Value-driven PL cleans up - private label cleaners

Discount Store News, March 6, 1995

Shopping at her local Jamesway, Kim Davis of Montville, N.J., was caught by the price difference between a private label control brand of furniture polish and a well known national brand.

She decided to give the control label a try. "It was a big difference in price and I thought it was a good value, $1 for a 17.5-oz. size. If I like it, I'll buy more and return to the store instead of getting cleaning products when I'm in the grocery store," she said.

Davis is not alone. Value-driven customers have snapped up private labels. While the growth of private label consumer goods has been due in large part to the success of food items in supermarkets, it is also coming on strong in other classifications and retail tiers--furniture polishes and household cleaners sold at mass merchants, for instance.

Discount store shoppers are becoming private label converts. Speaking at the Private Label Manufactures Association (PLMA) trade show in Chicago, Mona Doyle, president of the Consumer Network, said that a survey of discount store shoppers revealed that 36% were heavy store brand users.

"There's been vast improvements in the quality of products, packaging and labeling to the point where store brands often match or exceed the national brands," said consumer products analyst Gabe Lowry of Oppenheimer & Co.

The producers of the private labels have improved their quality and are even packaging on demand and offering EDI capabilities. Shoppers have apparently noticed. In fact, in one recent consumer poll conducted by PLMA, it was revealed that 92% of those queried believe store brand quality is improving.

Cleaning Aids Come on Strong

Cleaning aids are a natural extension for private label programs for several reasons.

For one thing, they add diversity to assortments. At Prange Way, for example, buyer Mike Janssen said a control label is used in areas such as disinfectants and glass cleaners to offer shoppers another choice. He confirmed that private label household cleaners sell well for the chain.

Another key is that private labels or control brands offer value pricing. "We offer private label as a way to provide a price choice," said Kurth Dohmann, buyer for Family Dollar. He said he picks his resources based on the price and quality they provide. The retailer relies on third-party consumer products testing companies to conduct performance tests. Among the items carried are furniture polish and starch. Family Dollar carries a combination of its own label and control names, Dohmann said. These are areas where consumers believe the no-brand name will have product parity.

At Kmart, private label serves up a way to make greater gross margins in a category that consumers price shop vis-a-vis their supermarkets, a spokesman noted.

Retailers estimated that private label cleaners net them gross margins in the 25% to 30% range vs. under 20% for national names.

Private label also helps, according to Jamesway general merchandise manager Larry Fine, in regard to popular "two for" promotions used to sell household cleaners. Jamesway, he said, can offer goods at two for $3 on house brands.

By retailers' estimates, private label household cleaner sales were up 10% in 1994 compared to the prior year. Meanwhile, national brands only showed a 5% increase.

There are mass merchants, however, who prefer to stick to national names. Caldor, for example, does not carry a house or private label. A buyer for Stuarts added that she, for now, sticks with the recognized brands. Both indicated that space requirements are making it difficult to expand.

But others said that private labels are allowing them the chance to make significantly higher margins, especially on aerosols that tend to carry high tickets. Aerosols are highly coveted by many shoppers, who believe the delivery systems have superior cleaning power over other forms of application.

"Furniture polish and bathroom cleaners are essentials to carry as aerosols. They are the two products that sell best. Also important are window cleaners," said Don Bratt, marketing manager for Guardsman Household Products, a value-price line.

An inaccurate perception surrounding cleaning items remains in the confusion over chlorofluorocarbons. "Today's aerosols are environmentally friendly," explained Frank Frazier, sales manager for HomeLine, a division of The Sherwin-Williams Company that produces private labels for leading chains such as Food Lion, Kmart and Dollar General.

He added that consumers want the efficacy of aerosol and should be given the choice within the store.

To hammer home an environmentally friendly story, the firm touts the fact that its cans can be recycled on the labels of the goods.

Vendors mull trade dress quagmire

Procter & Gamble Co.'s lawsuit against F&M Distributors Inc., a leading drug chain, over its package design has many suppliers--including makers of private label cleaners--and retailers re-evaluating their packaging,

Venture Stores was found not guilty of a similar charge against its trade dress. Federal appeals court in Washington reversed a 1992 lower court decision against Venture. The debate was over a package that Chesebrough-Pond's Inc. claimed was too close to its Vaseline Intensive Care design.