Store Brand - Private Label Memo: Cost Plus World Market Introducing A Spate of New 'World Market' Store Brand Items; We Report and Offer Analysis

Retailer Store Brands: Special Report

Specialty, natural-organic foods, beverage and import goods retailer Cost Plus World Market is introducing a number of new store brand natural-organic and specialty foods items under its "World Market" store brand into its stores.

The Oakland, California-based chain, which has nearly 300 stores located throughout the U.S., sells an eclectic mix of products in its stores, including: specialty and natural foods; beverages; wines and craft beers; confections; specialty coffees (consumables); bath and body care items; and various hard goods products like furniture; kitchen goods-gadgets; gifts and related household-oriented items; most of which are imported from throughout the world.

The new items Cost Plus is introducing under its "World Market" store brand include:

~A new, three-item line of all natural pasta sauces imported from Italy. The three varieties are Marinara, Tomato-Basil and Artichoke. The pasta sauces are in 16oz jars with the "World Market" store brand name featured at the top of the label. The country of origin, "Italy," also is plainly marked on the label.

~A new six-item line of organic pasta, also imported from Italy. The pasta line includes specialty cuts like Conchiglie and Strozzapreti. The pasta comes in 16oz clear packages. The word "organic" is on the package, highlighted in white on a red background.

~A new line of "World Market" all natural specialty salsa in five flavors: Three Bean & Corn, Southern Peach, Three Chili, Roasted Tomato and Roasted Tomatillo. The salsa line is in 16oz glass jars with a black lid.

~Two new varieties (line extension) of its "World Market" all natural Tortilla Chips. The two new varieties, in 12 oz bags, are Blue Corn with Flaxseed and Sweet & Spicy with Flaxseed.

~Four new flavors in its "World Market" 3oz all natural Premium Chocolate Bar line. The new flavors are: Chili & Lime Dark Chocolate, Chipotle Chili Dark Chocolate, plain Dark Chocolate and Toffee Caramel Milk Chocolate. There are now 12 varieties in the line. All have a high cocao content ranging from 64% -to- 99%. The chili and lime and chipotle chili varieties are part of a trend towards combining savory flavors with sweet in chocolate confections. We think you will see this trend grow among confection product producers and marketers.

Cost-Plus aggressively growing brand 'World Market'

Cost Plus World Market has been introducing new items under its store brand, along with extending existing lines with new SKUs aggressively since early last year.

For example, in mid-to-late 2008 the retailer introduced a 12-flavor line of pyramid-shaped organic tea bags under the "World Market" brand.

Additionally, in late 2008, Cost Plus introduced a new line of single-origin extra virgin olive oils. The three item line features extra virgin olive oil from a single country -- Italy, Spain and Greece -- in the bottle. The country of origin is clearly marked on the respective bottle.

Many extra virgin olive oils contain oils mixed from more than one country. Olive oil lovers often prefer single-origin oils. This is the consumer (foodies mostly) market Cost Plus is going after with the line. The retailer recently promoted the 750ml bottles of single-origin extra virgin olive oil for $7.99 each, a discount of about 30% over the regular shelf price.

Cost-Plus and consumables

Cost Plus stores devote a significant amount of floor space to specialty and natural foods items, both under the "World Market" brand and those marketed by domestic and international specialty and natural foods companies.

The stores also feature large wine and craft beer departments. Those departments also include non-alcoholic beverages like bottled waters, specialty sodas, new-age beverages and related drinks.

The stores also sell bulk and packaged specialty coffees, including a nine-variety line (24oz bags) under the "World Market" store brand.

Taken together, consumables comprise the largest overall percentage of category sales in the Cost Plus World Market stores.

More store brand items

The "World Market" store brand has increasingly been comprising more of the shelf space in the stores' food section. This is a part of the retailer's strategy to differentiate itself more in the specialty and natural-organic foods category as a retailer by offering and promoting its own brand.

Cost Plus has been struggling as a company for the last three or so years. In the last year things have been even tougher for the retailer because of the recession. A significant percentage of Cost Plus World Market's sales are in categories such as furniture, housewares and gifts, all items shoppers are buying much less of because of the bad economy.

Additionally, overall sales of specialty and natural foods are down as well because many consumers are trading-down and buying convention grocery products instead of specialty, natural and organic items in order to save money on their overall food bills.

As a way to fight this trend, Cost Plus has been promoting its store brand specialty, natural and organic items regularly, both in its weekly advertising circulars and in-store, reducing prices by 15% -to- 30% and sometimes more on the items.

The "World Market" items also are priced below similar manufacturers' brand specialty and natural foods items on the store shelves. By doing this Cost Plus is attempting to build sales of the store brand, which in many cases it obtains a higher gross margin on than it does the manufacturers' brands.

Like most retailers selling store brands, it also hopes to build consumer brand loyalty to the "World Market" brand, thus resulting in repeat trips to the stores, since the only place shoppers can buy the brand is at Cost Plus World Market.

Expect to see Cost Plus continue its aggressive store brand program, including more natural and organic items, both in the form of line extensions and completely new products.

store brand strategy and manufacturers brands

Of course, this strategy isn't so good for specialty and natural foods brand manufacturers-marketers, since there's only so much shelf space on the stores' shelves. Each time a new "World Market" store brand SKU or line is introduced that means room has to be made for the items on the shelf. That room most often comes from discontinuing manufacturers' items or reducing the number of shelf facings given to the items, as is the case with all retailers with store brands.

Additionally, since the store brand items are priced below competing manufacturers' brands, those brand marketers with like items in the Cost Plus stores are experiencing reduced sales, compared to say when there wasn't a competing "World Market" similar brand item on the shelves.

As an example, Cost Plus now merchandises a complete line of store brand spices and seasonings. Prior to completing the full line last year, specialty spice company Spice Hunter was the only full spice and seasonings line in the stores. This resulted in very high sales volume for the Spice Hunter brand at Cost Plus World Market. But now with a competing full spice and seasonings line under the "World Market" brand, the store brand items take sales away from Spice Hunter, as they do in each category in which the "World Market" brand competes with the various manufacturers' brands on the shelves, both domestic and imported.

More consumables' space: store and manufacturers' brands

Cost Plus would likely benefit right now from actually increasing the amount of square footage it devotes in its stores to consumables since few shoppers are buying much in the way of the other hard goods items the stores sell. Even though specialty and natural category sales are down because of the recession, consumers are still buying far more of the items than they are furniture, imported kitchen gadgets and exotic gift items from places like South America.

Perhaps more consumables in the form of both store brand and manufacturers' brand specialty, natural and organic, and even a few niche conventional items, might be the best way for Cost Plus World Market in helping it not only in the current recession, but overall as a way to reverse its fortunes. After all, the retailer was having trouble prior to the recession . Therefore the difficulty is more systemic than it is a result only of the current economic recession, although it is making the problems worse.

Perhaps an additional 1,000 square feet or so (the stores are about 20,000-30,000 square feet in size) devoted to consumables, taken from furniture, gifts and the like, in the Cost Plus stores would be part of the ticket to creating a more healthy Cost Plus World Market for the company? Based on the retailer's continued struggles, we think its worth a shot.

[Related past posts: January 28, 2008: Monday Marketing Memo: Cost-Plus World Market Restructuring: We Think Specialty Foods and Beverages Can be the Key to a Successful Repositioning ...July 25, 2008: Retail Field Report Memo: Specialty Retailer Cost Plus World Market Is At A Serious Crossroads: We Offer Analysis and Suggestions For Moving Forward]

[Natural~Specialty Foods Memo (NSFM) Editor's Note: Beginning today and over the next week NSFM will be offering extensive news, features and analysis on and about the fast-growing retailer store brand or private label movement. These stories can be indentfied by the header: Store Brand - Private Label Memo. Additionally, each of the pieces will have the sub title: Retailer Store Brands: Special Report.

The growth in conventional, natural, organic and specialty-premium store brands has been moving fast for about the last five years. The current economic recession has been and is increasing store brand or private label product development, marketing, merchandising and sales even more so. It's an important topic and issue. We plan to bring NSFM readers analysis and insight on the topic you can't read elsewhere. Stay tuned.

Read the first story in the special report series here: March 27, 2008: Store Brand - Private Label Memo: Store Brand Organic Products Gaining Prestege With Consumers Says New Study of What Shoppers Are Discussing Online.]

[You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Store Brand - Private Label Memo: Store Brand Organic Products Gaining Prestege With Consumers Says New Study of What Shoppers Are Discussing Online

Retailer Store Brands: Special Report

The introduction and aggressive marketing of high-quality retailer store brand organic products is leading to a change in consumer perceptions in a positive direction, according to a soon to be released research report called the J.D. Power & Associates Private Label Industry Report.

The report is from J.D. Power & Associates Web Intellegence Division, which conducts content analysis research using information from a variety of online sites and sources as a way to guage consumer attitudes and perceptions. Most people know J.D. Power for its industry ranking of automobile quality. However, it's a full service research firm which also focuses on consumer package goods in addition to other consumer products research.

Janet Eden-Harris, vice president of J.D. Power and Associates Web Intelligence Division, which is based in Westlake Village, California, offered a preview of the firm's research into consumer attitudes of store brand organic products this week at the IRI (Information Resources, Inc.) Summit in Las Vegas, Nevada.

She said the J.D. Power Web-based research project shows that consumer attitudes about many store brands have shifted in the last couple years. Rather than has has been the case in the past, in which generally store brands, including organics, have been considered by consumers to be of lower-quality, with a low-price focus (including poor packaging quality), private label brands, particularly store brand organics, are now being thought of as unique and as having quality commensurate with that of traditional manufacturer-marketer brands.

"It's clear that consumers have begun to discard the idea that private label brands are of lower quality than traditional brands, which provides an opportunity for retailers to differentiate themselves with high-quality, reasonably priced store brands," Ms. Eden-Harris said in her presentation at the IRI conference.

The firm's report analyzed about 50,000 spontaneous conversations between March, 2008 and March, 2009 in various Blogs and online message and review boards that mentioned and discussed store brand/private label products from a variety of retailers, according to Ms. Eden-Harris.

Retailers with one-half of 1 percent or more of all discussions during the year are included in the report, she said.

The research report is designed to provide insight to retailers on what drives consumers to purchase their private label brands, as well as to help consumer packaged goods manufacturers develop strategies for differentiating and marketing their brands.

Ms. Eden-Harris said in her presentation at the conference that the complete study and its results will be released in April.

Below are a few highlights of the firm's report regarding private label or store brand organic products from Janet Eden-Harris' presentation at the IRI Summit:

>The report finds that the amount of online conversation about private label products has increased steadily during the past year, with volume peaking during the fall of 2008 as the economic crisis was unfolding.

>Organic store brand pricing is a strong motivator for consumers. But the quality and flavor of private label organic products drive the highest levels of positive sentiment, according to the Web-based content analysis study.

> Store brand food products from Safeway, Trader Joe's and Whole Foods garner particularly high levels of positive consumer recommendations, compared with other private label brands, and are perceived as being particularly healthful and flavorful.

>Positive consumer sentiment for store brand food items, especially organics, is higher than it is for non-food products such as diapers, paper products and cleaning supplies. The report's conclusion: This suggests that these products are perceived by consumers as commodities, purchased for their lower cost rather than as a favored brand in their own right.

In her presentation, Ms. Eden-Harris said the improved perception of store brand organic products doesn't mean opportunity has to be lost by brand manufacturers' and marketers.

"While retailers continue to gain ground with their private label products, there is still enormous opportunity for consumer packaged goods manufacturers," she said. "Innovation is still a big growth driver, and CPG companies still lead in that regard. New and differentiated products that are priced to value will win market share."

We agree with that conclusion since at least in "phase one" of store brand organic product development most of the retailer brand products have been versions of products already produced and marketed by brand manufacturers' and marketers. In fact, retailers like Safeway Stores with its O' Organics brand used sales data from its in-house natural-specialty foods department to decide which items to create under the private-label organics brand.

Additionally, most retailers rely on traditional manufacturers not only to produce their store brands but in many cases to offer advice and suggestions on private label product development.

However, we're now seeing what we call "phase two" of retailer brand organic product development in which select retailers like Safeway, Kroger, Wal-Mart, Trader Joe's (TJ's has always been a "phase two" natural-organic product developer and innovator), Target, Whole Foods, Costco and a few others are innovating and actually creating some products under their respective natural and organic store brands that don't exist under manufacturer brands in the retail marketplace.

In our analysis though food company manufacturers and marketers, particularly in the natural and organic segment, continue to be the innovators when it comes to new product creation and development. Retailers still tend to be followers rather than brand innovators overall in the categories.

J.D. Power's Web Intelligence Division analyzes consumer behavior online by using proprietary Natural Language Processing and machine-learning algorithms to dissect the who, what and why of online opinion, offering in-depth insights for some of the world's leading brands, according to Ms. Eden-Harris. It's a form of content and opinion analysis based on what consumers are commenting and opining on on the Web.

The purpose of the Web-based content and attitude analysis research is to glean what consumers are saying online as a way of better understanding consumer behavior, attitudes, opinions and trends.

With so many consumers now using online product review sites, Blogs, chat forums and social networking sites like Twitter and Facebook, we think such research is now essential, along with more traditional methods, in order to better understand consumer attitudes in the food, grocery and consumer products space.

In fact, Natural~Specialty Foods Memo (NSFM) uses our own form of Web-based content analysis often to spot, analyze and write about consumer behavior and trends based on information gleaned from search engines, social networking sites, online review sites and message boards and Blogs.

Using the Web to better understand consumer behavior and attitudes will become even more important sense so many consumers are using the Web to search for products, retailers and related information, along with reviewing products at online review boards, and generally increasingly using the Web as an integral part of overall consumer and shopper behavior.

Below is a linked selection of past stories from Natural~Specialty Foods Memo (NSFM) on and directly related to the retailer store brands topic:

~March 12, 2009: Retail Memo: Whole Foods Market is Selling Brand 'Wild Oats'- We Offer Three Retailers We Suggest Could Benefit From Buying the Brand

~January 31, 2009: Store Brands - Private Label Memo: Smart & Final-Owned Henry's Farmers Market Preparing to Debut New Natural & Organic 'Sun Harvest' Store Brand

~August 24, 2008: Marketing Memo: Store Brands 2.0: Better Store Brands and Brand and Shopper-Marketing Changing How Food Retailers Sell Their Own Brands

~August 6, 2008: Marketing Memo: Safeway's Challenge: Going From Store Brand Marketer to Consumer Brand Marketer With its O' Organics and Eating Right Brands

~April 28, 2008: Marketing Memo: Safeway Stores, Inc. to Market its 'O' Organics' and 'Eating Right' Organic and Healthy Brands to Other Retailers in U.S. and Globally

~April 28, 2008: Retail Memo: Safeway CEO Burd Says Shoppers Buying Store Brands Over National Brands By As Much As Six -to- One in it's North American Supermarkets

~June 4, 2008: Marketing Memo: Ingredients For 'Free Media' Marketing Success: Safeway Stores Finds Them With Announcement of its New 'Eating Right For Kids' Line

~May 9, 2008: Retail Marketing Memo: Safeway Uses Mother's Day Holiday to Launch its New 'mom to mom' Store Brand Baby Products Line in its Stores

~December 27, 2007: Marketing Memo: Safeway's O' Organics Brand in Asia

~December 23, 2007: Safeway's O' Organics Brand: Part Duex

~December 21, 2007: Friday Fishwrap: Safeway's O' Organics Brand

~January 8, 2008: Media Memo: Safeway's O' Organics Brand In Asia

~February 6, 2008: Retail Memo: Raley's Attempts to Come 'Full-Circle' With New Private-Label Natural and Organic Products' Brand

~April 7, 2008: Retail Memo: Wal-Mart, Target, Drug Chains Further Blur the Natural~Specialty Foods' Retail Class of Trade Lines

~October 11, 2007: Thursday Talking Points Memo:
Category Marketing Dominance: How Whole Foods Market, Inc. Became King of the Supernatural Retail Grocery Category and Why it Will Continue to Reign For Some Time

~February 11, 2008: Retail Trends Memo: UK's Asda Pioneering the 'Store-Grown' and 'Store-Raised' Niche: Will Raise its Own Kobe-Style Beef and Grow its Own Truffles

~December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Possible With Mass Market Lift

~November 28, 2008: Consumer Behavior Memo USA: 'Life, Liberty and the Pursuit of Frugality' - America's New Consumer Frugality

~November 28, 2008: Retail Memo: Target Corp. Launching Major Expansion of Food and Grocery Products in its Target Discount Format Stores

~May 3, 2008: Retail Memo: Loblaw's New President Charts A Course to Return the Grocer to Its 'Glory Days' of Being Canada's 'Best' as Well as Biggest Food Retailer

~December 12, 2007: Mid-Week Marketing Memo: Tesco's Fresh & Easy

~January 28, 2008: Monday Marketing Memo: Cost-Plus World Market Restructuring: We Think Specialty Foods and Beverages Can be the Key to a Successful Repositioning

~July 25, 2008: Retail Field Report Memo: Specialty Retailer Cost Plus World Market Is At A Serious Crossroads: We Offer Analysis and Suggestions For Moving Forward

~January 30, 2008: Retail Memo: A Peak Inside a New Trader Joe's Store

[Reader Note: You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Retail Memo: Raley's Attempts to Come 'Full-Circle' With New Private-Label Natural and Organic Products' Brand

Sacramento, California-based regional supermarket chain Raley's is rolling out its own quasi-store brand of organic and natural grocery, fresh foods and household cleaning products today in its 120 Raley's, Bel-Air Markets and Nob Hill Foods banner stores located in Northern California, Central California and Nevada.

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.