Earlier this week we wrote about the strength of private brands in today’s marketplace. For shoppers, private brands offer great value at a lower price. For retailers, private brands offer higher margins and a means to differentiate. Combined, these advantages have let to substantial growth in SKUs and sales. Let’s take a look at an example of how private brands can help a chain differentiate.
Our local supermarket favorite, H-E-B, has been working hard to beef up their multi-tier private-labeling offering, being Hill Country Fare, H-E-B brand and Central Market. The Central Market division of the chain added seven flavors of craft ice cream and sorbets to its Chef’s Collection, each developed by Atlanta-based chefs and made from scratch by a small startup. The premium line was a hit, but also offered at Whole Foods and lacking local relevance. That led to the development of Rathbun Road, the brainchild of Iron Chef America contestant Kent Rathbun, owner of the Abacus restaurant in Dallas. The dessert is one of a growing number of exclusives catering to two mega trends: local preferences and private brands.
All around the country, supermarket chains are strengthening their private brands. New product additions increasingly focus on exclusivity to bring boutique experiences, not unlike store-within-a-store trends we see in other channels such as Toys-R-Us partnering with Macy’s and “The Shops at Target.” These products bring excitement to the store, making the mundane grocery trip a treasure hunt. This concept was made famous by Costco, which continuously changes out about one-quarter of their assortment.
Exclusivity through private brands is an important tool for supermarkets to attract Millennials, a shopper group notoriously underrepresented in the traditional supermarket channel. New and different products and partnerships with local foodservice establishments will help inspire Millennials to keep coming back for a one-of-a-kind experience.