberries.

I wonder if the consumer goes from store to store to search out a particular packer’s beef or chicken or pork.

I wonder if the consumer is beholden to a retailer’s bakery because it carries a specific “brand” of crusty bread or carrot cake or bake-off product.

Past research has shown that while the consumer may be aware of a few (very few and at a lower awareness level than one might think) of the brands available, they certainly do not go out of their way to find them. They do not decide where to shop for perishables based on the brands that a retailer carries. For the most part, their awareness may be based on successful past advertising campaigns (like the dancing Chiquita banana), but their decision to buy is based on more pragmatic factors: quality, availability, color, size, aroma, ripeness, presentation, choice, growing area, etc.

Think for a moment . . . if brands were truly successful in the perishable arenas, we would see multiple brands offered in each retailer, for crusty breads or bananas or fresh beef. For the most part, my observation is that a perishable item’s brand is far more reliant on a retailer’s decision to carry them, than it is the reverse. (The reverse being that a retailer’s decision to carry a specific perishable brand is dependent on that particular brand’s awareness to the consumer.) If brands were truly successful in the perishable arenas, we would see retailers carrying multiple brands at varying retail levels, just as we see in groceries. If brands were truly successful in the perishable arenas, then why would customers act as if the lettuce they buy from, say Kroger, is Kroger’s lettuce, or Kroger’s bananas, or Kroger’s ground beef. With relatively few exceptions, the consumer credits the retailer with owning the “brand” in produce, deli, bakery, fresh meat, floral.

So what does that mean to the world of Private Brands? The implications are pretty far reaching. Up until now, the realm of private branding has been restricted to groceries (packaged goods, dairy products, HBA, frozen food) and to specific products developed and sold under the retailer’s brand in perishables. This latter implies that the retailer would carry both the processor’s brand (like Chiquita bananas) AND the retailer’s own brand. But why? Probably because that has been the pattern used in groceries.

Restart the Paradigm

Perishables offer a unique opportunity to restart the private brand paradigm, to accomplish in the perishable arena what it has been striving to do in groceries for so many years. Where private brands make up over 16% of retail sales in groceries, with the definition alluded to in this article, private brands make up over 70% of sales and at full margin. In order to make the dream come true of being in charge of the private brand destiny for perishables I recommend close adherence to the following four rules for retailers:

1. Use perishables as you should want to use Private Brands everywhere . . . as a brand equity-building tool. Following this rule will have a positive impact on gross margin and on differentiating one retailer from another.
2. Don’t succumb to the lure of processors’ dollars. Take charge. Putting focus on collecting the “contract dollars” can be very shortsighted in that it overplays the importance of the contract with the processor and ignores the importance of the contract with the consumer.
3. Encourage processors of perishables to expend their dollars with the retailer rather than with advertising media and marketing firms. Processors are spending a lot of money to differentiate themselves from each other and not having a lot of success. Their monies would be better spent with the persons responsible for increasing their sales, the retailers.
4. Respond to legitimate consumer areas of interest in the perishable arenas. Lead out. This really loops back to the first rule, in that by responding to specific consumer interest areas, a retailer will find their bond with the consumer strengthening significantly. There is no shortage of consumer-interests right now; they range from identification of source to suggestive use help.

Carpe diem . . . seize the day! Recapture control of the most successful Private Brand story the retailer currently has . . . perishables. n

*Steve Rubow has over 40 years experience in retailing and private branding and was President/CEO of Topco Associates for 8 of those years. He is currently associated with Leo J. Shapiro Associates, a Chicago-based market research firm (website: ljs.com) and is on the faculty at The University of Chicago. Steve can be reached at steve.rubow @ljs.com.