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 Cover Story - March/April 2006  |
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Smart & Final's Sizzle: Signature Food
Private Label interviews Etienne Snollaerts, chief executive officer of Smart & Final, to discuss the role that corporate brands play in this warehouse grocer's go-to-market strategy. Private Label: Discuss the preference of Smart & Final’s customers for store brands and exclusive specialty brands versus national brand products. Smart & Final: Our mix of national brand and corporate brand products is designed to meet the diverse needs of our unique customer base, which includes both businesses and households. Many of our top customers are foodservice operators, such as independent restaurateurs, caterers and institutional food providers. They appreciate the consistent quality and value that our private label products offer. And, because many of these customers have experienced the private label-dominated programs offered by the broadline foodservice companies, they are extremely comfortable using our corporate brands. Our household customers appreciate that they can get the same restaurant-quality products that professionals use, allowing them to cook at home just like a chef at their favorite restaurant. Once they try the brand for the first time and see firsthand the exceptional quality and value that the brand offers, they will continue using those products, try other products in the same brand family and even make special trips to our stores in order to purchase that brand. Private Label: Discuss the role that private label plays in Smart & Final’s go-to-market strategy. Smart & Final: What began for Smart & Final primarily as a foodservice-driven program has evolved into a critical point of differentiation that helps drive sales and customer loyalty from both businesses and households. Like other progressive retailers, we have developed “signature” brands that our customers can relate to and appreciate. Rather than a store-wide “generic” brand, we have created compelling signature brands that cover specific categories, such as First Street Deli meat and cheese products, La Romanella and Montecito ethnic lines and TradeWinds spices. Our Ambiance line is a complete program that includes everything associated with hot beverage. It not only includes coffee, tea and hot chocolate, but also cups, stirrers, creamers and sweeteners, and brewing equipment. Three-Tiered Program
While all of our brands provide an exceptional combination of quality and value, several brands include a tiered-quality approach. Our Chef’s Review brand, which includes a variety of food and food preparation items, is a three-tired program. Chef’s Review 5 Star products provide premium quality, superior to national brand offerings. Chef’s Review 4 Star products are equivalent in quality to national brands but offer superior value. Chef’s Review 3 Star products provide a value-priced, standard-grade alternative. First Street Deli also offers a three-tiered assortment including Premium, Gold national brand equivalents and value-priced Silver selections. Janitorial and cleaning supplies is another important category for Smart & Final. We are well-known for our professional-quality janitorial products, and this is truly a destination category for many of our customers. Our signature branded products offer exceptional cleaning and food safety solutions, but most are easy and safe to use in household settings. They aren’t industrial to the point that they scare household users. We have a two-tiered janitorial program, with ProPride providing professional-quality and ProValue providing a value-priced alternative. We maintain a healthy mix of private label and national brand products. We are not seeking to significantly shift that balance, but we are continuing to expand and enhance our signature brand assortment to better meet customer needs and to capture additional sales within our growing customer base. In recent years we have added a number of new signature brands, and have introduced a variety of new products and sizes within existing signature brand assortments. Private Label: The quality of private label products has increased significantly during the past decade. Discuss the role that quality assurance plays in Smart & Final’s private label procurement program. Smart & Final: Restaurant quality is a core feature of our signature brand products, and our stringent quality assurance program helps us deliver on our quality promise. We have an on-site laboratory for quality assurance, with an expert in-house staff that conducts plant evaluations and regular audits to guarantee consistent product quality. Products are continuously tested as they are received from manufacturers. Our food technicians set specifications for restaurant quality, and ensure that all products meet USDA Hazard Analysis and Critical Control Points (HACCP) standards. They also participate in research and development activities, recommending changes in product formulations based on thorough testing and evaluation.
We are passionate about offering restaurant-quality products that help our customers succeed in their culinary and entertaining activities. We have made tremendous strides over the past decade in improving the quality of our signature brand products, and this is an ongoing process. Our La Romanella line of authentic Mediterranean flavored products provides several good examples. Many of these products are imported from Europe, including Spanish olives and Italian pastas and olive oil. We are one of a small, select group of retailers who sell bronze-die extruded Italian Artisan pastas, which have great taste and superior texture to which sauces can adhere. Even non-imported La Romanella products are specified and tested to match Mediterranean flavor profiles, such as using top-quality pear tomatoes in our sauces. Private Label: Discuss how Smart & Final promotes its private label lines in-store such as with shelf-talkers, in-store displays, in-store sampling, cross-merchandising programs, and how Smart & Final advertises its store brands with ad circulars, radio, TV, billboards, Internet website and newsletter. Also discuss the role of the SmartAdvantage membership card in promoting store brands products. Smart & Final: We employ a powerful marketing program that integrates a variety of tools to effectively promote our signature brands. We feature our brands in point of purchase materials, on in-store radio announcements, in ad-circulars, in broadreach media, such as radio and TV advertisements, and in on-line applications such as the Smart & Final Website (www.smartandfinal.com). Smart & Final’s culinary consultant and spokesperson, Chef Mario Martinoli, develops recipes using corporate brand items, explains their quality features and benefits at culinary events, and promotes them in our radio and television advertisements. At several times during the year, we build promotions around specific signature brands, and utilize incentives to boost trial of those products. We also use information generated by the SmartAdvantage card to target promotions in order to build their effectiveness. Private Label: Discuss Smart & Final’s approach to packaging design in terms of evolving from a common graphic scheme for each of its three Smart & Final store brands to a distinctive label design for each of its specialty lines. Smart & Final: In recent years, we have changed the way we package our signature brand products, adopting more attractive designs to better compete with national brands. We have evolved from a generic foodservice look to a program with considerable sophistication. The artwork on our packaging is designed to give each brand its own distinctive identity. La Romanella has an old world Italian style, while Montecito has a jazzy, Latin feel that says “This food is fun!” Bay Harbor, our restaurant-quality frozen seafood line, features mouth-watering, high-quality images. Packaging for several of our signature brands has been completely redesigned in recent years. We want to keep the graphics fresh and sharp. Our Chefs Review brand has stayed closest to its foodservice design roots. Chef’s Review includes the broadest variety of items of any of our signature brands and it also has the three tiered program, so its packaging and labeling have similarities across the brand, but also category-specific elements. Here’s another point of difference: Nearly 60 percent of our corporate brand products carry bilingual labeling. We believe this is an important feature in the southwestern states and northwest Mexico where Smart & Final operates. Overall, our approach is very deliberate and very sophisticated. We want to lead the trends, rather than following them. That is probably an important factor in our winning awards from the Private Label Manufacturers Association and the Packaging Association of Canada. Private Label: Casino Group of France is the majority stockholder of Smart & Final. Discuss the synergy between Smart & Final and its European parent in terms of new technology, private label sourcing, and product offerings. Smart & Final: Groupe Casino is one of the largest and most successful retailers in the world. They have tremendous experience and expertise that is directly applicable to our business, and we have learned a great deal from them. Through our relationship with Groupe Casino, we also have enhanced our access to state-of-the-art technologies and services. For example, we have been able to participate in Argentrics (formerly GNX/WWRE) the premier Internet-based, business-to-business exchange for retailers. We foresee many opportunities to work with Groupe Casino in the future to further strengthen our private label and product procurement efforts. Inside Smart & Final
This cash-and-carry wholesale grocer has developed a proven value proposition in its niche market serving foodservice, small business, and household customers. Smart & Final Inc., Commerce, CA, operates 249 non-membership warehouse stores in the western United States and northwest Mexico under two store banners: Smart & Final stores and Smart Foodservice Cash & Carry stores. Its trading area includes Arizona, California, Idaho, Nevada, and Washington, as well as northern Mexico. While Smart & Final stores target both the foodservice and household markets, Smart Foodservice Cash & Carry stores are focused exclusively on servicing foodservice professionals. Foodservice customers typically include operators of small restaurants, catering companies, businesses, clubs, and civic organizations. For household customers, Smart & Final stores provide a convenient, low-cost source for cooking and cleaning needs and are seen as the preferred destination for stocking-up their kitchens and preparing for holidays, parties, and events, according to the company. Market Niche Smart & Final competes across several channels of trade. Although it competes with supermarkets for the purchasing dollars of household consumers, its low-price, warehouse format and restaurant-quality product assortment differentiate it from other competitors in that segment. It also competes with warehouse club stores, but is differentiated by its smaller store size, focus on a singe product category and lack of a membership fee. It could be considered as a “category killer” (for restaurant-quality food and supplies) although its average size—17,500 sq. ft.—puts it at the low end of companies in this group which average 100,000 sq. ft. in store size. The stores offer a consistent assortment of 7,000 to 9,000 items—depending on store size, location, and customer mix—in both national and private label brands. The company’s private label product mix includes about 2,200 SKUs under 16 distinct signature brands—see accompanying list. In the past, Smart & Final employed a three-tier store brand program of economy, national brand equivalent, and premium-quality under the SmartBuy, Smart & Final Iris, and Smart & Final Premium labels. However, these labels have been discontinued in favor of its specialty Signature Brands.
In addition, Smart & Final stores carry a wide variety of professional culinary offerings including appliances, cooking equipment, and restaurant supplies. Parent Company Founded in 1871, the company’s name is based on the early owners J.S. Smart and H.D. Final. Today, the company is majority-owned (57%) by Groupe Casino of France. Casino ranks as the 12th largest grocery retailer worldwide with €22.8 billion in consolidated sales (euros) at the end of 2005. Casino operates 9,265 stores located in Europe, the United States, Latin America, Asia, and the Indian Ocean.
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