This is the third post in a four-part series on undertaking a sustainable sourcing business approach to innovate private store brands. Click here to view section one about the myths, risks and opportunities of sustainable sourcing, or here to learn about the Crawl Phase of a sustainable-sourcing initiative.
In the U.S., consumer awareness, the demand for more transparency and continued compression on margins are providing an opportunity for private brand owners and the industry to look at value and innovation through a different lens.
Millennials are the new majority demographic classification. This segment is very aware and fiercely loyal to brands that meet their value equation. It should be the goal of a private brand to have millennials becoming its customers for life.
When taking on a project of this magnitude, I recommend taking the Crawl-Walk-Run approach, featured in this series. Here we will examine the Walk Phase.
Gaining momentum: Walk
Establish a team
Now that you have established a track-record with some successful sustainable-sourcing initiatives, you will find it easier to get the full buy-in from other vital corporate leaders and establish in-store green champions. Formally develop your corporate team of VPs, directors and project managers from all relevant departments (perishables, marketing, legal, food safety, corporate responsibility, etc.) as private brand stewards to develop your private brand sourcing strategy.
Incentivize in-store green champions by providing special T-shirts and apparel to identify and differentiate them and by including them in monthly private brand steward meetings to ensure the goals of your sustainable-sourcing strategy are being met and measured.
Sustainable sourcing values
Once you start walking down this road, it is key to have your sustainable-sourcing values consistent throughout the private brand. Sustainably-savvy customers finding criteria in your private brand in one area of the store will expect similar or equivalent criteria to be met in the private brand products throughout the store. No customer enjoys being confused or misled.
Consumers are exploring healthy alternatives when shopping, in response to rising obesity and growing childhood diabetes. You may find a slight increase in the cost of sustainable sourcing. But as you spread that out, the cost increase may, in fact, only be pennies per unit, while you take advantage of the opportunity to greatly expand your customer base.
If you already have a natural/organic private brand, this is an easy way to test consumer acceptance of more sustainably-sourced products. You can begin offering a stock-keeping unit (SKU) of fair-trade coffee, a sustainably-sourced paper product or cage-free eggs.
In the Crawl Phase, I discussed recycling. When walking, now is a good time to challenge your manufacturers to reduce packaging.
To develop your sustainable-sourcing strategy as you begin to walk, look for ways to incorporate a slight formula variation in SKUs. Instead of using conventional cocoa, switch to fair-trade cocoa. Remove palm oil from the formula, or use sustainable sources of palm oil. Identify and reduce chemicals of concern or artificial ingredients.
As you develop new products, look for sustainable-sourcing opportunities to give your product the and factor. Who does not want to feel like they got more for their money? Offer an SKU of Omega-3 eggs … and make them cage free! Beef raised without antibiotics, a term that is becoming mainstream, and now grass-fed. Paper products made from post-consumer recycled product and Rainforest Alliance Certified. Health and beauty private brand products that are manufactured in recycled plastic packaging and Leaping Bunny Certified.
Sometimes lack of supply availability does not allow you to put a policy in place for what you would like to source. For example, take cage-free eggs and responsibly-sourced palm oil as ingredients for which there may not be enough supply. Your team of private brand stewards may decide to develop positions, in lieu of policies, due to inconsistency or lack of supply.
Realize that suppliers need demand commitments. For example, there must be demand for an entire barn’s worth of cage-free eggs in order for a supplier to convert a barn from cages to cage-free. Your suppliers’ understanding of your position will increase the availability of sustainable supply over time as long as you make clear to the suppliers that you will use sustainably-sourced ingredients whenever possible.
Communication is important to make sure the positions of your private brand strategy are known to your suppliers and to the industry. Having inconsistent sustainability attributes in your private brand products many mean that you will not be able to label or market the sustainable attributes right away, but as your positions are known and as you consistently buy the sustainably-sourced ingredients, supply will increase so that you can eventually promote the sustainably-sourced attributes.
Transparency and traceability
More and more consumers are interested in transparency, wanting to know where their food comes from, which requires traceability. Work with your suppliers to ensure they have and can share ‘chain of custody’ and traceability documents. A chain of custody document is the chronological documentation of a product or ingredient through the supply chain.
The paper products industry, through the Sustainable Forestry Initiative, is practicing this today. But as an industry, there is still a lot of work to do to record and make readily available product ingredient traceability information to brand owners and consumers. It is important to keep challenging your manufacturers and suppliers and to raise the bar on packaging and ingredient standards as well as supply chain efficiency.
Where you can, promote your efforts through social media, point-of-sale materials in-store and messaging on your website.
After gaining momentum in the Walk Phase of sustainable sourcing, you are ready to beginning exploring the Run Phase, the topic of my next post.
Portions of this were originally published in Henry Stewart Publications 2045-855X Journal of Brand Strategy VOL. 4, NO. 2, 000–000 Summer, 2015