As private-label products continue to outpace the sales growth of branded items, grocers are stepping up their efforts to offer the highest quality goods for the lowest prices while also boosting their margins.
Scores of retailers, from Target to Amazon, have announced major additions to their private-label offerings in the past several weeks, in a bid to capitalize on consumers’ growing interest in these in-house brands.
Next-gen convenience store Foxtrot Market, for one, recently brought on Mitch Madoff as senior vice president of private label and supply chain. With the addition of Madoff, who spent the past eight years building Whole Foods Market’s exclusive brands, his new employer is hoping he’ll do the same for the C-store and take its private-label offerings to the next level.
“When I was at Whole Foods … it was a large company, and so we might not have been as nimble or as quick to jump on trends or lead trends,” Madoff told PYMNTS in an interview. “Actually, here at Foxtrot I’m finding it to be the opposite — we’re able to move super fast [and to] create the trends in a lot of areas … So that’s where I find the biggest difference.”
Foxtrot’s digitally-native C-stores, which currently sell a range of private-label products and curated branded goods, operate in Chicago, Dallas and Washington, D.C., with both online delivery and a handful of brick-and-mortar stores.
Leveraging Insights Across the Supply Chain
This nimble approach, responding in real time to evolving trends, is at the core not only of Foxtrot’s private-label strategy, but also its ability to attract the suppliers needed to offer high-quality products.
“Suppliers really want to partner and work with us because we are fast and understand trends, and we get products to shelf very quickly,” Madoff explained. These suppliers will often choose Foxtrot to run test-and-learns and to offer exclusive products, he noted.
To keep at the forefront of these trends, the C-store uses a “mix of different data,” including “insights from our customers and our suppliers, farmers, et cetera.” These insights include information from suppliers about which products are in the highest demand, as well as information from Foxtrot’s on-site and online shops about what consumers have been purchasing. Regarding the latter, the C-store looks at which products have been moving the most, as well as what consumers typically pair with these products, getting a better understanding of the overall consumer journey.
What Shoppers Want Right Now
One of the trends that Foxtrot has noticed from its customers in recent months is a strong desire for “more indulgent moments.” Madoff noted that consumers are looking for products that “make you feel happy [and] give you joy in life,” and that “food is often the vehicle for that.”
In fact, PYMNTS research from the early months of the pandemic, published in the June 2020 How We Eat Tracker, found that 40 percent of consumers are eating more indulgently. The same survey found that 39 percent of consumers are actually seeking out healthier foods, which may have contributed to the dramatic rise Madoff has observed in plant-based foods. “I definitely see plant-based at this point becoming a lifestyle, where just a few years ago, it was more of a trend,” he said.
Another key change that Madoff has noted is “this idea of being able to bring the restaurant experience into your house.” While consumers were spurred to try these at-home experiences by the unique circumstances of the pandemic, with traditional in-restaurant experiences no longer a possibility for many, Madoff believes that these offerings will continue to be successful in the future. He added that these at-home experiences may have begun as a trend, but have since become a “lifestyle shift.”
Stocking the Virtual Shelves
In this role, Madoff hopes to shift the private-label/name-brand goods balance in the favor of private-label brands.
“What struck me most, and what really drew me into Foxtrot, is the way they curate and source their ingredients and products,” said Madoff. “While today, they’re doing a little bit of a hybrid of both curators and makers, I want to see us excel and become more makers of our products.”
Even with Foxtrot’s extensive selection of curated goods, the C-store’s founding shelf-stocking strategy has always been extremely conducive to private-label, as the company’s Founder and CEO Mike LaVitola explained it in a recent interview with PYMNTS.
“We looked to some of the incumbents to figure out which categories resonated the most with customers in a convenience setting — so beverages, beer, wine, snacks, coffee, candy, all that kind of stuff — and then we went in and essentially remerchandised it with our favorites,” LaVitola said.
With this do-it-themselves approach, it’s easy to see how private-label goods are key to Foxtrot’s product strategy. Now, Madoff explained, Foxtrot’s “ultimate goal” is to fill its private-label selection with “products that people don’t know they need or want until they taste it … and they’re like, ‘How did I ever live without that product before?’”