In the span of two months, two national grocery stores without a presence in Oklahoma have arrived in Tulsa and brought with them their well-known private label goods, enhancing the already plentiful options for Tulsa consumers.
Costco Wholesale, a warehouse club from Washington state, will open at 8 a.m. Thursday morning. California-based Trader Joe’s, a small specialty grocer, opened in late February. Each store brings more competition to a growing grocery store scene in Tulsa. Few places is that competition more apparent than in private label goods, otherwise known as the store brands.
The two new national retailers price and treat their private label goods differently.
Costco offers its brand, Kirkland Signature, as an equal or even upscale alternative to the national brand that sits nearby in the wholesale club.
At Trader Joe’s, almost everything is private label, with alternative names including Trader Giotto’s, Trader Jose’s and Trader Ming’s.
During a tour of the store in February, Store Captain Liz Hancock made sure to highlight certain products that have developed a cult following, such as the frozen Mandarin Orange Chicken, cookie butter and Maple Leaf cookies.
Costco is one of the rare stores that actually prices the store brand higher than some name brands. Earlier this week Store Manager Greg Barnhart showed the World cases of Kirkland tuna.
He said: “This is where our quality exceeds the national brand. We’re proud of this item.”
While in the clothing section, Barnhart compared Tommy Hilfiger shirts to Kirkland Signature button downs. He did the same with jeans, saying the company uses similar standards for stitch count and fabric quality.
Local competitors such as Reasor’s acknowledge the strength of Costco and Trader Joe’s offerings.
Brent Edstrom, chief operating officer for the regional supermarket chain, said Costco’s purchasing power allows it to command certain things from manufacturers, which his company can do on the local level.
For Reasor’s, its Redbud Farms brand is where it emphasizes its Oklahoma roots, using local suppliers for things such as lunch meat. The Reasor’s salad greens come from Scissortail Farms, and the Redbud Farms coffee is from Topeca.
The luncheon meat is where it tries to be a step above the national brand by having a better taste and higher quality but offering it at a lower cost, Edstrom said.
It’s become easier for grocery stores to bargain with manufacturers, he said, because of an industry-wide emphasis on private labels. He uses a can of store brand green beans as an example.
Edstrom said in the past, store-brand canned goods were the leftovers that didn’t fit the manufacturing specifications of the name brand.
Now, they’re “first-run” products, he said.
Grocers’ private label brands added market-share during the recession because the economic upheaval and uncertainty made consumers more wary of cost, and the store brands offered quality products at a cheaper price.
Even though private label goods are usually more inexpensive, the profit margin is usually higher because stores do not have to share the revenue with a major brand.
Some grocers told the Wall Street Journal that even when the economy strengthened, their intention was not to give back that market-share.
In Tulsa, that holds true. Private-label products are only offered at one store — the store that owns them.
“If a customer likes it, buys it and wants it, they can only come one place to get it,” Edstrom said.
Samuel Hardiman 918-581-8466