Reimagining the Dairy Department—A Holistic Approach to Cross-Category Innovation

December 4, 2017

When you think of the dairy department, what products come to mind? Milk, yogurt, butter and cheese? To be sure, those are the basics of any good dairy department. But in today’s retail environment, grocers have to think beyond the basics—and the $65 billion dairy department is one area that’s ripe for innovation, particularly when it comes to private brands.

Because of its potential, dairy was recently identified by Daymon’s analytics and category solutions teams as one of the four key areas where retailers and private brand manufacturers should be focusing their efforts. The dairy department is a big revenue driver and highly-trafficked area for most grocery retailers, says Lisa St. Germain, Senior Manager of Category Customer Solutions – Dairy & Frozen for Daymon. It’s also an extension of fresh, which continues to be a key focus for consumers.

Deciding to invest in dairy is one thing. Deciding how to invest is a whole different challenge. That’s the question one retailer partner was facing recently when it came to Daymon looking for data-driven insights and category expertise.

To help identify targeted dairy opportunities for the retailer’s own brands, St. Germain conducted a holistic, multi-category evaluation of the retailer’s dairy volume, sales, assortment and current private brand performance. At the same time, she evaluated other best-in-class retailers’ dairy strategies, including areas where they were innovating, how much space they were dedicating to dairy and how space within each set was being used.

Comparing these results, St. Germain was able to identify specific gaps in the retailer’s dairy strategy. “By collaborating with the on-site Daymon account team, we were then able to provide detailed, actionable insights on how the retailer could best leverage its private brands to drive innovation and sales across the department, not just in a single category,” she explains.

St. Germain says that this holistic approach can deliver more successful and targeted results for a retailer—giving them a clear idea of where to innovate and where to fortify the basics. For example, she explains, while drinkable yogurt is a growing trend that’s ripe for opportunity, “you need to have the basics first. If you don’t have Greek vanilla yogurt, you have to have that before you go on to drinkable yogurt.”

Surprised Greek vanilla yogurt is now considered a “basic”? That’s another point St. Germain makes—retailers shouldn’t assume it’s enough to have the same-old plain milk, half-and-half and butter in their private brand lineup. “Embrace the dairy space and pick more innovative items, even in categories like milk. Consider offering plant-based, ultra-filtered and high-protein options in your private label. There’s a lot of space dedicated to milk and it’s a high traffic area in the store, so having some unique items in that space can really drive your sales,” she says.

By having a strong commitment to their own brands across all segments, and continually working to innovate and making sure their selection is aligned with consumer needs, St. Germain says retailers can help make the most of today’s dairy trends—and keep shoppers coming back for more.

To learn more about partnering with Daymon to drive private brand innovation and strategy, contact Bob DiNunzio, Director of Category Solutions, at BDiNunzio@daymon.com.

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