STORES Magazine - February 2008 - (Page 29) Brand-Building Through Design I n 2005, Safeway retained Anthem Worldwide to develop a comprehensive brands platform. Anthem dis- tilled the chain’s disparate portfolio of 70 unique brands to 10 “power brands,” eliminating product redundancy and low-volume performers. The program now represents $6.8 billion of Safeway’s $40 billion in total annual sales. Among the “new” targets Safeway sought to develop was the wellness lifestyle consumer. Anthem helped to create a brand platform around the Eating Right name and develop the identity, theme line, packaging system design and photography for the portfolio’s 200 SKUs. Anthem also uncovered an opportunity to target unique health needs, providing a point of difference for Eating Right and to build relevance with a growing audience. such as tea, peanut butter and pasta. Costco plans to partner with Martha Stewart on co-branded prepared meals. Safeway launched the Eating Right line of more than 120 items including juices, salad dressings, soups, cereals and dinners aimed at customers looking for high-fiber, low-fat or lowsodium foods to satisfy specific heath concerns, and its O Organics line is expected to generate $300 million in annual sales. Despite the recent flurry of product launches, however, the United States “is generally behind the curve in private-label penetration and it doesn’t matter what category,” says Charmaine Tang, a Citi Investment Research vice president who follows the broadlines, food, drug and home improvement sectors. The U.K.’s Tesco, for example, generates “at least half” of its sales from private brands, she says – and stateside retailers have been bracing for Tesco’s entry into the domestic market with its Fresh & Easy concept. Two words – increased margins — make it easy to understand why private label is gaining traction. Retailers that source new products to their specifications can usually eliminate the middleman, boosting profits. Safeway, in fact, is doing so well with O Organics “that you have to wonder what that means for its competitors,” Tang says. At an investors’ conference in December, Safeway chairman, president and CEO Steve Burd announced plans to offer O Organics and Eating Right products to other outlets; Safeway also has discussed partnering with a food-service company to distribute products in that channel. WWW.STORES.ORG Lines are blurring As has happened with department stores, lines are blurring as to who – manufacturers or retailers — holds power and sway in the supermarket and mass channels. Eric Ashworth, chief strategy officer with Anthem Worldwide’s San Francisco office and a Safeway consultant on private-label brands, says, “the reality is that the retail channel is putting traditional consumer product goods manufacturers on a collision course with each other.” Instead of pitting CPGs against the retailer, Ashworth speaks of a new spirit of partnership that Anthem calls “manutailoring.” The idea, he says, is to build the brand together. “They should forget about ownership because they can both make money on [the new products].” It’s a win for both parties, Ashworth says, “because the retailer is going to be able to put the product on the shelf right away and the CPG is going to save $30 million in marketing spend. “They share the revenue because they own the brand together,” he says. StORES Janet Groeber is a Cincinnati-based business writer. STORES / FEBRUARY 2008 29 http://WWW.STORES.ORG
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