Beyond the Numbers

It might seem sacrilegious somehow to write an article downplaying the importance of statistics in a publication like F3. Yet, sometimes that's what we have to do, as the knowledge to be gleaned in many reports comes from what the numbers both do and do not tell us. And sometimes even from areas that the numbers do not seem to reach.

A wonderful example of this can be found in FMI's new study of supermarket pharmacies. The report offers a wealth of statistics detailing the challenges and benchmarks of today's pharmacy operation. However it is the accompanying essays written by industry experts that make clear the more complex issues and opportunities in this very important part of the store.

You need both to see the whole picture.

For instance, the benchmarks demonstrate that pharmacies - one of the great growth departments in supermarkets for more than a decade - are facing a range of new struggles today. Competition from all forms of retail and increasingly mail order is making growth harder than ever. New government and insurance company regulations are both making life challenging. And suddenly the marvelous numbers companies have expected and received from pharmacies through the years are getting harder to produce.

Yet a very different picture emerges in the short series of essays at the end of the report. The essays, written by retail industry leaders, put the issues of pharmacy into perspective well beyond what numbers can tell us. One of these experts writes about the changing demographics of America and the impact of the enormous Baby Boom generation.

Even more importantly, another essayist writes about the staggering opportunity that supermarkets could find in their pharmacies if we find a way of combining all the attributes of our stores into a new solution for shoppers. Pharmacies and food can work together to help shoppers deal with their ever increasing nutritional needs and their desire to somehow eat and live healthier.

It's not a simple picture, nor is it a simple solution, but it's a scenario that could change the way we look at pharmacies and, more importantly, how our shoppers look at our pharmacies and our stores. It moves us beyond the simple numbers and into examining the full impact departments in the store can have on the shoppers we need to serve and win over daily.

The statistics - the benchmarks - help us understand where we are. The essays, and the discussions we need to have about all the many reports we preview here in F3, help us understand the larger challenges we face.

And sometimes, we see the possibilities.

To purchase Supermarket Pharmacy Trends 2005, visit www.fmi.org/store/.

Private Label Growth Continues Globally

Private label, once the purview of deep discounters, is continuing to emerge in mainstream retailing as a powerful tool in the global battle for profits, market share and product innovation.

But will store brands, embraced wholeheartedly by European shoppers for decades, ever have the same impact in other parts of the world and among a broader demographic?

The simple answer to these questions is not "if" but "when." In an industry where most players carry virtually the same products, private label is coming to the forefront as the key to differentiation - a strategy that enables retailers to brand the entire store. It is often what sets retailers apart from each other, while leveling the playing field for chains and independents. Furthermore, private labels are no longer viewed as just a cheap alternative to national brands and, in some cases, prices may be higher.

In our most recent study, The Power of Private Label, ACNielsen looked at developmental trends in 38 countries and across 80 categories and 14 product groups. Globally, private label share of sales was up to 17% and grew 5% in the past 12 months alone. Geographically, Europe was the share leader with private label accounting for 23% of sales - bolstered by Switzerland, Germany, Spain, Belgium and the UK. North America racked up a 7% gain bringing private label share to 16%. However, as trade strengthens, emerging markets in Eastern Europe and South Africa are showing the fastest growth at 11% for the year, according to ACNielsen research.

Concurrently, private label products are making inroads across more product categories, with refrigerated products - particularly complete heat-and-serve meals - experiencing the greatest growth. This foreshadows further development of private label products and categories by retailers attempting to meet the needs of a varied shopper base.

Although private labels generally cost less, price is no longer the sole determinant among these shoppers. They understand that price is what you pay, but value is what you get. As such, there is no typical private label consumer. They represent a cross-section of households, age and income, and there is no correlation between price and the products having the largest share. Throughout the world, retailers ranging from Aldi and Tesco to Loblaw and Trader Joe's are using private label as a way to match their store to the lifestyles and values of their customers. Even in high share markets like Switzerland where private label makes up an incredible 45% of sales, the peak has yet to be reached.