The line of organic and natural products is branded under the Full Circle label, a completely new private-label brand for the family-owned supermarket chain. The Full Circle brand, which contains about 120 items to start at Raley's (there are about 500 items in the brand) with more skus coming soon, will be represented througout the store. product categories include grocery, produce, fresh meat, seafood, household cleaning products, and vitamins and dietary supplements, says Raley's spokesperson Amy Johnson.
Full Circle is what we define as a turnkey or quasi store-brand for mid-sized, regional supermarket chains such as Raley's. The brand was created and is marketed by the product developer and cooperative wholesaler Topco Associates and is designed to serve as a grocer's regionally-proprietary natural and organic products' store-brand.
Only one regional chain in a market area is licensed to sell the brand. For example, Raley's will be the only grocery chain in Northern and Central California to merchandise Full Circle products in its stores.
For all intents and purposes then it serves as a store brand in the retailer's market region. It's sort of a cross between an actual retailer-created brand and a national brand in that it is proprietary yet has some brand equity by virtue of the fact that it's sold by other chains outside the retailer's market area. In the natural and organic grocery categories its a way for a medium-sized grocery chain to acquire a multi-sku and multi-departmental store-brand without having to create one from scratch, which isn't feasible in most cases.
Other regional chain's merchandising the Full Circle natural and organic products' brand include: Arizona-based Basha's; Stater Bros. in Southern California; Giant Eagle Foods, which has stores in Ohio, West Virginia, Maryland and Pennsylvania; and Bi-Lo Supermarkets, which operates in the Carolinas, Georgia and Tenessee.
About the brand
Full Circle brand organic products are U.S. Department of Agriculture certified organic, produced using sustainable farming methods, pesticide and synthetic fertilizer-free, and grown without the use of any artificial antibiotics or growth hormones (the fresh meats and produce). Additionally, none of the organic food items come from genetically modified seeds or have been exposed to irradiation, according to Johnson.
The Full Circle natural products' items adhere to the following criteria: They are as close to a "natural" state as possible; are free of artificial ingredients, colors, preservatives and other chemicals; have minimal if any refined ingredients, and are packaged in recyclable packaging. All of the Full Circle organic items have the same product attributes as the natural products, in addition to the organic criteria listed above, Johnson added.
Further, the fresh seafood items carrying the brand are wild-caught and feature the Marine Stewardship Council logo on each package. The council is a third-party environmental group that certifies high-environmental sustainability standards for fisheries. The houshold cleaning products contain no toxins, and the vitamins and dietary supplements are free of chemical solvents or stimulants.
Raleys a pioneer in natural and organic products categories
Raley's is a pioneer in the natural and organic products' categories in the U.S. The retailer created store-within-a-store-style natural foods departments featuring natural and organic grocery products, beverages, vitamins, dietary supplements and non-foods products over 30 years ago in the 1970's. It was one of the first chains in the U.S. to make this level of commitment to the categories. In its new stores, these departments can be as big as 10,000 square feet. The Full Circle brand items will be integrated throughout the stores however, rather than placed in the natural foods departments, with some exceptions.
The Sacramento-based grocer also was one of the first chains in the U.S. to sell organic produce and to have all of its fresh produce certified as having "no detectable" levels of pesticide residue by a third-party private lab. The retailer continues third-party testing this policy today and has expanded it from a portion of its produce items to all those it sells.
Raley's, which does about $3 billion a year in gross sales in its 120 stores, has an extensive store brand program across all store departments which includes a value line, a mid-range line, a premium line and an artisan, specialty foods brand called Nob Hill Foods, which also is one of its four store banners.
[Raley's four retail store banners are: Raley's, 60,000 -to- 80,000 square foot superstores with an upscale flair; Bel-Air, 30,000 -to- 55,000 square foot supermarkets with slightly more upscale positioning than the Raley's banner; Nob Hill Foods,which vary in size from about 30,000 square feet (older stores and those in smaller communities) to about 65,000 square feet (newer stores), and with the exception of a few older stores are the grocer's premium, upscale store format; and Food Source, which is a price-impact warehouse store format.]
Three of the four banners--Raley's, Bel-Air Markets and Nob Hill Foods--all feature extensive selections of natural, organic, specialty, ethnic and gourmet grocery and fresh foods products, along with non-foods items in all five categories.
All three formats are positioned as primary grocery shopping venues but with "More"--which are the upscale elements and product selections listed above. Even its Food Source warehouse stores carry far more natural and organic products than the typical warehouse format stores do. The grocery chain's positioning statement is: Celebrate Food. Celebrate Life. Many observers refer to Raley's as the "West-Coast version of Wegmans," the innovative and popular upscale supermarket chain based in the eastern U.S. Of course, in Northern California they call Wegmans the "East- Coast version of Raley's."
Even though Raley's is a national pioneer in natural, organic and specialty products sales, and has long had an extensive range of store brands, it has come rather late to the game (especially for its positioning) to the merchandising of "its own" natural and organic products brand--Full Circle. Even though not quite all its own in terms of the brand's creation, its pretty close. (Perhaps Full Circle is a metaphor of sorts for Raley's, as well as a brand, in that the chain is coming back full circle to its roots as a natural products' category retail leader of sorts?)
For example, Safeway Stores, a major competitor in Northern and Central California created its popular O' Organics brand of grocery products over a year ago. The line now has over 300 items in it and had first-year sales (2007 was its first full year) of $300 million dollars. Of course, those sales represent the brand's presence in over 1,700 Safeway-owned stores in the U.S., a luxury Raley's doesn't have with 120 stores.
Raley's has historically been far ahead of Safeway--and has generally been the Northern California supermarket leader--in the natural and organic products' category. So the fact the grocer is just coming out with its own brand of natural and organic products now has been a suprise to many industry observers and competitors. Of course, with Safeway's major push into its Lifestyle format its become a category leader in its own right in the last five years.
Raley's coming 'full-circle' with new Full Circle brand
However, the Full Circle brand is here, and Raley's store associates began stocking the shelves and perishables cases with the products in its 120 stores today. The grocer's marketing philosophy behind the merchandising of the brand is that it believes it can use it to further leverage its positioning in the healthy and premium foods segments, compete with rivals like Whole Foods Market, Inc., Safeway and others who are big in the natural and organic products' categories, and add significant store sales due to the fact that the organic category has been growing at over 20% annually for the last five years, and will continue to do so for a number of more years to come.
Store or private-label organic products' brands also generally bring retailers higher gross margins than manufacturer brands due to the following facts: the cost of goods is lower, there is no middle man (a third party distributor who takes a cut), and marketing costs are lower because the retailer can use its existing media and in-store merchandising vehicles to promote the organic brand.
Store-brand organic and natural products' mega-trend
As we've written about here often, there's a mega-trend among national and regional food retailers to create and market store or private-label organic products' brands. In addition to Safeway Stores, Inc.'s O' Organics brand, which the chain is growing far-beyond its current 300 items, Kroger Co. also has an extensive organic grocery products' store branded line, in addition to a growing private-label natural products' brand. Costco Wholesale also is a major player in store brand organic and natural products with its Kirkland brand. Costco even does co-branding with major organic foods manufacturing companies.
Smaller regional chains like Publix and Wegmans also have private-label organic products' brands and are in the process of growing the number and variety of skus they offer under their respective brands. Other food retailers like Trader Joe's and Tesco's new Fresh & Easy Neighborhood Market stores are selling nearly all of the natural and organic grocery products in their stores under their own brands, offering only a limited selection of manufacturer branded items and lines.
For Raley's, the Full Circle brand should help boost the grocer closer to the top-tier of natural and organic products' category retail leaders in its market. The competion in Northern California and Nevada today is much stronger in the categories at retail than it was just ten years ago however.
For example, Whole Foods Market has 25 stores in Northern California and plans to build at least another 20 in the next four years. Additionally, Safeway is becoming a major organics category leader as it continues to develop its Lifestyle format stores in the region, adding more and more O' Organics items across all store categories.
Further, Fresh & Easy Neighborhood Market is coming to the region with 18 stores in late 2008 and 2009. Trader Joe's continues to built new stores throughout Northern California as well. Costco continues to expand its private-label natural and organic products' selection in its local stores as well. Even Long's Drugs, a Northern California-based national drug store chain created an organic and natural products' grocery brand called Walnut Acres last year which it is selling in all of its stores in the region at discount prices.
On top of all this competition there's a myriad of multi and single store independent supermarkets and progressive natural foods stores in the region which offer extensive selections of organic products, some even having their own private labels, or buying a control natural and organic brand from their wholesalers, which is a scheme similar to what Raley's is doing with the Full Circle brand.
Raley's is playing catch-up ball with chains like Whole Foods, Safeway and others in Northern California when it comes to having its own (or quasi-own) organic products brand. However, the grocer also has a strong core of natural and organic products' customers--and as we mentioned earlier has been selling manufacturer branded organic foods and grocery products since the 1970's, long before most other supermarket chains were doing so. As such, while it is a catch-up game to be sure, the Full-Circle line should be a net positive for Raley's, especially in light of its positioning as a leader in specialty and natural foods and upscale merchandising.
There's nothing wrong with a grocery chain trying to come "full-circle," especially when they're on trend.