Different By Design

Retailers that leverage shopper data and take control of their sales environment will be able to differentiate their stores and store brands.

The other day I drove past a Denny's en route to my local coffee shop for breakfast. I knew that if I stopped at Denny's, I could order eggs, bacon and pancakes, and they would taste pretty close to those found in any other Denny's. I also knew that the Denny's would look like any other Denny's, and my breakfast would set me back only a few bucks.

But I drove past Denny's (and other national chains) to go to my local coffee shop. Inside, it looks nothing like a Denny's. It has a local country charm that allows me to feel comfortable and wanted. The employees know my name and what I am going to order. They serve great coffee in big mugs (which is helpful after a long night).

Yes, I spend probably twice as much for my breakfast as I would at Denny's. Still, I visit this coffee shop every Saturday, and judging by the crowds, many others are regular visitors as well.

This kind of consumer behavior is just as prevalent in grocery stores and supermarkets. Ultimately, "individuals" shop and spend more where they are most comfortable and feel the least amount of stress. They will also, within reason, pay more for this comfort and convenience.

Home field advantage

Retailers have a tremendous advantage in the competition for more customers and greater sales through their own store brands. These advantages boil down to two fundamental points of differentiation:

1. Retailers have unique and proprietary knowledge about their specific clientele in various demographics.

2. Retailers have complete control over their sales environment.

Retailers can and must utilize these proprietary advantages to differentiate themselves and their store brands from other retailers and the national brands.

Embrace your consumer data

The national brands must market, package and merchandise their products to appeal to the mass market. This means that national brand manufacturers must introduce products that appeal to consumers in Los Angeles, Boston and Norman, Okla. Such products also must appeal to large ranges of economic bands. As any marketing professional will tell you, these demographics are significantly different and must be approached in a unique and focused fashion.

When building a store brand, a retailer has the luxury of focusing more specifically on its target customer. If the retailer's clientele is middle class, it can build store brands that reflect shoppers' unique shopping patterns and desires. If it is lower class, it can create store brands and serving sizes that appeal to shoppers specific budgetary needs.

Consumer data are a valuable and critical asset that retailers must leverage to help differentiate their store brand products from the national brands, and to give their specific shoppers the comfort of knowing the retailer is addressing their needs.

Create a branded environment

By knowing their clientele, retailers also will be able to brand their stores, not just their store brands. As set forth above, shoppers spend more time in stores in which they feel comfortable.

The first step is determining the clientele for the particular retail store. Retailers then can create a shopping experience that is consistent with these shoppers' needs.

For example, if a retailer is interested in keeping or attracting higher-end foodies, then a store environment that denotes adventure, gourmet foods, interesting wines, recipes, etc., might be a good fit. On the other hand, if the store is best-suited for a "lower-end" clientele, the store environment cannot feel too "stuffy" or "ritzy," or the cost-conscious consumer will move on.

Think about it: How does a Toyota dealer differ from a Mercedes Benz dealer? The branded store environment attracts the desired shopper and then creates a perceived price point and value proposition for the store brands sold within it.

Retail stores must brand themselves to create a total shopping experience. This can be built around several parts of the store, including the bakery, in-store deli, coffee bar, produce section, etc. All advertisements, signage and sales collateral must be consistent with this branding.

No compromise here

Store brands, too, might need upgrades — upgrades designed to remove the sense of compromise consumers traditionally associated with such products.

Any lingering perception of sub-par quality could result in resentment on the part of consumers, who they feel like they are being forced to "buy down" to save money. This is embarrassing and contrary to the pleasurable shopping experience you want to promote.

Instead, retailers should examine their store brands and determine if upgrades, including better packaging, marketing and merchandising, are needed. The more successful store brands are what we at Aisle 9 call destination brands — unique brands that are exclusive to the retail store. They are professionally branded, designed and merchandised like successful national brands.

Consumers then have a choice between a national brand and a store brand that is unique and interesting. And their sense of compromise disappears.

Think about it: Do you ever feel like you are compromising when you buy a Sears Kenmore refrigerator or Craftsmen tools? I'm betting no. But those destination brands are exclusive to Sears, and consumers must bypass many other retailers to go to Sears to buy them.

Control the selling environment

There has been a palpable swing of the pendulum between the power of the national brands and the retailers. In the past, national brands dominated the marketplace and could direct retailers to comply with their stocking and merchandising programs.

Now, the national brands no longer enjoy that same leverage. In fact, the national brands are not necessarily bringing consumers into the stores. More important, once in the store, consumers are choosing store brands in greater numbers.

With 70 percent to 80 percent of decisions being made at the point of purchase, control over product merchandising is key. Retailers choose who gets floor space for displays, signage on the shelves, prime impulse real estate at the checkout counter, etc. They need to take advantage of their power, using merchandising tools to attract greater attention to their own store brands.

Bring it together

For any retail store to be competitive, it must differentiate itself from its competition. Retailers begin the differentiation process by capitalizing on the proprietary customer information they already collect (or better start collecting).

With a strong knowledge of customers' needs and shopping patterns, retailers then must begin to brand their stores to create a consistent and exciting shopping experience. An important part of this process is developing a unique selling proposition for store branded products — upgrading the brand, packaging and selling collateral to move from a "me too" to a compelling alternative brand.

Finally, a retailer must take control of its stores and build merchandising tools that highlight its own brands. By implementing these four steps and taking advantage of your home field advantage, you will see a significant increase in shopper visits, shopper loyalty and store brand sales.

Greg Feinberg is president of Los Angeles-based Aisle 9 Group, http://aisle9group.com. Contact Feinberg at [email protected].