Walgreens launches Nice! range to boost profitability

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This week saw US drugstore retailer Walgreens launch Nice! – a range of private label food and drink items – to replace its long-standing Deerfield Farms offering and other category brands.

This week saw US drugstore retailer Walgreens launch Nice! – a range of private label food and drink items – to replace its long-standing Deerfield Farms offering and other category brands. The range forms part of the retailer’s drive to simplify and increase penetration in front-end private labels to boost profitability.

Although the Nice! range launched with 20 SKUs, Walgreens plans to increase this to 400 by the beginning of 2012. The range forms part of the retailer’s renewed commitment to increasing own-label penetration in front-end merchandise to boost its shopper loyalty and fend off competition from drugstore rivals and other US retailers that are pushing into the small-box grocery space.

The retailer has been enjoying a degree of success with its private labels, largely due to consumer demand rather than any concerted effort on the retailer’s part, reporting recently that house brands represented 20% of front-end sales in 2010 up from 17% in 2006.

Nice! has been introduced with a limited assortment including canned tomato sauce, canned soup, white rice, tea, baking soda, honey, dehydrated fruit and macaroni and cheese. The range is promoted on signage in-store, including overheads and shelf dividers, sporting the tagline ‘Smart. Quality. Everyday’.

Some of the material informs customers of the change from Deerfield Farms to Nice! products. The range is already being promoted in Walgreens’ weekly flyers and is expected to feature in other forthcoming marketing campaigns. Packaging is simple with coloured images on a plain white background, reminiscent of Carrefour’s austere Carrefour Discount range but perhaps with the playful touch of Target’s up & up lines.

An obvious criticism of Walgreens’ move is that it comes one or two years later than it probably should have. Kroger launched Kroger Value back in 2007 while Target introduced up & up and Walmart reformatted Great Value in 2009, and were thus able to capitalise on shoppers downtrading during the worst period of the economic crisis.

Nevertheless, Nice! is a positive move – a case of better late than never. With its more distinctive packaging designed to stand out on the shelf and positioned much more clearly as a private label than Deerfield Farms, the range’s low price will serve to sharpen Walgreens’ price image.