Chico’s Comp-Store Sales Up 5.2%
Fort Myers, Fla., Chico’s FAS Inc. said Tuesday its comp-store sales grew 5.2% in March from the same month of 2006. Chico’s said its overall sales grew 22% to $191.2 million for the five-week period ending April 7. So far this fiscal year, the company said overall sales have grown 19% to $304 million from $255 million, while comp-store sales are up 1.5%.
Safeway promotes Eating Right with new initiative
Safeway has been launching multiple merchandising initiatives to help it maintain the momentum the company has enjoyed from its Lifestyles store rollout, and the effort now includes a new wellness brand dubbed Eating Right.
Speaking at the Merrill Lynch 30th Annual Retailing Leaders Conference, Melissa Plaisance, Safeway’s senior vp of finance, said, “The Eating Right line is a unique brand proposition that we’ll be introducing in the second quarter of this year. It will be across multiple categories, providing dietary solutions to our shopper. This line will combine great taste with nutritional advocacy. It features a unique nutritional icon system. There are little bubbles that will say ‘high-end protein,’ ‘low fat’ or ‘fat free’ and make it very easy for customers to find the type of dietary solution they are looking for.”
She noted that the line’s packaging is designed to be consistent “across categories, so it will be very recognizable,” adding that Eating Right “really targets the health- and diet-driven consumer.”
Perishables and private label have been key to Safeway’s strategy of developing a better-quality proposition that differentiates it from other conventional supermarket companies. In private label, Safeway is paring brands to 10 core names. In wellness, that includes O Organics, which launched last year and did $160 million in sales in its initial annum. Eating Right will be a complementary wellness program that responds to consumer interest—which Safeway observed in its market research—in superior nutrition in conventional as well as natural food assortments.
Store brands still growing at office supers
It’s all about the margin for the nation’s leading office product superstores who are counting on increased penetration of private brands as a key driver of profit growth going forward.
That was certainly the case last year as the percentage of sales generated by private brands at Staples, Office Depot and OfficeMax reached record levels of roughly 20% or more. The three companies’ total combined sales reached $42.2 billion and of that amount approximately $8.4 billion came from proprietary brand sales, nearly double the amount from just a few years ago. The increase is one of the reasons each of the office product resellers reported gross margin improvements and increased operating profitability.
While the shift is great for the retailers, it has added pressure to suppliers of branded office products, especially those whose products lack differentiation or questionable brand equity. Now the situation is set to intensify and each of the big three office products resellers has clearly communicated their intention to drive further profit growth through increased private label sales.
Staples has provided the clearest direction in this regard, indicating that 20% of last year’s sales of $18.2 billion came from proprietary brands. The company also indicated its long-term goal is to achieve a 30% penetration rate. To get there, Staples last month promoted the former head of its private brand development group, Jevin Eagle, to the position of evp of merchandising where he now oversees all product categories including technology, supplies and office decor. Eagle’s prior roles as senior vp of the private brand group was filled by David D’Angelo who previously served as vp of product development, sourcing and operations and reported to Eagle.
If Staples achieves its goal, the company could be looking at estimated private brand sales of $7.5 billion based on analysts’ estimates that Staples’ organic rate of growth will push its annual sales into the vicinity of $25 billion by the end of 2010.
A similar growth situation exists at Office Depot where the company hasn’t disclosed figures on its private brand penetration rate since 2005. That was when the company’s goal for the year was hitting 18% to 20%, but since then there have been numerous new brand introductions in categories throughout the store which have pushed the private brand sales figure well above the 20% penetration rate and have analysts forecasting that Office Depot is ahead of Staples on its way to 30% penetration.
“Office Depot continues to view virtually the entire store as appropriate for private label product with notebook computers the sole exception,” said Colin McGranahan with Bernstein Research.
While Office Depot and Staples have well-established private brand programs, OfficeMax has quickly closed the gap. It ended last year with roughly 2,000 private brand items representing 20% of its annual sales of nearly $9 billion compared to 14% two years earlier. The company has committed to further expansion of private brands, but stopped short of providing a specific penetration rate target during a recent meeting with financial analysts.