Basically, it's a warning to vendors
WHAT IT MEANS AND WHY IT'S IMPORTANT — As Walgreens pays tribute to its store brand via hard-hitting ads that position its health-and-wellness products as the ones that its pharmacists recommend, CVS/pharmacy officially has unveiled its new Just the Basics private-label line — both developments that should serve as warning signs to vendors.
(THE NEWS: CVS/pharmacy's Just the Basics line makes debut. For the full story, click here)
CVS' Just the Basics is not just another private-label concept. What sets it apart is the fact that, unlike other private-label concepts that try their hand the national-brand-equivalent positioning, Just the Basics is a very clear price-value proposition. Just the Basics implies that it's not the same quality as the leading brand — but it's probably at least as good as the value-priced option the big brands market (i.e., Bounty vs. Plenty; Charmin vs. Charmin Basic). Clearly, CVS is saying that it wants to own that price point.
"Now, while many retailers are stuck in the brand-follower mode of the 1980s, we have evolved to a leadership role," Mike Bloom, CVS Caremark EVP merchandising and supply chain, told analysts during the 2010 analyst meeting in October in New York City.
Private-label penetration at CVS stands at about 17% and over the next two to three years that number is expected to grow to more than 20%. It is also interesting to note that Just the Basics targets the customer in categories where taste/flavor or even efficacy aren't as critical as it might be in such categories as food or OTC.
It is no secret that retailers have been working to bolster their private-label offerings, but these latest moves by both CVS and Walgreens are clear indications that this trend is gaining significant steam.
The news certainly raises the stakes on vendors' need to communicate back to the retailer and the consumer why their brands are important and why they belong on the shelf and in the basket.
The innovative vendor will use every means available to communicate that message or die trying.
If Walgreens' new private-label ads were a wake-up call for vendors, then consider this the snooze bar going off for the first time. And, you can only hit snooze so many times, before you've officially overslept.
So ... are you awake yet?