Dan O’Connell & Miguel Molina
The deli, produce, bakery and meat case sections of the retail perimeter were all once void of brands; today store brands, processor brands and even grower brands are emerging as significant players. Look to the floral department to follow. Understanding how to leverage the branding trend at the perimeter will help create new opportunities for your value-added offerings. Brand love can be achieved if you tune in to this dynamic market and understand its emerging voice.
Retailer and traditional brands that hope to flourish on the perimeter need to recognize and embrace three fundamental truths to ride the branding wave: the importance of brand storytelling, the need for brand authenticity and the ability to be relevant. Processor and grower brands have a much bigger platform to share their message, a history they can leverage and the resources to drive innovation. On the other hand, retailer brands have the ability to be closer to their consumer and are more agile due to alternative/multiple product sourcing options. They can respond to the customers’ demands quickly. In addition, these retailer brands have an edge with pricing, as they can readily adjust, based on competitive products and consumer demand. Lastly, they have an advantage in terms of the placement of their products (e.g., endcap, eye-level, lighting or a separate display case) relative to their competition.
Effective brand storytelling drives brand equity and value. Brand equity at the store perimeter is presently a mix of perceptions and realities. Retailers are either competing on price – and thereby undercutting processor and producer brands’ pricing. Or, conversely, some retailers are shooting for the top of the price spectrum by creating more refined brands that focus on basic consumer needs, such as freshness or craft quality. The challenge for these higher-end store brands will be to keep pace with the processor and grower brands who have deeper resources to meet emerging needs, such as further processed or other value-add strategies that cement brands in consumers’ hearts and minds.
Establishing authenticity and relevance in the journey toward brand love, while seemingly a huge advantage for those who create the products, appears to be a clear disadvantage for retailers. The reality is not yet. Several retailers are winning at premium price points in the perimeter because they are listening to their customers and partnering with their suppliers to drive what we at Foodmix call the “ing” of traditional commodities. Slicing, dicing, mixing, flavoring of what once was seen as a commodity can move a category closer to brand love. Adding a basic level of added value – easily done by many co-packers combined with local knowledge – makes retailer brands in the perimeter viable alternatives for the consumer. Processor and grower brands need to study these distinct retail departments and truly understand “met” and “unmet” needs to drive innovation and brand equity.
Each department of the perimeter began as an unbranded new frontier – things have changed and will continue to change. Both retailers and processor/grower brands are winning with good storytelling, relevant offerings and authenticity. For those committed to driving innovation and value-added offerings, there are even more opportunities.