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Is the tail wagging the dog?

Des King looks at own-label strategy at Safeway

Retailer brands have come a long way from their origins as straightforward low-cost alternatives to the higher profile category leaders.

Traditionally as strong as bread and butter shopping basket staples, own-label options are now very much in evidence on most shelves – accounting for over half of the multiples’ combined total sales revenue.

With such a high volume of the weekly food bill accounted for by the major retailers, do brand owners have cause for concern at this apparent display of the tail wagging the dog? Established wisdom tends to suggest that own-label is unlikely to extend beyond its current saturation point. But, as it increasingly takes itself more seriously as a branded category, the long-term prognosis for some middleweight lines must be uncertain.

The trick so expertly perfected by retailers has been to transform themselves into brands in their own right. In buying own-label, the consumer is in effect buying the store itself.

Own-label lines now represent around 30% of Safeway’s total offer and account for 51% of annual turnover. It is several percentage points adrift of Sainsbury but it has been achieved in less than 12-years and the rapidly expanding range embodies all the purpose and energy of an enthusiastic late-starter. Indeed, almost two-thirds of all Safeway sales are generated by product lines launched within the past two years.

Ian Welsh and Karen Graley of Safeway’s in-house packaging design team explain how the development of own-label lines such as ‘The Best’, ‘Eat Smart’, ‘Eat Street’ and the ‘Italian’ range are now building the UK’s fourth-ranking multiple into a first choice destination store.

TS: How would you define Safeway’s own-label strategy?

IW: We aim to become a destination shop – and one that people will come to because there are products that they can’t get anywhere else, and also because the overall range is such good quality, good value and individual to ourselves.

We have four core values: best in fresh; best in customer service; best in availability; and focus on price. Our own brand has to reflect those values.

‘The Best’ is our premium offer. We launched about two years ago to carry predominantly fresh products – cooked meats, yoghurts, desserts, pates, breads and so forth – and it’ll grow to about 450 lines over the coming year. It’s positioned in-store alongside established brands at a competitive price.

TS: So is own-label becoming a brand in its own right?

IW: Definitely. We call it own brand or retailer brand. The thing that’s happening is that retailer brands are distinctive to themselves – nobody else has them.

‘The Best’ and ‘Eat Smart’ are giving consumers a product that they can’t get anywhere else. You’ve got to go to Safeway to get them. As a slimmer’s range ‘Eat Smart’ is a market leader.

KG: The whole point about the ‘Eat Smart’ graphics and presentation is that it’s saying ‘this has been specifically developed and produced for you’. We’re telling you the fat and calorie content up front so it’s all very manageable no matter what institution diet you’re on.

It’s not overtly female – it’s bold and has impact, and you wouldn’t feel embarrassed to stand at the fixture and browse it.

TS: So the packaging is important then?

IW: It’s very important, but it’s only one com-ponent whereas some- thing like ‘Eat Smart’ looks great and was supported by quite an extensive in-store POS package. The pack itself will sell the product the very first time. If the product performs, then you’re into repeat purchase.

There are brands already copying the ‘Eat Smart’ presentation. That’s great for us and I’m sure the other multiples would say the same. It shows that own brands are actually driving the category. If we can lead markets then it’s great that people are mimicking us.

But clearly we have to work very hard to stay one step ahead – through product selection and through packaging and overall presentation too.

TS: What sort of lead-times do you need to bring new products into the range?

KG: Well, obviously there is now an established set of design criteria for the range. For a new ready-meal in carton or sleeve, ideally we’d like eight weeks but we can actually get it in-store in just two or three weeks.

That would include getting the product down to photography, artwork and origination, printing, packaging and delivery in-store. It’s not ideal but it can be done.

TS: Do you work with many external suppliers?

IW: We have core lists. Currently, there are just four design consultancies: Loewy, Radius, Butcher and Gunderson, and Wren and Rowe, and we’re trialing Lippa Pearce.

On the production side we have Prestige Technik, Electronic Solutions and Thames McGurk – and we’re trialing two others simply to make sure we’re not caught short with workload.

We have preferred lists of printers that we’re looking to rationalise down to about 20 of known abilities who can work within the right price and quality parameters.

TS: Do you have a policy of looking at new designers?

IW: I must be getting about 20 calls a week and, if there’s something there of interest, then I’ll go and have a look.

I always go to see them – I like to get a feel for their company, a feel for the people, and see how they deal with things on their premises.

If they’re up to scratch then we’ll go through various stages of assessment and then we’ll trial them.

The thing you can never tell is whether you’ll get on with them. If you think of how much we’re doing and how quickly we’re doing it, there has to be a good working relationship. I would say, however, that 70-80% of the companies that do approach us are ordinary and they can’t see it.

A lot of design consultancies seem to sit in their own little bubble. If they were to look a little bit wider they’d maybe ask themselves why Safeway or Tesco should use me rather than the consultancies they’re already working with.

We have a three-monthly review of all our consultancies, and if it’s not working we’ll identify any shortfalls with them.

That usually works, but if it doesn’t we’ll have to question if they’re right for us.

All of our production houses have deployed someone to sit in here as traffic controllers.

They work directly with us, and are very much part of the team. It doesn’t mean they ever cross the line.

They’re here to do a job and that job is clearly defined. They help one an-other too. There’s plenty of work for all of them.

TS: What do you predict in the future for retailer brands?

IW: We have a great opportunity because we came from a lower base than our competition, and I think the power of the name will become more trusted. Whereas in the past own brand has tended to follow markets, going forward it will tend to set the pace.

There are market norms that are shared by everybody and brand leaders with their IGD guidelines that were set some time ago have agreed that that is acceptable.

What you need is for brand norms and that’s where I see own brand going.

It’ll develop its own personality, its own ranges. In Canada, Loblaw’s ‘President’s Choice’ started as an own brand and became so well established and so well liked in its own right that it’s now sold through other stores.

That’s unlikely to happen here, but you will see plenty of new in-store initiatives that’ll be Safeway ‘looks’ that you won’t see anywhere else.