09Aug2009
Private Label rises to 21.8%
Winn-Dixie’s private label has been slowly gaining penetration, and is now about 21.8% of dollar sales. A couple years ago, before product upgrades, SKU increases (especially in fresh departments) and packaging redesigns, it was at 19.1%.
The chain’s 3,000-plus corporate brand products, once under 58 different labels, are now under just three: Winn & Lovett for premium items; Winn-Dixie for the mainstream national brand equivalents; and Thrifty Maid for value products.
Can’t begin to tell you how many people in the trade told us of the upscale “Winn & Love-It” label. Catchy, yes. Accurate, no. There was in fact a Bill Lovett in the history of the chain, which for a time was known as Winn & Lovett. So that’s where that name came from.
The right-sizing of the number of labels was overdue; it’s hard to imagine building any real brand recognition among the shopper base with all that fragmentation. The focus on just three brands also brings economies of scale.
As you’d expect, the increases in private label sales – in pulling away sales from higherpriced national brands – have pulled comp and identical sales. on the flip side, they’ve enhanced margins. In a conference call with securities analysts, President Peter Lynch said private label increases had pushed down identical store sales by 0.3% in one recent quarter, but he’s also noted that the private label program “is an important contributor to our margin improvement.”
Most industry observers had good things to say about Winn- Dixie’s private label efforts, but some said more should be done build consumer awareness of them. One described the products as high quality but far behind in relative awareness compared with the likes of Publix, Kroger and H-E-B, for example. (We had several Winn & Lovett frozen dinners back at our hotel, and would buy them regularly if we didn’t live in Vermont.)
One vendor said the Winn & Lovett brand in particular needs “more advertising and taking that brand to higher volume items.” He added that more needs to be done to tell shoppers about new private label items that are coming.
There were concerns expressed about how Winn-Dixie used to be known for private label that was cheap, but not high quality. “Somehow they need to get their brand identified with good quality, not just cheap.” A source familiar with the chain noted that “I believe Winn-Dixie has a long way to go on this front but they are making progress. However, the proof is in the pudding – customer votes (purchased product) will ultimately be the answer to this.”
Overall, the buzz is upbeat. Said one manufacturer: “They’re not a Safeway or a Kroger, but they’re right behind in terms of being a fast follower. We expect to see great things from Winn-Dixie in the years ahead as they build their brand and their store brand products.” And another concluded “Delighted to see them fight Walmart and Publix.”
