How Private Label Can Compete With the Digital Sector

As pure-play online grocery delivery and meal-kit services gain ever more traction with time-starved consumers, grocers’ private label programs may find a way to hold their own against these admittedly formidable competitors.

Howard Kaufman, VP of sales and marketing at Mesa, Ariz.-based private label supplier Lehi Valley Trading Co., suggests that brick-and-mortar food retailers fight back “[b]y developing and marketing meal-kit solutions under their respective private label brand[s] and selling [them] in store, emphasizing the convenient and ‘instant-gratification’ aspects offered versus delivery service. Grocers can also offer meal-kit solutions online – for example, via Kroger’s ClickList service – and provide same-day pickup service in store, again emphasizing convenience. Also leverage experiential marketing – sampling/demos – to drive awareness in store and demonstrate the high-quality/innovative attributes of [the] private label meal kit solutions offered. Finally, exploring a partnership with a ‘world-renowned’ chef to create unique offerings could also offer a point of differentiation.”

“When it comes to competing with online meal kits, today’s shoppers want taste, experience, convenience and healthy options and value — all delivered to their doorstep,” notes Linda Phan, category manager at Elk Grove Village, Ill.-based Topco Associates, a provider of private label products to its food industry member-owners and customers. “In response to the meal-kit trend, more and more retailers are offering delivery and online ordering. In the store, retailers can compete with pure-play grocery delivery and online meal kits through merchandising, ads and point-of sale-marketing.”

Adds Phan: “Grocers are creating secondary displays in store centered on building meals. These displays feature own-brand ingredients and recipes for meals such as fajitas, pasta dishes [and] weekday lunches. This in-store version of a meal kit delivers the convenience, taste and healthy options shoppers want, and can be supported by in-store or in-ad promotions.”

“We know shoppers are looking for solutions,” observes Phan’s colleague Kina Guyton, Topco’s director of marketing, expanding on the topic of impactful in-store displays. “Retailers have the benefit of being able to offer their own-brand products alongside their other destination categories and services. For example, pairing great premium own-brand cooking sauces … with a protein prepared by butchers in store and carefully selected fresh produce is the ideal way to showcase the best stores can offer.”

Continues Guyton: “Additionally, with the increased own-brand offerings in the affordable premium space, retailers can meet the shoppers’ desire to stay informed with tools such as unique recipes offered online and in stores highlighting key own-brand ingredients.”

“What’s lost in the meal delivery business is the experience of choosing your recipe and ingredients … and discovery,” points out Jim Holbrook, chairman and CEO of Stamford, Conn.-based retail services company Daymon. “Retailers have the power to provide that inspiration in the store. We found that the most engaged shoppers are 44 percent more likely to use their mobile devices to help them to decide what to buy. Offering apps to make suggestions and provide that inspiration in the store is critical.”

What's in Store -- And More

Retailers themselves have already rolled out strategies meant to position their private label products as viable, low-cost alternatives to the offerings of digital-only operations.

“Tops recently launched its partnership with Instacart in November 2017, so our Tops private label items are available via Instacart in more than half of our stores, with the rollout of the remaining stores occurring in first quarter of 2018,” says Nicky Walsh, director of business development with the in-house Daymon team at the Williamsville, N.Y.-based northeast regional grocer.

“Shoppers will find numerous clean, ready-to-eat prepared foods in the store, in addition to many options designed to go from fridge to table with minimal effort, offering the convenience of meal delivery without all the harmful additives that typically accompany a convenience meal,” notes Frank Scorpiniti, president and CEO of the Asheville, N.C.-based Earth Fare. “In addition, our Daily Meal Deals ensure that a family of four can prepare a different hot, clean meal each evening for less than $10, and in less than 30 minutes.”

Holbrook cites West Des Moines, Iowa-based Hy-Vee’s meal-prepping party program, in which five to 12 customers gather by appointment in a store club room with a kitchen to prepare a recipe together, and then divide up the results for home consumption.

When it comes to decisively vanquishing online rivals, however, as Brian Sharoff, president of the New York-based Private Label Manufacturers Association, observes: “There is no one answer that fits all. Some retailers may find that offering their own websites is the best solution. Others may find that enhanced services in the store will work better. Most retailers will need to perfect both techniques in order to defend themselves.”

Read more about the future of private label in the February 2018 issue of Progressive Grocer.