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Amazon and Whole Foods Aren't Ruling Grocery Or YEAR IN REVIEW retailers to react, which several of impact of [Amazon.com buying them have done. Just look at the Whole Foods Market] has been online businesses of Walmart and overblown." Kroger, the nations top two gro• So far, it has. cery retailers, which are flourish• From a brick-and-mortar ing. They are investing heavily in standpoint, Wiole Foods Mar• online ordering and free grocery ket, with 470 stores, has a lot of pickup as well as home delivery. building to do to catch Walmart, Retailers in general are also which has more than 4,300 using their private brands pro• stores. And brick-and-mortar grams to differentiate. They are stores aren't going anywhere making investments in premium as long as retailers continue to AMAZON AND private brands to offer exclusive adapt to their customers' needs. products they know their cus• That's not to say Whole Foods WHOLE FOODS tomers cant get anywhere else. Market isn't growing. Its same- Last January, private brand store sales have grown about AREN'T RULING consultant Todd Maute, a partner 3 percent since being owned by with New York-based brand Amazon.com, and will continue agency CBX, told Store Brands his to grow. But a year after Amazon, GROCERY OR "gut feeling" is that that Amazon corn's acquisition of Whole Foods doesn't want to rule the grocery Market, it's clearly not the end of PRIVATE BRANDS world But ruling the retail world the grocery world as we know it is another matter. That said, a year isn't a long It has been almost 1.5 years "As Amazon continues to ex- time, especially when it comes since Amazon.com officially took over Whole Foods Market after purchasing the retailer for $137 billion in cash. At the time, some industry pundits made it sound like Amazon.com would soon take over the grocery industry — much like the evil Thanos taking over the universe in the summer blockbuster movie "Infinity War" — after it acquired the natural and organic foods retailer. Some industry insiders made it sound like Walmart, The Kroger Co., Albertsons Cos. and other grocery retailers would meet a doomed fate at the hands of Amazon.com Founder and CEO Jeff Bezos. pand into more and more cat• After the acquisition, grocery egories ... that is where I think stocks dropped like a sack of Amazon will rule the world," potatoes. Panicked investors Maute said. "I think Amazon sold their shares in Walmart, is just going to continue to go Kroger and other retailers. after one segment of business But fast-forward to now. The after another." grocery industry has changed, Maute's point is that Amazon, yet Walmart, Kroger and other com wants a sliver of the $800-bil- retailers are going strong. lion grocery pie, not the whole pie. If anything, Amazon.corns In a recent story on CNN. acquisition of Whole Foods Mar• com, reporter Nathaniel Mey¬ ket lit a fire under other grocery ersohn pointed out that "the 46 Store Brands / November 2018 / www.storebrands.com YEAR IN REVIEW shoppers — aged 18 to 34 — had a particularly high awareness of Lidl and shopped there frequently, according to the survey, which also noted that 48 percent of 600 consumers who tried Lidl are now shopping there more than twice per month. Industry analyst Mike Paglia calls Lidl a "disruptor," which is as fine a compliment as you can give a grocer. Paglia is especially impressed with Lidls 90-percent assortment of private brands. "Lidl is challenging the conven• tional notion of private brands, which is if you want to get low prices you have to be willing to sacrifice quality' Paglia told Store Brands earlier this year. "That has been the unwritten rule of private label from a shopper perspective. LIDL STRUGGLES. Lidl is saying that doesn't have to be the case. You can get both low prices and high quality." WHAT'S NEXT? Much of the news about Lidl in 2018 centered on its growth. Industry insiders speculated that Lidl would open hundreds Lidl came out swinging in But the honeymoon ended if not a few thousand stores in the summer of 2017 and quickly when Lidl began being coming years. Then those same quickly opened about 25 stores criticized for underperforming speculators backtracked, which on the East Coast. Lidls arrival stores. Then, the pundits pounced posed a negative light on Lidl. was marked by much fanfare even more, chiding Lidl for its In fairness to Lidl, the retailer in the trade and mainstream poor selection of store locations, never announced how many media. Industry pundits touted and for stores that were too large U.S. stores it planned to open the Germany-based retailers low and expensive to operate. beyond 2018. prices and quality selection of Shortly after, Lidl scrapped "Overall, I think Lidl is off to a store brands. or delayed plans to build several good start," Paglia added. "But that stores. Its goal to open 100 stores doesn't mean there isn't room for by mid-2018 fell short by more improvement in the long run." than 40. Will Harwood, Lidl commu• In May, the proverbial private nications director in the U.S., said brand pasta hit the fan when the retailer sees much opportunity Lidl replaced its CEO in the U.S., for growth in the U.S. and looks Brendan Proctor, with Johannes forward to moving into new mar• Fieber. No reason was given for kets. Harwood emphasized that Proctors departure. Lidl is taking an "agile and ad In June, Lidl issued a report by tive" approach to store openii Boston-based consulting firm Oli• "We are looking forward to ver Wyman saying that younger building on the progress we consumers have taken a liking to have made," he said. the retailer, especially its private 2019 could be a pivotal year brands and low prices. Younger for Lidl. 50 Store Brands / November 2018 / www.storebrands.com YEAR IN REVIEW A KROGER'S SIMPLE , TRUTH TOPS 1 A $2 BILLION IN SALES The simple truth is it will be $2 billion in sales. Kroger addressed concerns etched as "extraordinary" Simple Truth products are about free-from and organic in the private brands history free from 101 artificial preserva• products, beginning with price. books. tives and ingredients. Simple "There's a general belief in We're talking about The Truth Organic products are the marketplace that organic Kroger Co.'s Simple Truth and certified organic by the U.S. De• means more expensive," said Simple Truth Organic private partment of Agriculture. Kroger Mary Ellen Adcock, Kroger's brands, released in September didn't just roll out the lines to vice president of natural 2012. In January, Cincinnati- jump on the free-from ingredi• foods at the time (she is now based Kroger announced the ent and organic bandwagon in group vice president of retail lines had achieved a whopping 2012. Listening to its customers, operations), in a press release YEAR IN REVIEW announcing Simple Truth and branded shelf signs, stanchions Simple Truth Organic. "While in produce and meat sections, organic products are available and front-of-store standees and in most conventional grocery banners in more than 2,200 stores, our customers told us Kroger stores. Online elements that labels can be confusing. We included a Simple Truth website understand these challenges, so (www.simpletruth.com) and we're offering our shoppers the a social media presence on Simple Truth Organic brand — Facebook, Twitter and Pinterest. an easy, more clearly labeled and Kroger went all out to pro• affordable way to buy organic mote its new brand, something products." that was also different for a In 2012, Simple Truth and private brand in 2012, Jor¬ STORE Simple Truth Organic consisted gensen said. of about 250 products. That has " [Kroger] got behind the ballooned to more than brand, which was the oppo¬ BRANDS 1,400 products across _^|(P site of the old practice of launching and TjJ^k leaving it in IN THE ^,W"lJf^rm. Private brands," he added. LIMELIGHT B Kroger is H also taking H Simple Truth personal care (^"ITAWS W to China The spotlight shined on store brands in f —it will 2018, whether it was local television stations —• sell the line's interviewing shoppers about their willingness s^Jir products there to purchase more private brands or stores Truth in a nutshell: ^^^^^ on an e-commerce themselves promoting their own brands with Natural and organic foods site owned by Alibaba more fervor. Whatever the case, store brands that are affordable," Gil Phipps, Group Holding Ltd. In definitely received more clout in 2018. Krögers vice president of brand• August, Kroger announced it Consider Batavia, Ill.-based Aldi, which ing, marketing and Our Brands will open an online storefront won several awards in Store Brands 2018 (Krögers private brands), told on Alibaba's Tmall global site, Editors' Picks Awards, a program that Store Brands earlier this year. a platform for international recognizes the best new product concepts The success of Simple Truth brands. Launched in 2014, available for private branding. Aldi, real• and Simple Truth Organic is not Alibaba's Tmall Global platform izing the chance to differentiate, wasted no lost upon Carl Jorgensen, direc• is China's largest business- time in merchandising and promoting those tor of global thought leadership/ to-consumer marketplace for winning products in its stores with the 2018 wellness for Stamford, Conn.- China's consumers. Editors' Picks Awards logo. based Daymon, which provides Kroger's online store test will Earlier in the year, Store Brands reported retail strategies and services to start with select Simple Truth that consumers might be filling their shop• help retailers grow their private items, providing Alibaba's more ping baskets with private brands more in brands.
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