Retailers, national brands collaborate on packaging: unique packages and displays earn Avon, Pillsbury and Primo Foods preferred shelf positions

Food & Drug Packaging, Feb, 2002 by James W. Peters

How can packagers of branded products find a way around the increasing dominance of retailer brands? One answer is to join--rather than fight--retailers in cooperative packaging ventures where both parties win.

Companies like Pillsbury, Toronto-based Primo Foods and Avon Products are gaining preferred shelf positions by partnering with retailers and using packaging and displays as part of a marketing strategy.

The idea is for retailers and manufacturers to create brands, packaging and retail kiosks that are unique to a particular retailer.

For retailers, a strategy of unique products helps them break the "price cycle." Here's how:

When a retailer sells just national brands, low price becomes its prime differentiator. The retailer builds no consumer loyalty to its stores, and it competes on "what's on sale this week."

But retailers with strong brands and packaging unique to their stores can bring value to their customers. That scenario makes the retail outlet a "destination" for shoppers with brands that can't be found at competing stores.

The packagers win, too. When they provide retailers with targeted packaging and promotions, they get preferential shelf locations and in-store promotion for their products.

NOT JUST PRIVATE LABEL

The scenario differs from the traditional private-label strategy where the retailer relies on its own brands. In the new scenario, the national brand's equity is often used to endorse a store brand. That can raise the stature of the retailer's brand.

Consider J.C. Penney and its line of BeComing cosmetics. Products are packaged by Avon in distinctive packaging exclusive to J.C. Penney.

Because the beComing brand is exclusive to J.C. Penney, it brings shoppers to the store, making that chain a destination for cosmetic shoppers. J.C Penney often locates the becoming kiosk at the front entrance of a store, guaranteeing maximum traffic.

The line includes body lotions, perfume, candles and bath and shower gels. It also includes baby items such as baby cleaner and powder.

Packaging includes tubes with hang tabs designed to display packages effectively within the kiosk area. Bright combination of colors and upscale shapes differentiate the brand.

Package graphics emphasize the beComing brand, and point-of-purchase materials complement packaging for maximum impact on the consumer. The Avon logo is on point-of-purchase materials, endorsing the brand.

In the cooperative venture, J.C. Penney and Avon share costs, including salaries of in-store personnel.

J.C. Penney gets its own high-end brand and Avon gains some control over the retail environment in which its products are sold. By allying with the retailers Avon can optimize packaging and point-of-purchase materials to get a greater share of that 70% of purchase decisions made in the store.

IN THE GROCERY STORE

The concept is not limited to high-value items such as personal care products. It is being executed in the most demanding arena--the center of the grocery store.

Sometime the strategy relies heavily on point-of-purchase materials, explains Patrick Rodmell. He is vice president of market and business development for Watt International. The Toronto-based firm focuses on strategy, image, product, package, retail and total design.

"It is consumer-centric merchandising," says Rodmell. "It is a way of creating areas within stores--end caps, P-O-P models--based purely on the consumers. The national brand owner and the retailer need to take a back seat to the consumer's needs."

One example involves Pillsbury. The company saw an opportunity to build its "fast snack" business. Products were heat-it-and-eat-it, quick-grab food for kids. The products were targeted for the toaster oven.

Pillsbury's challenge was to become captain of this emerging category. According to Rodmell, the answer was to think differently.

"Don't think about building the Pillsbury brand. Instead, think about build an area within the store. In this case it was the `Hot Snack Zone'," Rodmell says.

Rather than creating a separate brand and entirely new packaging, Pillsbury created display materials that emphasized the "fun" of the category.

In working with Canadian retailer Sobeys on the concept, Pillsbury made the "Hot Snack Zone" exclusive to that retailer. Sobeys could own the concept and use it to drive category sales. The retailer saw a lift in the category and Pillsbury saw a greater lift for its products within the category.

"You are the hero within the category," says Rodmell.

The "consumer-centric" approach may even provide a lift to the meal solutions area, one that retailers have struggled with for years.

An example comes from Toronto-area Primo Foods. The company packages Italian foods and partnered with A&P to create an Italian Foods kiosk. The idea was to build a retail center around a need--a meal--rather than around separate categories such as pasta, sauces, soups or tomato products.

Packaging complements the point-of-purchase kiosk to offer the consumer a total solution.