CPG Marketing Trends: Walgreens’ New Private Label Brand

As we look towards 2012, private-label will continue to play a major role in the CPG landscape.  Walgreens took notice and recently introduced its new private-label brand “Nice!” in stores across the US.  This new label will include more than 400 grocery and household products at prices up to 30% below national brands.  The launch is part of Walgreens’ strategy to build its private brand business, including consolidation of many of the brands in its existing portfolio.  Walgreens is aiming to have the majority of Nice! products on shelves by early 2012, which will include traditional grocery items such as soups, sauces and bakery items.

“Store brands have always been a core part of our business. With more shoppers seeking value in this economy, we’ve been able to attract new customers across every income level to our brands and maintain their loyalty with a focus on quality and assortment,” said Joe Magnacca, Walgreens’ president of daily living products and solutions. “Now with the launch of Nice!, we are streamlining our offering to make it even easier for customers to identify high quality everyday essentials at a great value.”

The Walgreens label is being phased out of food and household products but will remain on health and wellness items. By consolidating their private brands, Walgreens is able to concentrate product development and marketing efforts. They are supporting the brand with in-store signage, PR support and are planning to launch a national campaign next year. Nice! packaging incorporates distinctive and recognizable design aimed to promote trial of the new products and simplify the shopping experience. The label promotes the tagline “smart. quality. everyday.”

The latest move by Walgreens supports the fact that customers are still seeking quality and convenience at a value price.  According to A.C. Nielsen data, total private brand sales in the U.S. have increased from $64.9 billion in 2005 to $88.5 billion in 2010. The fastest growing store brand consumer segment is households with incomes more than $100,000, according to Nielsen.

Walgreens joins the growing trend to use branded private label as a means to great high value through a brand name versus a retail label. Great credit to Walgreens for also focusing their private label efforts to products that are directly linked to their core DNA—health and wellness.  It is a great example of using a true brand architecture to determine the best role for private label within a retailer.

“We believe we will continue to build loyalty to our stores and our brands as shoppers find favorites on our shelves that will become staples in their everyday lives,” Magnacca said. “We are confident that our more refined approach will provide a new level of simplicity and choice, which is the ultimate value objective for our core customer.”

About

Brad is an expert in private label and challenger brand food marketing for Barkley, an integrated marketing and advertising agency. He specializes in working with manufacturing-driven food companies that have aspirations to develop a consumer insight-led strategies to help drive innovation and growth.

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