MAPCO Looks to New Private Labels to Fuel Profits

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MAPCO Looks to New Private Labels to Fuel Profits

By Barbara Grondin Francella

BRENTWOOD, Tenn. -- MAPCO Express Inc., a division of Delek US Holdings Inc., is overhauling and expanding its private label business, with new products planned across the store.

Looking to differentiate itself from the competition and increase profit margins, MAPCO, which now has 50 private label SKUs in its 500 stores, is exploring low-, medium- and high-end tiers for its private-label product program, which will reach include an array of packaged goods categories, Paul Pierce, MAPCO's vice president of marketing, told CSNews Online.

In the next few months, the 500-store chain is rebranding all of its private label products, which now include "M" soda and water and other items. "We will use a variety of different names," Pierce said, noting a decision on final names hasn't yet been reached. "Most products won't have our name on it, won't have an 'M' on it. They will be brands we are creating. The consumer may never know the product is a MAPCO brand. They'll just know they can't get it anywhere else."

The chain's low-end proprietary products will serve as traffic drivers. A middle tier of products will be profit generators, while a high-end line of items will be upscale, unique products designed to differentiate the stores from the competition, he said.

One item, due to ship in the next few weeks, is a private-label isotonic. "It's not a me-too product. It has zero sugar, zero carbs, vitamin-enhanced -- all of these better-for-you properties," Pierce said. "It'll probably be priced a little below the major brands, but we will be promoting it as a very unique product."

The chain's high-end items will be gourmet-type products, with unique packaging. MAPCO's meat snack, for instance, includes exotic meats. The line is priced higher than typical meat snacks.

"We may come in with a low-end meat snack too. We may have different tiers of products in the same category," Pierce said. In the water category, for instance, a low-end bottled water could share the cooler with a private-label vitamin-enhanced line that is higher priced.

"With national brands, we continue to see margins decline," Pierce noted. "It's put us in the position to really look at our own products and develop them ourselves. We have enough stores to get the attention of the manufactures and we can differentiate ourselves from the smaller competitors."

While the stores could sell a bottle of Coke or Pepsi for $1.39 and make a 30 percent margin, he said, MAPCO's private label soda may retail for 99 cents, while carrying a 60-percent margin.

"With the economy on a downward cycle, all of the trends point to customers wanting to maintain their consumption levels, but by down on quality or go down from brand names," he told CSNews Online. "It's the perfect time to explore that and we are pushing as fast as we can to add more products."

The chain is aggressively pursuing private label chips, juice drinks, isotonics, vitamin water and packaged snacks. "We are considering our own brand of smokeless tobacco," Pierce noted. "There is nothing out there we wouldn't consider."

MAPCO stores recently rolled out a bulk candy and snack program, including bulk trail mix.

"We are looking at higher-end mints and chocolates," Pierce said, noting he admires Target and their private-label program. "We are looking at anything we think we can put out that will satisfy consumers and give us a point of differentiation and improve margins.

"When times are tough, you need to be a bit more creative and move fast."