License to Brand

PLMA Show 2010 Demonstrates Continued Growth in Upscale Private Label Food

This year’s PLMA seemed like a busy, well attended event with no signs of a lack luster economy. Private Label in America continues to growth in importance and in share so it’s no wonder the show floor was full of new products and new companies trying to get into the PL game.

Most interesting to me for the second year in a row was the section in the Innovation Hall where new lines from both U.S. and international retailers were featured side by side. It’s a great way to see what’s happening and what’s not. Perhaps it was the selection process by show management, but from the lines displayed one would have to conclude that retailers are trying desperately to create upscale lines that will appeal to a different customer or “buying moment” than their traditional value entry private label brands.

Meijer’s new “Gold” line features a fairly traditional collection of specialty items from sauces and condiments to condiments packaged in, also a fairly traditional approach, a black and gold labeling concept. Much of the packaging on display was pretty tasty but like the Meijer’s entry the naming process lacked imagination and originality here are just a few of the line-brand names on display “Appetit”, “Taste of Inspirations”, “Compliments” Kitchen Gourmet”, “Signature Classics”, “Extra Special”. Tesco and Topco both are taking a ‘restaurant quality at home approach with “Restaurant Collection” and “Dining In”.

One very interesting exception to the sameness rule was a new line by Marks and Spencer ….Simply FULLER LONGER -  a healthy eating line touting high protein, balanced carbs and low calories. It’s simply packaged in a clean, fresh and healthy looking white package with appetizing food photography. This straight forward, need driven positioning is “brilliant” as the Brits like to say. I think it would work well in the U.S., taping into the low glycemic trend and talking straight to the dieter’s need. I hope it lives up to its promise and that the he line’s taste delights as much as its promise.

Finally, one other entry from the UK really stood out with perhaps the gutsiest packaging risk I’ve seen in a really long time. Menu from Waitrose featured an all black package face with no food photography and bare bones product descriptions. I love creative solutions to new problems, but for me not only is this approach a risky depart from convention the position in unclear (black….upscale or budget) and key communication needs seem unmet. What do you think?

Sear’s is on a roll with their brands. But can they pull it off?

A few months ago we commented on Sear’s seemingly confused branding strategy that appeared to be without a clear positioning. And therefore we questioned where their acquisition of exclusive brands was headed. RCA for electronics. Bongo for fashion forward apparel.  Their veritable brand Craftsman brand sold at Ace Hardware. A new golf equipment boutique. What was going on? A little known animated feature from decades ago made the statement that “a point in every direction is the same as no point at all.” Is Sears the perfect example? 

Well, last week Sear’s made two more announcements …a new line under the French Connection parentage and a store-with-in-a-store concept with Forever 21. Now these two latest brand acquisitions are starting to make some sense. Bongo. French Connection. Forever 21. A stable of brands that  could have a consistent positioning – fast fashion. Maybe just enough to get new young consumers who have never experienced a Sear’s store to stop by and take a look. Interesting! A repositioning could be underway in terms of Sear’s fashion statement that could hold water.

I’m looking forward to seeing how this all gets executed. Will the looks be strong enough? Here’s a great opportunity for Sears to really step out with a new look and feel for their stores. Let’s hope the merchandising can live up to the promise of these brands and the designs and products deliver. If they do perhaps they can give Sear’s a foundation upon which to rebuild this once great American brand.

Fruit Bars to Mattresses – Exclusive Retailer Licenses Continue Their Growth Trend

As the chart below demonstrates, 2010 is shaping up to be another growth year for retailer exclusive and direct- to-retail (DTR) licenses.  The strategy that started out quietly in the 90’s, with a few retailers and licensors like Target and Cherokee teaming up, is now a mainstay at retailers across virtually all categories of goods. And every licensed property and agent is looking to make this kind of deal because they provide consumers a superior price/value experience while capturing a greater commitment from the retailer for shelf space and features.

Selected Retailer Exclusive Licenses - 2010
RETAILER	BRAND	LICENSED PRODUCTS
Davids Bridal	Vera Wang	Budget wedding dresses
Brooks Brothers	St. Andrews Links	Apparel & accessories
Macy's	Madonna's Material Girl	Apparrel, accessories, footwear
Payless ShoeSource	Champion Fitness	Footwear
Target	Dole	Frozen fruit bars
Bed, Bath & Beyond	Real Simple	Home goods
Target	Real Simple	Home office
Meijer	Katie Brown	Kitchen textiles,tabletop, garden
Macy's	Eve Mendes	Latin-inspired dinnerware
Macy's	Martha Stewart	Mattresses
Office Depot	Christopher Lowell	Office furniture
JCPenney	Supergirl by Nastia	Apparel & accessories
HSN	Glamour Magazine	Jewelery
Sears	Bongo Junior	Denim apparel
Target	D-Signed (Disney)	Apparel & accessories
Staples	Yak Pak	Composition books
Home Depot	Martha Stewart	Kitchen cabinets
H & M	Lanvin	Men's & womens's apparel
Sears & Kmart	Casa Cristina	Home goods
Pet Smart	Martha Stewart	Pet accessories
Pet Smart	Fischer price	Pet toys
Claires	Glee	Fashion jewelry & accessories

The above suggests some interesting trends that those of us close to the DTR licensing world have been witnessing. TV “experts” from cable and even PBS have become licensing commodities – everyone wants their own line - but Martha continues to dominate with her renewed licensing activities over the last several years. Retailers, clearly sensitive to changing demographics, are getting better at regionalizing and localizing their mix and are seeking out brands targeted to ethnic groups like the Eve Mendes relationship with Macy’s and the Casa Cristina deal with Sears. And while fashion continues to be THE category for the licensing industry, consumer brands from a wide range of categories are finding ways to expand their brand equities into a range of product categories.

We’ve explored all the reasons why this trend makes sense over the past several years in this blog. But key among them is the continued growth of retailers private brand portfolios and their improving talents in product sourcing and as brand managers. Licensed brands can play a role in private brand portfolios because they tend to be incremental to internally developed control brands and capture share from national brands. They increase the size of the pie for the retailer’s private brands.  

Last week the Wall Street Journal reported  that “Chief Executive Lars Olofsson wants to transform Carrefour from a big box selling other companies' brands into a consumer label in its own right. And he wants those in-house brands to be the least expensive around, making Carrefour to groceries what IKEA Group is to furniture.” Could licensed brands play a role for Carrefour? Its closest competitor Walmart has used the strategy effectively in several product categories.

Can an Exclusive Brand strategy be overdone? At Target?

It may be possible to have too many exclusive brands…but the real question should be “how good are those brands,” rather than “how many brands are there?

Mike Duff at BNET raises some interesting ideas in a recent piece when he says, “Target is turning into a souvenir stand as the company marks occasions ranging from store openings to the change of season by rushing another exclusive line of products through its stores.” He goes on to say that consumers may be overwhelmed by the amount of exclusive brands at Target.

I can’t speak to how these short-term exclusives tie into Target’s overall strategy. But it seems that in this economic environment, adding excitement and discovery to the shopping experience is a worthwhile focus. And exclusives, even if not explicitly recognized as such, are a way to freshen up a store’s customer experience. 

The question that I think merits discussion is, “Is Target picking the right exclusives based upon a clear strategy for the brand on the front door?” Generally I believe that no one does it better than Target. They don’t just throw brands out there to see what sticks. They are selective with the brands they introduce and their exclusives consistently reinforce the Target brand’s overall positioning….fun, fashion, and excitement.

Exclusive brands can drop more pennies to the bottom line but their real value is that they can nurture and enhance the chain’s banner brand. If they do that, then the specific amount of those exclusive brands is less important. 

What do you think of Target’s short-term exclusive brands as a strategist? Do you like them or do they just confuse and overwhelm you as a shopper?

 

So what’s the strategy with Sears exclusive brands?

What’s the strategy? Got me! I simply can’t figure out how Sears’ recent moves with their exclusive brands come together as part of a consistent brand-based strategy. What does Sears stand for? Or better yet, what does Sears’ management want the brand to stand for in the future? And how do Sears and K-Mart differ in terms of their brand positioning?

There doesn’t seem to be a clear vision. Sears recently announced its acquisition of an exclusive license for the RCA brand for LCD TV’s – to be sold at both Sears and K-Mart. How does this type of exclusivity help either Sears or K-Mart establish a unique brand identity? At the same time, Sears is going to allow its venerable Craftsman and Kenmore brands to be sold at Ace Hardware. That’s a great deal for Ace, but it has to dilute the value of these brands from Sears' perspective. Craftsman and Kenmore are classic examples of how exclusive brands can make a retailer a destination. No longer, I suppose.

And as Lydia Dishman at BNET has recently commented, Sears' fashion strategy is all over the place. You’ve got the acquisition of exclusive trendy fashion brands like Bongo without a merchandising strategy to support it. And then there’s Sears’ concept of opening up branded golf boutiques as a store-within-a-store concept.

In one way Sears is on the right track by recognizing that exclusive licensed brands should be part of their brand turn-around strategy. But I once heard a definition of positioning as “having to say no.” So by definition, a positioning strategy means having a clearly articulated, relatively narrow and consistent, focus. I hope there’s more strategy behind the curtain that we can see. And I hope that a year from now, I’ll be eating my words.

Hey there’s an idea! Eating. Maybe Sears should get into the food business. A deal with Aldi for the value end of the business, and one with Dean and Deluca to cater to the golfing crowd that just bought a new putter?

Kohl’s Cashes in with Aldo Brand

For those of you who follow retailer strategy, it’s no surprise that Kohl’s has signed on with Aldo. I saw a recent article from TheStreet.com touting their approach of retailer-exclusive deals like this one, as well as others like Avril Lavigne, Vera Wang, Britney Spears, Daisy Fuentes and more. They’ve successfully combated the recession by signing deals with appealing retailers and celebrities like Aldo, yet offering it at reasonable prices.

 

Adding a recognizable name like Aldo to their roster will certainly bolster their footwear offerings. The new line will be available in Spring 2011.

 

Kohl’s continues to sign retailer-exclusive deals such as this in an effort to stave off J.C. Penney’s deals with the Olsen twins, Madonna and others.

 

No matter who wins this particular fight from a retailer perspective, it’s a win for consumers.

Pantene make-over – a much needed response to store brand competition

P&G is launching its revamped Pantene line with new formulas, new packaging and a streamlined SKU line-up. That sounds smart to me on all fronts. I’m looking forward to seeing it, and trying it first hand!

Having been involved with major retailers to develop licensed, salon-brand, hair care products designed to take share from Pantene, I’m close to this category and think that the revamp is a great move for P&G. The scaling down of the SKU count (to only 166 items) is long overdue. Brand extension over-proliferation has created consumer confusion in a lot of CPG categories.

Have you tried to find that tube of toothpaste that you liked recently? You know….the one with the tartar control, breath freshening, bacteria fighting, whitening formula, and spearmint flavor in the jumbo-sized pump dispenser with a motion detector audio chip that reminds you to brush your gums carefully and floss regularly? Or your favorite “Original” Wheat Thins?

The need to pare down SKU’s makes consumer sense, but it’s also in response to the universal trend of retailers doing a better job with their own SKU rationalization efforts – partially to make room for their own exclusive brands.

Back to Pantene – there is no reason why they shouldn’t have THE very best products on the market. There is no better consumer research and product R&D organization on the planet than P&G. They claim to have tested more than 600 new Pantene formulations with 20,000 women worldwide, and to be using “an atomic force microscope, similar to one used on NASA's Phoenix Mars Lander, and micro-computed tomography, used to measure bone density, (sic) to reveal how ingredients interact with different hair types.” This points to an opportunity for the formulators and manufacturers of private label products to step up and really invest in sophisticated product development efforts in order to truly deliver “national brand better” products. There is no question that private label quality is getting better all the time, but there is a long way to go to compete with the efforts of international leaders like P&G, Unilever, Kraft and Nestle.

Now, can someone please help me find that joint-pain relieving, headache-curing, mucus-reducing, cough suppressant, day-and-night-time-formula topical patch that won’t upset my stomach?

Nielsen checks in with some definitive and interesting findings on Private Label

Nielsen, THE source for retail information has been consistently taking a closer look at the world of private label in recent years. Their latest study release confirms what we have been hearing from multiple sources….the tough economy has combined with better private label products and more strategic marketing by retailers to have fueled continued growth in private label sales.

 

Growth of both dollar and units sales have achieved shares of total sales of 17.3% and 21.9%, respectively. While still not equal to the shares enjoyed by store brands in Europe, these numbers indicate the steady march upward of store brands as retailers consolidate in every category and dig for the better margins and value that store brands provide.

 

J.C. Penney’s Capitalizes on Sephora Brand to Draw in Customers

This week,J.C. Penney’s laid out their plans for the next five years. I’ve blogged in the past about their approach to private label, because they do a lot of things right in this space. One thing included in the five year plan is the fact that they will continue rolling out their Sephora store-within-a-store program.

 

The in-store Sephora departments are part of J.C. Penney's strategy to use the renowned cosmetics shop to enhance its image and attract new customers.

 

J.C. Penney’s also likes Sephora's strategy of allowing customers to try all its products and to bring them back for a refund if they decide later they don't like them. This customer-centric approach has won them fans since day one.

 

Beyond that, Sephora is a great retail brand and conjures up images of a fun, indulgent, shopping experience with brands not typically found in other mass beauty channels.

 

I think it’s a smart strategy - Sephora does bring in different customers and makes J.C. Penney’s more competitive with drugstores and mass merchants, all of which have greatly improved their beauty departments in recent years.

 

I really enjoy seeing news like this, because it’s a great new twist on retailer-exclusive beauty . It allows J.C. Penney’s to compete much more effectively with other mass beauty channels because Sephora provides them with an upscale name and retail environment.

 

At the end of the day, it reflects very nicely on the entire J.C. Penney’s shopping experience, which is exactly what a really good premium proprietary brands should do!!

 

Now that this shot has been fired, the next question is - what will Target, Wal-Mart, Walgreens and CVS do in response?

7-Eleven Announces Private Label Beer Game Day - is it a winning strategy?

If you follow my blog, you know I’m watching the private label spirits evolution with great interest. And I’ve also been following 7-Eleven’s focus on private label as well….so I thought the news this week that they were planning a private label beer was really interesting.

 

I’m not sure if “Game Day,” as the lager is called, has the stuff to make it happen. This has nothing to do with the taste or branding of the beer, but more about beer drinkers’ passionate devotion to their beer of choice – be it high end or low end.

 

They’ve also got a previous failure under their belt in this same space. In 2003, they launched a beer called Santiago as a means of grabbing a piece of the premium/imported beer pie, but that didn’t work. Paying premium prices for private label beer doesn’t make any sense.

 

But they’ve learned from their mistakes with Santiago, so this will be a premium beer selling at a budget price.

 

And they might be able to give the Goliaths like Anheuser-Busch a run for their money since they own the real estate.

 

All of this COULD appeal to 7-Eleven’s core demographic, which has been hit the hardest by the recession. They’re male, age 21 to 27, blue-collar workers, who are facing the decline of industrial jobs.

 

But even though it sounds good on paper, beer is a very different animal than a lot of product out there. It will be an uphill battle for 7-Eleven to even stay in the running with Game Day, let along pull off a “Two Buck Chuck” phenomenon.

 

What do you think? Can 7-Eleven score a touchdown with its private label brew, or will it get benched?

Madonna Gets in On Licensing Game with “Material Girl” Junior Collection

Yes, it’s like a flashback to the 80s for me when I hear the words “Material Girl”, but I have no doubt that Madonna and her daughter Lourdes’ line debuting at Macy’s this fall will be fashion-forward.

 

Iconix has done it again – signed a big-name licensing deal that is – planning to launch a back-to-school apparel line, with the addition of footwear, handbags and jewelry. Prices will range from $12-40, with the intention of rolling out additional products in the lifestyle and beauty sector like perfume.

 

I know Madonna is relevant for girls who grew up in the 80s, but is that the case for today’s tween and teen? I agree with Iconix CEO and Chairman Neil Cole’s statement that “Madonna is a fashion icon…” but I think of her as an icon for people who are 35-50, not 12-20. I’m sure that’s why her daughter Lourdes is involved.

 

What do you think? Will young women respond to this? Is Madonna on their radar?