Dive Brief:
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Albertsons announced it is expanding its Open Nature private-label brand into non-food categories and will introduce an additional 240 products this year.
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Some of these new private-label offerings will be home care products, Albertsons said. The Idaho-based grocery retailer already debuted baby and pet food products under its Open Nature brand.
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The private-label brand, sold only in Albertsons' family of stores, has no antibiotics, MSG-type ingredients, nitrates, and preservatives such as sulfites and benzoates, the company noted. Open Nature meats are free from preservatives and added hormones.
Dive Insight:
This change follows on the heels of the store's O Organics brand expansion announced in January. According to Geoff White, president of the company's Own Brands segment, Albertsons knows customers want high-quality, clean and more natural products at affordable prices, and this is one way to deliver.
"Whether it’s for their spouse, child, or pet, we know how important it is to feel good about the food they feed their family and the products that come into their homes," White said in a release. "We’re more committed than ever to offering customers that experience, which is why we are excited to introduce a wider variety of Open Nature products and expand the brand’s free-from approach into non-food categories.”
Counting Open Nature and O Organics, Albertsons now has five exclusive core brands crossing many store categories. Like O Organics, Open Nature began with Safeway, which, according to Store Brands magazine, had a highly respected private-label program when it merged with Albertsons in 2015.
When Open Nature debuted in 2011, it consisted of more than 100 items Safeway noted were "made with 100% natural ingredients from natural sources, with nothing artificial added." Initial Open Nature offerings focused on the meat department and included fresh beef, pork, chicken, chicken sausages, bacon and beef hot dogs. Branded bread, yogurt, ice cream, salad dressing, frozen foods and other products were added later.
Since Albertsons is not publicly traded, it's not clear exactly how well Open Nature has been doing. The company noted in January that O Organics had hit the $1-billion sales mark, and it said this week that, combined with Open Nature, the two have brought in $1.4 billion in sales. In total, Albertsons' private-label brands had more than $11 billion in sales in fiscal 2017.
Private-label products now account for one in every five items sold in U.S. supermarkets, and that ratio is expected to grow in the coming years as retailers continue to focus on expansion and innovation. Natural and organic lines are a main growth driver, so Open Nature and O Organics have a lot of competition these days. Kroger's Simple Truth brand is now a $2-billion business encompassing more than 1,400 products. The company's announcement that it will expand that line may have played a role in Albertsons' recent decision to ramp up O Organics.
In Albertsons stores, Open Nature and O Organics complement one another to provide a comprehensive natural and organic selection. The expansion makes sense from this perspective and responds to growing consumer demand for healthy and less-processed items, both edible and not.
Private-label brands have become more popular in recent years. Consumers who try them out often find them to be reasonable substitutes for their competitors in quality, and even beat them on price. The Private Label Manufacturers Association has reported that shoppers who choose store brands save $30 billion each year.
The merger between Albertsons and Rite Aid could positively impact the grocer's private-label business by allowing it to offer Open Nature nonfood items in Rite Aid locations. Such a cross-branding experiment could help Albertsons reach its goal of boosting private-label sales from 23% now to 30% and to 19% in Rite Aid stores. Pharmacy customers might appreciate being able to pick up Open Nature home care, baby and pet food products at the drug store. As long as the integration is done effectively and sufficient marketing and outreach investment accompanies the changes, it could work to their mutual advantage — and to that of their customers.