Private-Label Watchouts

Convenience retailers offer advice when it comes to adopting private-label products.

February 23, 2021

This is the second in a two-part NACS Daily series.

By Pat Pape

Simply offering shoppers a selection of products with your own store’s label is not a guaranteed win, according to Mike Musso, senior managing director for Conway MacKenzie of Atlanta, a global management consulting firm.

“You can’t just launch a product and compete solely on price,” he said. “Store brands are brands, and with that you need a complete comprehensive team to manage those brands. You must have a complete promotional strategy, a consumer value proposition and consumer advertising behind it.”

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Iowa-based Yesway strategically promotes its private-label merchandise through the chain’s loyalty platform.

“We’ll target consumers based on transactions to encourage digital sampling,” said Derek Gaskins, chief marketing officer, Yesway.

“This is a benefit our top customers relish. We also do member pricing with the Yesway Rewards Card, so their retails are better than the everyday shelf price. Finally, we promote different product categories monthly and offer two-fers, combos, flat percentages off and other bundles on our specials.”

Busy Bee, a chain based in Madison, Florida, showcases its offerings with in-store product demonstrations. “We have several teammates who love to cook,” Megan Forcey, director of advertising and e-commerce, said. “They love speaking with guests about the various ways to cook with these items and dishes they’ve created.”

Musso advises using both a brick-and-mortar and an omnichannel presence to build the brand long term. “It’s very important to employ the same promotional strategy that major consumer brands are employing in c-stores,” he said. “You must have the consumer recognize the brand and find it appealing. When they try the brand, they need to love it and come back to it.”

Finding the right source for your private-label offerings can be a challenge, but once you do, the manufacturer must be managed like any other vendor. Gaskins suggests seeking flexible suppliers that can grow with your own retail operation.

“Your margins should also be 10-20 points better in private label to ensure the category is sustainable long term,” he advised. “Start small, prove success and then grow through consumer engagement. You don’t want to commit to volumes initially that could lead to problems for the program.”

“The manufacturer becomes an extension of your company,” said Musso. “You must understand what they’re doing, their quality controls and their product safety certifications. If you don’t, you’ll end up living with a risk down the road.”

Despite the challenges of developing and managing a private-label program, Musso expects to see more c-store chains offering private-label products in the future. “It’s necessary to building their store brands and credibility,” he said.

Because Yesway customers were so quick to adopt the stores’ branded offerings, Gaskins predicts continued success as the chain’s program expands. “Consumers are embracing private label,” he said, “especially now that retailers have dramatically improved quality.”

This is the second in a two-part series about how convenience retailers can leverage private-label offerings in their stores. Read the first part in Monday’s NACS Daily. Not a subscriber? Sign up to get the latest roundup of industry news and trends in your inbox each weekday.

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.

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