Stuffed into yesterday's Sunday newspaper editions in newspapers located throughout the U.S. were the weekly advertising circulars from major mass merchandisers Wal-Mart and Target, and national drug chains Walgreens and Longs.
The advertising circulars from these retailers were chalk-full of natural, specialty and premium food and grocery products offered at promotional prices, which demonstrates how these retailers are continuing to blur the class of trade distinctions between retail format sellers of products in these categories.
The nature of these advertising circulars (they are far from the first ones we've seen by the way) also further demonstrates what we've written about before in Natural~Specialty Foods Memo (NSFM), and observed continually over the last couple years, which is that these "alternative format" retailers continue to add a more extensive assortment and wider variety of natural, specialty and premium food and grocery brands and items to there store product mixes, along with figuring out promoting the category items is good for their business.
below is an overview of the natural, specialty and premium food and grocery products each of these four retailers are promoting in this week's advertising circulars, which were to distributed to millions of American consumers yesterday in their Sunday newspapers, as well as been direct mailed to many homes:
Wal-Mart's weekly advertising circular is one of the biggest (24 pages) we've seen the retailer distribute in years. Being "the peoples retailer" the brawny big box retailer from Bentonville's promotional circular for this week includes everything from basic grocery products like toiler paper, laundry detergent and Hamburger Helper, to television sets, patio furniture and kids toys.
The 24-page advertising peice is part of Wal-Mart's month-long April Earth Month campaign. You can read more about it here and here.
However, the retailer devotes at least one-fourth of its 24 page advertising circular (the most we have every seen it do) to natural, organic, sustainable "green" products--including food, groceries, beverages and even clothing. Here's a look:
The Wal-Mart weekly advertising flier devotes almost an entire page to promoting Clorox Co.'s new line of Green Works all-natural cleaning products, which include bathroom cleaners, toilet bowl cleaner, window cleaner and other cleaning items. The entire "green" cleaning products line, which Wal-Mart was the first U.S. retailer to merchandise and sell per an agreement with Clorox, is promotionally-priced at 2 for $5, which is about 25% off the items in the line's everyday prices.
Additionally, Wal-Mart is introducing its new line of Sam's Choice brand of Fair Trade, organic, premium whole bean coffee in this weeks advertising circular. The line, which has has six varieties, is USDA certified organic, Fair Trade certified and endorsed by the Rainforest Alliance environmental group.
The 10-12oz whole bean coffee items are being promoted at a price of $5.88 for a 10-12oz bag. The graphics on the package connote both sustainability and premium quality, with a background of a lush green coffee field, the certified organic and Fair Trade organization logos on the front of the package, and text which evokes premium quality.
In its current 24 page advertising flier, Wal-Mart also is promoting its own reusable shopping bags at $1 each, PUR brand home water filters as an alternative to bottled water (and reusable metal water bottles as well), and a limited addition offering (at 60 cents each) of "Earth Day," green and white labeled (instead of the traditional red and white) Campbell's condensed soup.
The "Earth Day" Campbell's soup is touted as "green" for two reasons: the cans are 100% recyclable and source reduction, do to the fact that condensed soup which must be mixed with water results in much smaller cans than ready-to-heat canned soup. As a result, far less tin is used per-can than is the case with ready-to-heat canned soups, which Campbell's also sells by the way.
There are additional "green" food and grocery items promoted in the advertising circular. Further, Wal-Mart devotes nearly an entire page in the thick promotional flier to "transitional organic cotton T-shirts for men, woman and boys and girls. Transitional organic cotton that comes from fields in which farmers are just beginning to transition from conventional production to organic methods.
In the ad circular Wal-Mart says its buying products produced with transitional cotton as a way to encourage further transformation by farmers to organic growing methods for their cotton production Further, it suggests in the promotion that by buying the "transitional organic cotton-produced" T-shirts, consumers can join in with Wal-Mart to encourage farmers to make the transition from tradition to organic cotton production.
Lastly, the Wal-Mart advertising circular devotes a half-page to two natural, new-age beverage lines: the Vitamin Water line (now owned by beverage giant Coca-Cola) at $1 a bottle, and a new line of cranberry juice and green tea drinks called Cranergy from cranberry juice-maker Ocean Spray. The Ocean Spray line looks like it comes from a small, natural beverage company.
Finally, Wal-Mart sets off all the natural, organic and sustainable products in its weekly promotional circular using its green "Save Money Live Better" logo, which has become its trade mark for "green" or sustainable marketing.
This week's Target advertising promotional circular, which just happens to be 24 pages like Wal-Mart's, features a mix of its Archer Farms corporate brand natural, specialty and premium food and grocery products on the front of the circular, setting the tone for the promotional publication, which is health and wellness.
On the front cover, with full-sized color pictures of each item, Target is promoting a variety of Archer Farms' brand natural and premium products.
For example, there's Archer Farms' brand premium whole bean coffee in numerous varieties. The coffee is promotionally-priced at two 12oz packages for $11.00. The front page of the circular also features Archer Farms' all-natural, premium frozen pizza's at 2 for $7, Archer Farms' baked natural potato snack crisps priced at $1.88 per bag, Archer Farms' yogurt-drizzled all-natural Fruit & Oat snack bars (2 for $5), and a line of Archer Farms' brand premium, all natural ready-to-drink flavored green tea in flavors like Pomegranate.
This week Target also is promoting its entire line of Archer Farms' brand natural, organic and premium/specialty food and grocery products in all its stores for 15% off, which it flags in a circle on the advertising circular's front cover.
Inside the 24 page circular, Target also is promoting Vitamin Water at $1 each, as well as a number of other natural and specialty items. And, being a "peoples retailer" as well, albeit a more upscale one, the 24 page target circular also promotes everything from Nabisco Ritz Crackers and Coca-Cola, to computer printers, inexpensive upscale furniture, trendy Dyson brand vacuum cleaners, cell phones and more.
Perhaps most interesting in terms of natural and specialty products' retail channel blurring has been what drug chains like Walgreens, Longs and others have been doing recently. These retailers have been increasing the variety and quantity of natural, organic, specialty and premium food and grocery products (as well as natural cosmetics and garden supplies) in their stores for the past few years. It's been in just the last year though that we've seen these drug chains increase their offerings in these categories substantially, along with promoting the items regularly in their weekly advertising circulars.
Let's take a look at Long's advertising circular for this week, which came out yesterday in most of the U.S.:
Longs' 16 page advertising circular for this week has numerous natural, specialty and premium food, grocery and beverage items in it at promotional prices. For example, there's Starbuck's Frappucino iced coffee drinks at $5.49 per four-pack, Dannon Frusion Yogurt drinks at 2 for $3 and a number of promotionally-priced premium wines.
In the specialty and gourmet products' category, Longs' is promoted imported Nutella Hazelnut Spread, extra virgin olive oils, Ghirardelli premium dark chocolates, Bigelow, Stash and Lipton specialty teas, and a number of natural and organic grocery items and beverages under its own Walnut Grove label, which is a private label the drug chain created about two years ago--and has been expanded--devoted to natural, organic and specialty products.
Not to be left out among the natural and specialty foods category class of trade blurring party is mega-drug chain Walgreen's. While Longs' has long sold a strong selection of basic grocery products in its drug stores, and started adding natural and specialty foods in a small way nearly 10 years ago, Walgreen's came a bit later to the party--but that's changing.
Even though Walgreens' operates fairly small-format drug stores, the retailer has been increasing the quantity and variety of food and grocery products it stocks in its stores, including adding natural and specialty items, and promoting them in its weekly advertising circular on a near-weekly basis.
Let's take a look at Walgreens' weekly advertising circular for this week:
While not quite a extensive and broad-based in natural and specialty category items it's promoting in its circular this week compared to competitor Long's, Walgreen's still offers numerous items, especially for a mainline drug chain.
Among these natural, specialty and premium food, grocery and beverage items include: ZeroCalorie brand Vitamin-Enhanced Water, which looks much like the Vitamin Water brand which Coca-Cola acquired from Glaceau for billions last year. Walgreens' promotional price on the product is a buck-a-bottle, the same as Wal-Mart and Target are selling the "big brand" for this week
Walgreens' also gets into the premium coffee promotional game, advertising Starbucks premium whole bean and ground coffee at $7 per 12 oz package.
The national drug chain also is promoting Dreyer's most-premium variety of ice cream, Lindt and Ghirardelli premium quality milk and dark chocolate items, and a new line of its own Walgreeng brand premium nuts (cashews, pistachios, almonds) packaged in very upscale-looking stand-up-style packages.
The drug chain also has Blue Diamond brand's line of premium nuts in this weeks advertising circular, along with a number of natural nutritional supplement items and vitamins. There's also organic potting soil and garden mulch advertised in the promotional flier.
The natural~specialty channel blurring continues
As we've discussed in NSFM before, there's been a continual blurring in the natural, organic, specialty and premium foods categories in the U.S. over the last ten years, with the class of trade blurring trend being particularly strong in just the last three years.
This isn't to say mass merchandisers like Wal-Mart (in its discount stores not Supercenters) and target (its regular Target stores not SuperTarget which have full supermarkets in them like Wal-Mart Supercenters) and drug chains like Long's and Walgreens' are going to compete head-to-head with such natural and specialty foods grocers like Whole Foods Market, Safeway Lifestyle and the numerous regional chain's and multi-store independent supermarkets and natural foods stores in the U.S. that specialize in natural, specialty and premium food and beverage sales. That's not the case--or the issue.
Rather, the point is these "alternative format" retailers are doing two things: First, by expanding their store selection in the respective categories they are broadening the popularity of natural, organic, specialty and premium products. This is a good thing for the industries. They also are exerting more price competition in the categories by promoting the items, which results in upscale supermarkets and supernatural and natural foods retailers having to get more price competitive in their retail pricing strategies.
However, on the retail side of the ledger, it's a fact these alternative retail channels are taking away some sales from the above mentioned format grocers. After all, every jar of gourmet or imported jam, each bag of organic coffee, each quart of organic milk, and every bar of premium dark chocolate that's purchased by consumers at a mass merchandiser or drug chain, means these items aren't being purchased at Whole Foods, SuperValu's upscale Bristol Farms in Southern California, Wegmans in New York and scores of other specialty and natural products merchandising-oriented and positioned grocery chains located throughout the U.S.
The retail class of trade blurring in these respective categories is an interesting phenomenon to observe and analyze. It also should be of particular interest to natural and specialty food and grocery manufacturers and marketers. Many of these folks know little about what's going on in these alternative channels. Those manufacturer's and marketers who are participating and selling to many of these retailers are seeing benefits and added sales.
We suggest those marketers and sellers who aren't involved in selling to mass merchandisers, drug chains, online retailers and others, check it out. Done properly, selling to these channels can increase top line sales without hurting bottom-line profits considerably. It also can be a great way for national and regional sales managers to make bonus towards the end of the year. But that's a completely different story, right?