A fresh start for Sobeys

With a new discount banner, a private label revamp and enhanced loyalty programs, Belinda Youngs is shaking things up in the grocery aisles.

“Good people making good food easy.” That’s Sobeys’ new brand positioning – developed to underscore the brand’s recharged focus on wellness and consumer-employee engagement – but one could argue that it’s also an apt descriptor for the supermarket co’s CMO, Belinda Youngs, and the work she’s been doing this year.
At the forefront of her recent accomplishments was this spring’s launch of FreshCo, a new discount banner promising Ontario shoppers an escape from the dingy, bargain-basement environment of many value supermarkets. It was a project that zipped from concept to launch in just nine months.
“We wanted to generate an offer in the discount market that was less about compromise and more about what you get for the money,” says Youngs, who leads a team of 65. “So we focused on more fresh, more ethnic, more local products.”
Designed by AOR Rethink in Vancouver, with help from Toronto-based retail co Durnan Jackman Saffer, the new stores (launched in former Price Chopper locations) feature a minimalist aesthetic and a partially guided flow that’s reminiscent of Ikea. 

As Youngs says, “We wanted to create something that was the antithesis of what already existed.”
But don’t let FreshCo’s modern design fool you: it’s still a discount supermarket, and the tagline, “Fresher. Cheaper,” was established to make that clear.
“Very few companies use the word ‘cheaper’ but it’s a word your general consumer will use,” Youngs says. “It denotes savvy shopping.”
Launching a supermarket brand from the ground up is something Sobeys hasn’t done in a century. The company was founded in Stellarton, N.S., in 1907, eventually expanding its reach outside the Atlantic provinces in the 1980s. While it’s grown substantially since then to become the second largest food retailer in Canada – operating a dozen different banners that include IGA, Thrifty Foods and Foodland – most of that growth happened through acquisition. Ontario has always been a weak spot for the retailer, and the province’s Price Chopper banner has seen particularly poor performance in recent years, so a fresh start made sense.
Chris Staples, partner and national CD, Rethink, who’s worked with Youngs for four years, says, “Belinda is a true visionary. She’s not afraid to rethink every aspect of a brand from scratch, and from a 360-degree perspective.”
He adds, “She’s very skilled as a champion for the [Sobeys] brand, but is also very attuned to regional variations. She has good taste, and a great sense of what will actually work in a store environment.”
The launch of the first eight stores was promoted via radio, public transit ads, community and national newspapers, and through direct mail, with media by Carat Canada, PR by Fleishman-Hillard and digital by Arc (all in Toronto). In the first three weeks, the locations achieved 90% awareness and trial.
Since then, Sobeys has launched 20 more FreshCos, with sales building in line with the company’s expectations. While you can expect to see more Price Choppers become FreshCo locations in the future, Youngs says the decision to switch will be made on a case by case basis.
The discount segment isn’t the only thing Youngs has been refreshing. Three years ago – around the time Youngs transitioned from EVP of private label to CMO – Sobeys quietly introduced an in-house consumer test panel facility. There, trained consumers taste-test every private-label product that’s being developed or reformulated. If a product fails a panel, it goes back for further tweaking.
With between 80 and 100 testers on-call, Sobeys is able to match the panel members to the type of product being developed, so wellness products are tested by people who eat healthy, while kids’ products are evaluated by both children and moms. The panel can also be used to compare products with their national-brand equivalent or a competitive private label.
The facility is the first of its kind in Canada, and Youngs says that U.K.-based Tesco and Woolworths Australia are the only other companies globally to have this capacity in-house. Since its launch, about 70% of Sobeys’ private-label products have been tested.

But Youngs wants to be clear about the panel’s purpose. “It’s not a marketing campaign, it’s not a consumer communication campaign – it’s about how we create a competitive advantage around the quality and taste of our products,” she says.
So far, she’s pleased with the results she’s been seeing in Sobeys’ proprietary private-label tracking report. “We’ve closed the gap on taste with our primary competition,” she says. “Likelihood to recommend and repeat are up.”
These results come on the heels of a complete revitalization of Sobeys’ 4,500-product private-label portfolio, a process that began in February 2008 and wraps up in May 2011. The process includes next-generation packaging for all private lines, designed by Fish Out of Water in Toronto, and the rebranding of the discount line from Compliments Value to Signal (with the tagline “Your signal to our lowest prices”). The revitalization also included an increased emphasis on the premium and wellness lines. This change was reflected in recent POS data, with the premium line seeing a 245% year-over-year increase, while the wellness line increased 80%. 
Private labels are key not only from a profit perspective, but also from a differentiation and loyalty point of view, Youngs says.
“You have to create products where consumers will cross the road to buy them,” she says.
In terms of CRM, Sobeys has also been investing heavily in leveraging the data from its loyalty programs – Club Sobeys in Ontario and the West, Club Thrifty Foods in B.C. and Air Miles in Quebec, with the back end run by Toronto-based Exchange Solutions – developing an offer-targeting capability that means consumers receive coupons they’ll actually want to use.
Using anonymized data from the loyalty program database, Sobeys has developed six segmentation models that group consumers by how often they shop, how price conscious they are, their life stage, lifestyle and so on.
When potential coupon offers are entered into the system, Sobeys’ offer-matching engine uses additional logic (for instance, whether you’ve bought the product or a similar one before) to determine the best recipients. The system ensures that you won’t receive a diaper coupon if you don’t have a baby, and won’t tempt you to buy name-brand if you’re already buying the private label equivalent.
The Club Sobeys quarterly statement is sent to over two million members, containing 1.4 million unique combinations of offers. This results in redemptions that Youngs says are well above the industry average.
Youngs began her career in the U.K., working in merchandising and procurement at Sainsburys Supermarkets, and Staples says her experiences there “proved invaluable, bringing some fresh perspectives to the Canadian grocery scene.”
Whether you chalk it up to her international background, her fierce consumer focus or her willingness to start from scratch when necessary, there’s no denying that Youngs has freshened things up at Sobeys.

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Intro

Dominic Mercuri, TD Canada Trust

Patrick Dickinson, The Bay

Zeeshan Shams, Procter & Gamble

Denise Vaillancourt, Société de transport de Montréal