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Supervalu Makes Risky Brand Change

05/04/2011

Eden Prairie, MN based grocer Supervalu announced yesterday it is consolidating individual store-chain brands into one national private label brand. Economies of scale in packaging, marketing and sourcing should help the struggling grocer control the margin erosion it has experienced over the past two years.

There’s risk in the weeds for the grocer on this move. Private label sales comprise 19.3 percent of the company’s sales – so this is no trivial move.

The new brand, called “Essential Everyday”, appears to be the “better” of the good, better, best merchandising principle. At the opening price point end they offer the Shoppers Value label and Culinary Circle is their premium brand.

But do shoppers really care if Supervalu has a good, better, best merchandising strategy? I don’t think so.

While “Essential Everyday” is not an awful name it does not address most grocery shoppers hesitation about buying grocers’ private label products – QUALITY. Going through shoppers heads is, “Is the stuff in this can as good as the national brand?”. It’s one thing to pay a little less for a product. It’s another thing to compromise quality, taste or quality for a few pennies less. In today’s economy most shoppers are reluctant to give up those attributes to save a little.

I think they’ve got a ways to go on this project.

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