Retailers use private labels to build loyalty

07/16/2012 09:32:00 AM
David Mitchell

RPE Inc. ships Biggins, among other labels. Bushmans’ Inc. offers Discovery Gardens potatoes, and Spud City Sales has a Spud City label. But Wisconsin potato shippers seldom get a chance to see how their own labels fare head to head at the retail level.

“Retailers are trying to build consumer loyalty to the store and store brands,” said Rick Kantner, director of sales and marketing for Friesland, Wis.-based Alsum Farms & Produce Inc., which packs and ships its own Alsum-brand spuds as well as other labels.

Mike Carter, chief executive officer of Roshold, Wis.-based Bushman’s, agreed that demand for private label packaging is increasing from retail stores.

“If it were up to us, we’d love to compete in the marketplace with our own bag,” Carter said. “But we understand why they do it. The customer is always right.”

Bob Johnson, president of Katz Produce Sales LLC, Plover, Wis., said retail demand for private-label packs is about more than just branding.

“My feeling is that the store brand gives the buyer more control of quality, price and vendors when they have control of the label,” he said. “They can also put out a very interesting display when they have a bag design and modify it slightly for each item in the category.

“When you have a national brand, you are really no longer shopping, and the seller is in a better position to dictate price. National brands generally have good quality control, frequent promotions, and they certainly have their place. However, most of the bigger accounts I deal with are going the store-brand path with canned goods, snack foods and many produce items.”

Like Bushman’s, Stevens Point-based Spud City also sells Dole-branded potatoes.

Spud City owner Tom Lundgren, said that although private-label bags are a growing segment, his company still ships more brand-name potatoes than private label.

Vice president of marketing and new business development Randy Shell said Bancroft, Wis.-based RPE Inc. is seeing growth in store brands because retailers are doing a good job of promoting their own brands on both quality and price. However, he also said national brands and vendor brands will continue to play an important role in the category because individual retailers have different branding objectives.



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