Spartan Sets A New Pace With a New Face
By Jill Bruss - www.privatelabelbuyer.com

Grocery distributor and retailerSpartan Stores revitalizes private label.
More than 50 years old, Spartan Stores’ Spartan brand products have developed quite a heritage and a legacy with consumers. But while its loyalty has stood the test of time, its packaging was beginning to show its age. In Grand Rapids, Mich.-based Spartan Stores’ 55 retail grocery stores under the Glen’s and Family Fare banners and its hundreds of independently run stores stocked with Spartan brands, the green and gold packaging reminiscent of the 50s held its own for decades, until recently. The considerably retro Spartan brand design — only slightly tweaked since its introduction in 1953 — has undergone a complete redesign in the past year. The new clean, modern, white packaging featuring a redesigned Spartan logo graced with a heritage-green colored ribbon has brought private label to the forefront of the company’s growth initiative and has catalyzed the private label program. Six months into the company’s fiscal year, private label penetration is on pace to reach its year-end 20 percent goal, up significantly from the low- to mid-teens of years past.  

Spartan Stores has also undergone major corporate reorganization in the past 18 months, as the company becomes more retail-focused grabbing talent from leading retailers including Kroger, Giant Carlisle and Farmer Jack. And it has seen the results where it counts in recent months as second-quarter operating and net earnings were at the highest levels in the past three years. Recently released second-quarter operating earnings increased by more than 80 percent and net earnings tripled. Much thanks is due to a new management structure focused precisely on category management and a renewed focus on private label. And more recently, the company completed a strategic move in partnering up with Stamford, Conn.-based Daymon Worldwide and Topco Associates, Skokie, Ill.

Up-to-date packaging
“As we assessed our packaging, we felt a new look was needed to retain our loyal customers and attract new ones to the quality of Spartan brand,” says Sally Lake, vice president of marketing, pointing to the evolution of the packaging since the brand’s inception in the 1950s. A forward progression was in order, and progress the company did.

The Spartan brand now creates a bright and modern presence across the store with primarily white packaging featuring photography of the product and its usage. By fiscal year-end, Lake says, she would like to be 100 percent transitioned to the new packaging, and the organization is well on its way to accomplishing that goal at about 80 percent.

While the packaging transition is progressing swiftly, the decision to completely redesign the program wasn’t considered on a whim. Lake says she and the marketing team began working through the market research and marketing studies leading up to the redesign nearly three years ago. She worked closely with a Western Michigan-based advertising agency, Fairly Painless, to develop five or six new logos.

“Spartan brand recognition is 98 percent, that’s like Ronald McDonald and is extremely strong,” Lake says proudly. “When we did the research, we did it in our market and out of state, and the new label was preferred six to one over the old label from an aesthetics perspective and better representation of product on the package.”

The new private brand logo went over so well that it even landed on the signage on the corporate headquarters building, leading the way to an overall corporate logo makeover.

Category Management Makeover
With new and aggressive management entering the fold at the top of the organization in the past 18 months, the more than $2-billion grocery distributor and retailer has shifted the structure within the company and is making a concerted effort at practicing true category management. In years past, the Spartan Stores organization had a very segmented structure with a wholesale team, a retail team and a private label team, a design that was inefficient and did not allow Spartan Stores to effectively use the tools of category management.

“We integrated the teams and now we have category managers focusing on fewer categories, and who are experts in evaluating their categories and the role of private label,” says Alan Hartline, vice president of center-store merchandising.

Category managers now use their category expertise to keep an eye on innovation that can and should be brought into the Spartan program in national brands and private label.

Spartan Stores also brought ACNielsen data to the desks of category managers, giving them the opportunity to more accurately track retail product sales information and apply that knowledge. “The company now has a quantitative view of market place demand rather than its previous limited view of only those goods shipped from the company’s distribution centers,” said Dennis Eidson, executive vice president of marketing and merchandising, at the annual shareholder meeting.

“The new emphasis on category management has reshaped the company culture by focusing attention on the products consumers want to buy, rather than past practices of pushing products into the marketplace,” Eidson said. “The category management changes have contributed to the favorable sales growth performance and have helped to increase retail, distribution and individual product category market shares.”

“We created ownership with the category managers, and established scorecards to include a private label penetration target,” Hartline adds. “It’s a visible number that we look at weekly, and it gets everybody focused on the challenge.”

The shift to practicing category management has reset category manager’s priorities and is resulting in better-performing sections of the store that more precisely address consumer needs. “We also have a much more productive product mix, tying up less inventory dollars and having less out-of-stocks. All of that plays a role [in a successful private label program], and we’re starting already to realize the benefits,” he says.

With category managers focused on national brands and private label, and how they interact at retail, Spartan Stores is set to continue augmenting the private label portfolio throughout the year. With the new structure, syndicated data and processes in place for a year, Hartline says there are many categories the company has yet to impact.

“A lot the work we’ve been doing so far is really just the beginning,” he says, excited and optimistic about the progress still to come. “And we have received a positive response from our distribution customers with whom we have shared the benefits of this approach.”

Spartan works very closely with distribution customers to garner their expertise in their markets and make educated and successful decisions together. Spartan’s refocused category management and new resources allow the company to put the consumer at the end of every decision, a benefit to all Spartan stores, corporate-owned or independent.  

Teaming Up
Daymon Worldwide is known for having in-house brokers embedded in retailers nationwide. Retail execs have said that some Daymon associates are so much a part of the organization that other employees don’t necessarily know whether or not Daymon associates actually work for the retailer, and that’s the Daymon strategy. A new relationship between Spartan and Daymon was created in March 2004, as Daymon is well-known and established in private label sourcing and marketing.

“Spartan Stores has a strong program that needed some new strategies to get to a whole new level,” Hartline says. “We sought new partners to get us there. We wanted the global visibility from Daymon to help us with branding our program and understanding what best-in-class retailers are doing.”

Joining Topco Associates brought Spartan Stores the benefits of being part of a large and efficient buying group, as Topco’s co-operative-like format creates powerful leveraging capabilities for the organization and offers great benefits to its members. Topco is known in the industry for helping push private label programs to new levels and meet new consumer needs with the company’s product offerings to its members.  

“With Daymon on the sell side and Topco on the buy side, we’re really trying to evaluate the whole portfolio of our brands and make sure we’re meeting all the consumers’ needs,” Lake says.

As the Spartan private label programs grows, Lake cites numerous marketing opportunities she’d like to explore, including more strategic use of the Catalina front-end coupon system and comprehensive use of the company’s Web site to drive private label presence and spread marketing messages.

Both Hartline and Lake are extremely optimistic about the future of the partnerships with Daymon and Topco as these new relationships are “only in their infancy.”

Take It One Tier at a time
With new packaging making a huge impact on already committed consumers and category management in action, the Spartan brand has been the centerpiece of the company’s private label program. Interestingly, Lake says, in 1953 when the Spartan brand was introduced, a time when retailers where introducing private label as a generic, inexpensive offering, Spartan Stores wanted to offer a national-brand-equivalent program. Where the majority of retailers have had to transition their private label from generic to national brand equivalent, Spartan already had the quality standards in place.

Now, still in the national-brand- equivalent-or-better position, Spartan is flanked by first-tier premium goods under the Bayberry Farms label and third-tier value items under Home Harvest. While Bayberry Farms and Home Harvest haven’t been in the crosshairs of Spartan associates’ diligent transition work, addressing the first and third tiers in the coming year is priority.

“What we want to do is strengthen the Spartan program first and foremost – packaging, product quality and assortment,” Hartline says. “We want to move the Spartan brand to the level of our expectation, and then we’ll look at the other programs.”

Bayberry Farms and Home Harvest are temporarily on the back burner, however, the overall private label program has grown with the introduction of Full Circle, a natural and organic line acquired through the Topco relationship.  

“As we build equity in the Spartan program, Full Circle is just one more program we can offer to our customers,” Hartline says. “It meets the need of today’s active and health conscious consumer.”

Spartan is also leveraging the Topco relationship in health and beauty care. The company is beginning to transition the Top Care line into the mix. Top Care offers Spartan a full product line with benefits including quality packaging, variety, inventory, warehouse turns and promotion support.

Successfully Filling the  GAPs
A big initiative in place on the Spartan brand is to fill gaps on the shelf to be sure there’s a complete offering to consumers – get the right products on the shelf at the right time. But new product introductions have been, and will continue to be, taken very seriously so as to prevent a proliferation of new products before the quality levels have met the company’s standards.
“We’re taking a more disciplined approach because we really believe private label is our crown jewel,” Hartline says.

Spartan brand ice cream is the company’s most recent example of its new product and private label strategies. “Part of our strategy is to have a good value to the consumer, a real quality product that becomes a destination for the consumer,” Hartline says. “Our new ice cream, for example, is a real indulgent product where taste is critical. We put a focused effort on developing a high-quality product.”

And when the ice cream debuted earlier this year, Spartan was diligent about establishing the product as a high-quality item, truly national brand equivalent, if not better, thanks to a focus on R&D and innovative flavor development. Spartan used its in-house demo resources to offer multiple demos in its corporately owned and independent stores. Consumers had a chance to try it, and so far, the response to the 13-flavor line has been positive.  

In the refrigerator case, the Spartan brand lineup did not have an offering in yogurt. No longer a gap, Spartan launched a yogurt program with a product that has gone head-to-head with leading national brands, according to Lake. The packaging, Lake says, compares with the national brands because of its bright color and design, and its foil-lid seal. Spartan looked carefully at national brand packaging when planning the yogurt launch, realizing that a significant cost-savings was possible with a simpler foil-lid closure, eliminating the plastic lid used on one of the leading national brands. Consumer reaction is clear in the category, considering one leading brand has the lid and the other does not, yet market share is fairly evenly split.  

Thanks to the confidence driven by the new packaging and its success so far on current and new items, the Spartan team looks to go beyond national brand equivalency and still offer value, and it’s clear there is innovation to come.  

Another strategy getting some attention is the potential to identify solution categories in the store, areas where private label stands to be the only offering. In looking at best-in-class retailers, Hartline says solution categories can be extremely successful. Categories such as baking nuts and cotton balls are areas that can serve the Spartan brand well.

Currently, Spartan is working on developing an artichoke heart offering, a specialty item that appeals to a select customer. “With a high-quality item, we can offer consumers a great experience with a Spartan brand product, and we create a good entry-point for this [new] consumer,” Hartline says. He adds that this new product may, in fact, determine whether this category could be a solution category for the Spartan brand.

In the cereal aisle, a Spartan brand has already proven it can stand alone as bagged cereal has now become a solution category. Merchandised near the edge of the cereal section, newly packaged bag cereals carrying a fun and kid-friendly character are stacked vertically to create a strong visual of the Spartan brand. Consumer purchase data showed a strong preference for Spartan brand in this category, leading Spartan to discontinue the brand alternative. “The consumer was voting that they were willing to purchase Spartan brand cereal,” Hartline says.  

Another area of opportunity in the eyes of Spartan execs is the perimeter of the store — a focus on fresh to be spearheaded by a new vice president of fresh, Brian Haaraoja. “When you look at statistics of breakout from center-store to fresh, we definitely have opportunity,” Lake says. “We have to look at what the best-in-class retailers are doing and where the gaps are. We’re not going to take commodity-type products, that’s not the philosophy, but with our brand recognition and the strength we have in the brand, there are some opportunities that we can fulfill.”

Finding and seizing opportunities is the driver for Spartan Stores’ executive team and the category managers who are now focusing on national brand activity as well as private label growth. Spartan employees have taken to the shift in philosophy, executives agree, and the future is bright for Spartan Stores’ private label program.  

“We’re embracing private label and the impact of what it means to our overall business and the equity to our distribution customers,” Hartline says. “Our efforts are paying off, and we’ve made the right decisions and have gotten the focus necessary to move forward. Spartan has a renewed focus on its private label program, providing customers with unique, meaningful products and programs that have destination potential. We’ll build consumer loyalty and create a competitive advantage in our marketplace.”

Spartan’s got an energized team that is setting a new pace with a new face. PLB