IRI notes rise in private-label purchases in new report
CHICAGO Private label is not only on the rise because store brands are cheaper versus their branded equivalents, but because shoppers feel that those branded equivalents don’t deliver greater value for the extra dollar. According to a new study released by Information Resources Inc. on Tuesday, 78% of both lower- and higher-income consumers believe private-label products are typically of excellent quality.
The study, called “Private Label 2009: Understanding and Mitigating Private Label Threat,” provides a thorough review of private label performance and best practices across channels, categories and retailers as well as current viewpoints from more than 1,500 consumers.
“Although nearly 80% of shoppers have positive attitudes toward private label, dollar and unit share are still below 25%,” stated IRI consulting & innovation president Thom Blischok. “Retailers still have enormous opportunities, and our research uncovers exactly where they should play and increase the likelihood of their success. We also analyzed the private label competitive landscape for branded manufacturers and how they should respond at the category, market and retail banner level.”
IRI consulting & innovation SVP Sean Seitzinger added that, “Four out of five shoppers are now ‘sold’ on private-label quality indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products. However, branded manufacturers still have key advantages in the strong emotional connections between their brands and their loyal customers. For instance, personal care products have successfully differentiated themselves in the minds of shoppers.”
Nearly two-thirds of shoppers often buy private-label products instead of name brands. More importantly for retailers, all age groups and income levels show a relatively strong propensity to purchase private label.
Shoppers across all income levels and age groups agree that variety is an important factor when buying private label, with 65% of shoppers preferring stores that offer a high level of private-label variety, which is up five points since late 2007. This research indicates that retailers need to think about variety in terms of products and packaging within a category, and manufacturers should be thinking about how they expand the expectations that consumers have for choice within a category.
Contrary to want many may believe, IRI research reveals that price is a less important purchase criteria to shoppers than variety, packaging and quality. While shoppers with lower-incomes (52.8%) are more likely to switch away from their typical brand for a better price, middle-income (52.2%) and higher-income (46.8%) are also more apt to switch versus a year ago.
“For retailers to maximize their private label strategies, it’s not as much about the products anymore,” Seitzinger said. “It’s about developing marketing programs that will drive purchase behavior, including trial, repeat and long-term loyalty. A successful marketing approach will center on taking these positive consumer attitudes and converting them into new shopper behavior across categories.”
Winn-Dixie reports Q4, fiscal-year results
JACKSONVILLE, Fla. Winn-Dixie closed out the year on a strong note Monday, reporting $7.4 billion in net sales, up 1.2%, for the fiscal year ended June 24, with identical-store sales from continuing operations up 1.2% compared with the prior fiscal year.
During a conference call Tuesday morning, Winn-Dixie chairman, president and CEO Peter Lynch told analysts that the chain’s remodel program, scheduled to be completed across the chain’s entire store base by fiscal year 2013, will be a key driver in the grocer’s success going forward, as will pharmacy.
“Script counts are up,” noted Lynch. “As far as pharmacy plays into our promotional activity, as I have said in the past, pharmacy is a key component to our strategy going forward,” he said. Primarily because pharmacy customers, no matter which channel from which they pick up their prescriptions, are sticky customers. “So we are always trying to make sure that we keep those customers and reach out to them for more business,” Lynch said.
And right now, that means better customer service than the pharmacy down the street. “We’ve done a lot of work in making sure that our pharmacists are really out there taking care of the customer,” he said. “The customer really needs that approach regarding pharmacy and I think we’re doing a much, much better job at it here at Winn-Dixie today.”
Lynch updated analysts around Winn-Dixie’s store remodeling program, which Winn-Dixie is tackling on a market-by-market basis. The grocer’s hometown market of Jacksonville, Fla., home to 51 stores across north Florida and south Georgia, was completed in mid-July. “We are currently on track to remodel half of our stores by the end of fiscal year 2010 and to complete substantially all of our stores by 2013,” Lynch said.
At the end of fiscal 2009, the company had completed 170 store remodels, 73 of which were still within their first year of operation. Of the 73 first-year store remodels, 47 are considered by the company to be offensive remodels. For fiscal 2009, those 47 stores had a 10.3% weighted average sales increase compared to the same period in the prior fiscal year, excluding the grand re-opening phase. The sales increase resulted from increases in transaction count and basket size of 5.6% and 4.5%, respectively.
Diplomat Specialty Pharmacy, CareSource announce partnership to treat CKD
SWARTZ CREEK, Mich. A specialty pharmacy in the Midwest will partner with another company to help treat people with chronic kidney disease.
Diplomat Specialty Pharmacy announced this week that its Diplomat Health Services Division would partner with Ohio-based CareSource in an effort to slow the progression of kidney disease, improve clinical outcomes and reduce costs associated with it.
“Early recognition and intervention are essential to slowing disease progression and improving outcomes,” CareSource chief medical officer Craig Thiele said in a statement. “Collaboration and creating a communication continuum, as well as enhancing patient and physician education, goal setting and tracking outcomes ensure success for all stakeholders.”
According to the National Kidney Foundation, chronic kidney disease affects 26 million Americans, while millions more are at increased risk. It’s one of the many complications of hypertension, but it can also cause hypertension, and it often affects people with diabetes.
Diplomat said that in pilot studies, its CKD Navigator disease management program showed significant medication and medical cost savings while improving results among patients by incorporating medication therapy management, medication adherence tools and lifestyle management techniques.
“We have demonstrated the savings,” Diplomat VP clinical services Ron Alexander said in a statement. “Now, with the CareSource project, we plan to not only show good financial metrics, but also incorporate lifestyle information to gauge the program’s health effects.”