This document summarizes the private label landscape in Canada and lessons that can be learned by US retailers. Private label market share has declined for six consecutive years in Canada as national brands have increased promotional pricing. However, Canadian retailers are taking steps to revitalize private labels through new store formats, extensive new product introductions, and treating private labels more like brands. The declines were caused more by lack of brand support than consumer saturation with private labels. US retailers can learn that private labels require continual innovation and marketing support to be successful.

1. Cover Story PL LESSONS FROM CANADA
BY LYNN CELMER
BY LYNN CELMER
Message
from Canada
While Canada has been a private label hot spot in the past, PL market
share has dropped there for six consecutive years. Here’s why, and what
U.S. retailers can learn from the Canadian private label experience.
A
lthough private label can be found in global private label report.
every household in Canada, private label Private label’s dollar share in Canada
market share has remained relatively stood at 18.1 percent across all categories in
static over the past year as national brands have 2010, according to the Canadian Private Label
met Canadians’ thirst for value by driving more Review, another Nielsen publication. That’s
sales through feature pricing, according to The down slightly from 18.4 percent in 2009, and
Rise of the Value-Conscious Shopper, a Nielsen represents the sixth consecutive year market
share for private label has fallen in the Great
White North.
Does the Canadian experience mean that
North American consumers will only buy so
much private label and no more? And do market
share declines there bode ill for U.S. private
label retailers?
Not exactly, say veteran Canadian food
retailing experts. Canada’s private label slide
has more to do with retailers not treating their
private label offerings as brands than it does
with reaching a shopper saturation point. Quite
simply, what happened in Canada is that private
label brand support dropped and consumers
shopped elsewhere.
This year, though, Canadian retailers are
charging back, rolling out new store formats
that emphasize private label, introducing a
wide range of new private label products and
even repositioning their private label to better
connect with consumers and the changing
demographic trends in Canada.
“I don’t think there’s anything pressing to
say that this trend will continue,” said Jeff
Doucette, principal for Alberta-based retail
consulting firm, Sales Is Not Simple, regarding
PL sales declines in Canada. “I think what
was happening was many retailers, outside of
In the summer of 2010, Toronto-based drugstore chain Shoppers Drug Mart launched Etival
Loblaw, were consolidating their private label
Laboratoire, an exclusive dermatological skin care line.
brands and probably creating a bit of brand
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2. PL LESSONS FROM CANADA Cover Story
“Retailers are recognizing
that it’s not a mass market
anymore and that you
really have to have special
formats targeted to very
specific segments. We’re in a
very micro-merchandising,
micromarketing environment.”
— John Torella, global research
consultant, J.C. Williams Group
confusion with the shoppers in J.C. Williams Group. “Retailers company had such success last “Our customers response to
the stores.” are recognizing that it’s not a year with down-sized private our line of President’s Choice Ice
mass market anymore and that label offerings that it decided to Cream Shop Flavours has been
New Formats you really have to have special stick to the mini theme. Some nothing short of phenomenal,”
In 2010, Stellarton, Nova Scotia- formats targeted to very specific of the new President’s Choice said Allan Lindsay, vice
based food retailer Sobeys, segments. We’re in a very micro- brand mini products for 2011 president of marketing at
launched Freshco, a hard merchandising, micro-marketing include fully cooked fire- Loblaw Companies Ltd. “So
discount format which some environment.” roasted sweet Italian mini pork much so, we’ve had to double
say took some inspiration from sausages, Smokin’ Stampede production for some of the most
Tesco’s Fresh & Easy chain. New PL Products brisket sliders and Blue Menu requested flavors.”
In addition to the Freshco The largest national food retail Angus sliders. Other products Sobeys, Canada’s second
brand line, the stores also store in Canada, Loblaw, No. include a S’mores kit, coconut largest food retailer and No. 11
carry selected varieties of the 6 in our exclusive PLBuyer cream pie, spicy tzatziki on our Top 30 list, revamped
Compliments and Sensations Top 30 Private Label Retailers yogurt dip, peanut butter-filled its private brand portfolio last
by Compliments private label ranking(See PLBuyer, September pretzels, The Decadent ice cream year. The company conducted
product lines, as well as Sobeys 2010) saw private label sales of sandwiches, and yes, five new consumer research and found
value private label brand, Signal. $8.2 billion, or 26 percent of total ice cream flavors. out that customers were
Not too long after Target grocery sales, in 2010,
announced its plans to enter down slightly from
the Canadian market, taking 2009, according to the
over leases for up to 220 former Canadian Retailer Year
Zellers stores owned by retailer in Review from Sales is
Hudson’s Bay Co., Loblaw Not Simple, an Alberta-
announced plans to open 20 based retail consulting
stand-alone Joe Fresh stores firm.
in Canada. The stores feature In 2010, Loblaw
private label apparel for men launched 1,200 new
and women, a kids collection, private label products,
intimates and sleepwear, including 14 President’s
swimwear, sunglasses, jewelry Choice Ice Cream Shop
and beauty and bath products. flavors, Angus sliders
Expect to see more retailers mini beef burgers,
rolling our alternative formats sparkling fruit juice
in an attempt to sell more and bite-size mini
private label, according to tarts. It also redesigned
John Torella, global retail packaging on a further
consultant with Toronto-based 300 products. The
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3. Cover Story PL LESSONS FROM CANADA
trends poll for Sobeys by Harris/
Decima revealed that Canadians
are increasingly choosing private
label products in fresh categories
such as dairy, fresh produce,
fresh meat and fresh baked
goods, so to meet consumer
demands, the company last
summer launched products
in several fresh categories,
including fresh salad kits, a
variety of fresh Pesto flavors and
sundried tomato and basil goat
cheese, all under its Sensations
by Compliments label. Just in
time for summer 2011, Sobeys
has introduced two new items in
its Sensations by Compliments
CNW Group/Loblaw Companies Limited
line: Korean-style beef burgers
and Angus beef sliders.
The third major player in
Canada’s retail food sector,
Metro, is looking to tap into the
growing health and wellness
demands of consumers by
Brampton, Ontario-based Loblaw sampled its newest President’s Choice brand minis by bringing a barbecue trailer to its
launching its Irresistibles
170 stores throughout the summer.
Gluten Free product line this
May. Metro’s gluten-free line
misinterpreting the positioning is said to be the only Canadian
of its three-tiered private label private label gluten-free line
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“The problem with private label in
To O Loyal Customers That Suppo ted Us This Year
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ea Canada and, in fact, throughout North
America, is that many big players in the
retail industry are digressing back to
programs that look and feel more like the
generic, systematic programs that were
prevalent years ago,”
Excellence in Private Label Partnership Programs
— Patrick Rodmell, president and CEO,
Watt International
National Brand Equivalent
New “Good For You” Snacks
had the Compliments brand Canadian shopping aisle,
Full Line Snack Manufacturer appearing on all three tiers. Shoppers Drug Mart also is
After seeing the results of its showing its commitment to
Production Plants in Perham, MN & Phoenix, AZ consumer research, however, private labels. In the summer
it decided to rebrand its of 2010, the retailer launched
economy line as Signal, to keep Etival Laboratoire, an exclusive
1-800-346-4910 Compliments as its national dermatological skin care line
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said to be uniquely tailored to
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its “affordable indulgence line.” age groups and skin types. The
A spring 2010 consumer retailer, in 2010, also launched
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4. Cover Story PL LESSONS FROM CANADA
an exclusive bath line called Bath
Retreat and introduced new sun
care products under its Life Brand.
The other major Canadian
drugstore player, Jean Coutu,
also has been expanding its
private label offerings with
the rollout of two exclusives in
beauty: StudioMakeup and The
Balm. The retailer also launched
an Eco Nature line of feminine
hygiene products under its
Personnelle brand and a co-
branded Personnelle-Shrek line
of diapers and training pants.
In 2012, it plans to introduce
several new private and
exclusive label products as well.
On Trend
Private label represents big
business in Canada, bringing in
nearly $11.4 billion of revenue,
according to The Rise of the Value-
Conscious Shopper, a Nielsen
In 2010, Stellarton, Nova Scotia-based food retailer Sobeys, launched Freshco, a hard discount format which carries selected global private label report
varieties of the Compliments and Sensations by Compliments private label product lines, as well as Sobeys value private released this March. Private label
label brand, Signal. performance varies by category.
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5. Cover Story
In Canada, private label Patrick Rodmell, president and
outperforms national brands CEO of Watt International, a
only in produce and health and Toronto-based integrated retail
beauty. agency. “The gap between the
“In both produce and HBC, quality perception of private
I don’t believe that consumers label and national brands is
feel there is a decided difference widening. I think this trend will
in quality,” said James Fraser, reverse only when retailers start
partner with Toronto-based investing in their private brands
design and branding agency as opposed to only looking to
Hunter Straker. “They can be take costs out.”
a smart shopper by saving on “I believe we are just entering
those items where quality is into a tougher economic climate
equal or better and they spend and consumers increasingly
more on those items (outside are going to be trading up and
of produce and HBC) where PL down depending on the category
definitely has a halo of inferior they’re shopping in,” said Doug
quality or performance. It’s all Stephens, president of Retail
part of the consumer practice of Prophet, a Toronto-based retail
trading down so that they can consulting group. “The mid-
afford to trade up.” tier offerings will continue to
Every household in Canada take a beating. I believe we’ll
buys private label, with an see a renewed level of growth
average spend of $844. Heavier in both private label and luxury
spenders tend to be concentrated offerings.”
among younger households with What’s important for U.S.
kids and also with higher than retailers to take away from all
average incomes. this is that the private label
Private label share is strongest market share declined in Canada
in the Maritime provinces on when retailer focus was taken
Canada’s East Coast and in away from marketing private • SALAD DRESSINGS • MARINADES • TARTAR SAUCE •
BARBECUE SAUCE • MAYONNAISE
• MARINADES • TARTAR SAUCE
Western Canada, but losing label as brands.
share. “I think that Loblaw over the
While private label is the
most developed in the grocery
channel, it is gaining share
past couple of years has gotten
really caught in managing its
supply chain and reorganizing,
Trust ®
within the drug, warehouse and
mass merchandiser channels for
typical grocery categories.
while Metro was caught up in a
merger and Sobeys in a merger
and rebranding,” said Doucette.
with your reputation.
We know that your label is only as good as the product
Look to see continued “The private label business inside. At Cains we strive to provide quality products that
Canadian private label needs to still be a main part of will enhance your image and build repeat sales and profits.
growth in the health and your competitive steering wheel Cains offers a wide array of product formulations and
beauty aid category due to as you go through any change. packaging to match market leaders
underdevelopment, according to When you take your foot off of and meet all your private label needs.
the Nielsen report. the gas like some of them have
The private label household in the past couple of years, you
in Canada is becoming smaller, see the results.
older (boomer), adult only with “Like any national brand
BARBECUE SAUCE • MAYONNAISE
higher incomes, according to company, the pipeline needs
• MARINADES • TARTAR SAUCE •
Nielsen. to continually be full of new
With this shift comes a unique innovations, ideas and fresh
set of needs: smaller sizes, health packaging and you need to
& wellness, premium and adult continue to push and find that
preferences. real, star product that will allow
you to stand out from all of your
Lessons to Learn competitors.”
“The problem with private Therein lies the major lesson
label in Canada and, in fact, U.S. retailers can learn from
throughout North America, is their Canadian cousins. Growing
that many big players in the private label sales requires a brand
retail industry are digressing commitment that includes being
back to programs that look innovative with new products,
and feel more like the generic, being well-positioned and being For information on customizing a private label program please contact
systematic programs that were supportive with marketing and Cains Foods L.P. • retail@cainsfoods.com • 978-772-0300
prevalent years ago,” said other brand necessities. PLB SALAD DRESSINGS • MARINADES • TARTAR SAUCE •
WWW.PRIVATELABEL BUYER.COM J U LY 2 0 11 PLBUYER 29