Placing products in clubstores can bring enormous benefits at little incremental cost, including huge revenue, market share growth and the ability to introduce products to desirable demographics.
One of the best rewards of placing products in clubstores is that, with the right business and branding strategy, you will drive your existing business outside of club at the same time. Contrary to what buyers at other retailers may tell you, the fact is, the more successful you are at club, the more your business will grow outside of club.
As a premier club brokerage firm specializing in representation, business strategy and product development, we've partnered for more than 10 years with top brands like Chobani Greek Yogurt and Bob's Red Mill to develop product packaging for placement in club warehouses. I have seen my share of excellent packaging designs over the years. There has always been a strong connection between great packaging and successful products.
From my experience, here is what I believe works best at club and how brands can take advantage of this unique environment to develop compelling product packaging that will improve your opportunity for success at clubstores.
What makes club different?
When you walk in to a club warehouse there is a level of excitement not normally seen at a traditional supermarket. Everyday thousands of club members enter their local warehouse store to seek out their favorite brands and "treasure hunt" for their next new favorites. The winning brands stand to win big: Depending on its distribution and whether it's a rotational or regularly-ordered item, a single club stockkeeping unit (SKU) can generate more than $30 million annually.
Within a mere 14 days of arriving on a club warehouse floor, a buyer knows whether or not an item is a winner or a loser. A new product that takes off quickly can be a strong seller for months or even years. Items with poor sales out of the gate rarely pick up steam and almost always head further downhill. When you run into a situation where your product fails to achieve minimum sales numbers, the first thing I would do is examine whether the packaging conveys the right message.
With all that is at stake for brand managers, it's amazing how often club product packaging is poorly executed. Packaging for club needs to be designed to withstand the rough and tumble warehouse environment while still conveying core brand promises.
I have seen some companies put their prized brands in plain white or brown master cartons without a single printed word or logo. Others ignore club packaging specifications and produce master cartons that give way under the stress of too-weak paperboard and poorly designed pallet configurations. As a broker, I would be embarrassed if a client's product was not properly packaged or displayed in the warehouse. Yet I see poor product packaging so frequently in clubs I wonder if the CEO has ever walked into a warehouse store. I just want to shout at these brand managers, "It's your brand! Protect it at all costs!"
The cause can often be due to internal pressures to cut costs. Other times it's just plain bad advice. Occasionally, a club buyer may recommend creating more value by making sacrifices in the brand's packaging, but this is a slippery slope towards pennywise and pound-foolish.
Marketers spend millions of dollars to build a brand outside of the club environment, and then treat club like a stepchild venue because they are more concerned about protecting their relationship with another retailer. This is a huge mistake. My best recommendation is that if you feel your product isn't right for club—despite the exceptional revenue and market share opportunities—then don't enter the channel.
How to assure strong club performance?
In a nutshell: Packaging in a clubstore environment must explain and inspire.
From a design perspective, when product packaging is done right, it can be as beautiful and engaging as a masterpiece in an art museum. In his book "The Big Book of Packaging," Will Burke, principal and chief innovation officer of CB'a Brand Engine, wrote, "To be truly successful, packaging design should go further, excite, arouse curiosity and elicit desire."
Few marketers understood the importance of great packaging like Apple CEO Steve Jobs. Years ago I was invited to see Jobs introduce a new computer at De Anza College. This turned out to be one of the first showings of the original iMac. I was intrigued by how much time Jobs spent talking passionately about how Apple had just revolutionized the packaging of the computer. Putting a handle on the top of the box seems like a must-have today. It was Jobs who was first to create a solution for this often-awkward process of trying to carry such a large box home.
He went on to say (and I paraphrase), the box is the first interaction a consumer has with an Apple product. If the packaging is off in any way, the consumer's experience of the product is ruined. The packaging must be as good as what is inside of the box. The packaging sets the expectations for what is to follow.
At club, brands have two important packaging advantages to capture club members' attention:
1. The master carton.
2. The sell unit.
The master carton and sell unit provides club vendors an opportunity to promote additional features and benefits of a product while drawing attention away from competitive products.
The magic that is Chobani
Not all food companies understand club packaging and few as well as Chobani, maker of America's No.1 selling yogurt brand. The company combines the best authentic strained Greek yogurt with outstanding packaging to create a consumer experience that has driven Chobani to be the leader of the entire yogurt category.
Chobani clearly understands that the consumer experience is a key part of the brand—and that this experience varies by retail channel. Their marketing team builds this into everything they do.
Chobani started with a simple concept: make the best cup of yogurt, and then make it affordable so that everybody can have access to real food. This mission statement provides the product development team with excellent guidance. But how can the Chobani packaging convey health in the "industrial" environment of a club warehouse?
Chobani uses the extra "real estate" of the package case to tease what the consumer will experience when they enjoy the product. A consumer cannot be confused as to what awaits them when the box is clearly marked.
The bright blue color is an excellent background to display Chobani's clean, bright Peach, Strawberry and Blueberry 6-oz cups on the top of the box and along the four sides. This is crucial because a shopper is as likely to read the side of the box as the front when the master cases are stacked high. The white callouts are attractive and easy to read. The copy, "To enjoy best, spoon fruit from the bottom instead of stirring," provides a vivid preview of the great taste and real fruit that awaits club members in every unit.
Showing "organic" in a clubstore
Bob's Red Mill Natural Foods offers a diverse line of more than 300 all natural, organic and gluten-free flours, cereals, meals and mixes for pancakes, cakes, cookies, breads and soups. It's a company with deep roots in the whole grain business. Sometimes I swear the Bob's Red Mill team has whole grains running in their veins. Trying to sell "organic" and "homey" in a cinderblock warehouse stacked high with pallets is challenging.
Bob's Red Mill's master carton works as well in its plant as it does stacked high in the warehouse of a club retailer. To display the right brand values at club, we worked with Bob's Red Mill packaging and plant teams to create a master carton that could be used to house any club pack. The use of inkjet technology allows Bob's Red Mill to create any message on its master carton, keeping costs low while offering the flexibility to tailor branding messages to the discrete consumers for each product.
Bob's will not risk confusing consumers by creating packaging that is unrecognizable to its core consumers, strongly resembling what they will see at their local supermarket. The USDA logo, the word "organic" and the 2009 Golden Spurtle World Champion Oatmeal badge are proudly displayed. On the Organic Steel Cut Oats package, a "Did you know" message explains the benefits of heart-healthy whole grain oats. And, of course, no Bob's Red Mill package is complete without the visage of its popular founder, Bob Moore.
One of the challenges at club is assuring that master cartons are strong enough to withstand the weight of the product and the constant reaching-in and leaning-over that occurs when club members shop. Walk in to your local club and you will see many master cartons that do not pass the test littered around the aisles.
The Bob's Red Mill team spent a great deal of time testing that its master cartons hold up for the entire member experience. When you're shipping 112-oz bags of organic quick-cooking Steel Cut Oats, you are talking about a lot of weight-and you never know how high the club's merchandise manager will stock the shippers on an end cap.
Sometimes buyers will request subtle changes to the cases, but other than that Bob's Red Mill knows the value of its brand. The company built it strong and made it recognizable. It does not abandon its established, cherished brand values.
At Level One, we have been fortunate to partner with some truly great brands and successfully introduce them to club. The ones that have the strongest performance over the years are those that turn the unique packaging demands of club to their best advantage. Their success is due to packaging leaders who are committed to creating brands that evoke consumer passion, excitement, curiosity and desire—no matter the environment where it is placed.
Jeremy Smith, COO at Level One Marketing (www.leveloneusa.com), brings more than 30 years of strategic business experience to the company. He has served in senior management, sales and marketing in the advertising and graphic arts industries. Smith's background includes working with highly regarded food and non-food companies including Acura, Levi's, J. Walter Thompson, Motorola, Paramount Pictures, Stacy's Pita Chips and Xerox.