Mind Your Brands
Despite impressive recent sales gains within the store brand sector, new products are in no way guaranteed to succeed. Success comes through brand equity — built through hard work, forethought and strategic planning.
It's not every day a private brand outsells a powerhouse brand. But this is something that is happening in store aisles across the country as retailers get savvier about how to market their brands, and as consumers get smarter in the way they spend their money.
The bottom line: It's all about brand equity. For retailers to drive traffic, they need to work more diligently in establishing traditional brand management and brand building techniques as a way to differentiate themselves. One question they should be asking themselves is "How do we get shoppers into our stores?"
The answer? Pricing, certainly, but with all that is happening economically, the other part of the answer — and perhaps the bigger part — is by building trust in their products, as well as trust in the in-store experience.
When you consider the success and failure of products, especially in the volatile environment of the past year, you'll find that retailers that had a very good brand equity before the downturn experienced very good growth from a private brand perspective. Just look at Wegmans, Meijer, Kroger, Schnucks and many others that lead the way here. Shoppers understand what their brands are about. They trust them. And so they turn to them over and over again.
Retailers that do not have a strong equity in their private brand portfolio are not experiencing that kind of growth. To be honest, the jury is still out on Walmart (at least in this author's opinion). Sure, the retailer fine-tuned and repositioned its Great Value brand and redid the packaging, but these products do not appear to be showing the expected growth, despite all the money that was spent. Walmart has the biggest brand in the United States, but brand equity appears to be lacking.
Equity is not only about price, but also about delivering on many different attributes that make a brand the brand of choice. You need all parts of the strategy to be a success.
The economy is still fragile. Consumer spending, while expected to grow in months to come, remains inconsistent, adding uncertainty to how the economy is going to bounce back.
We all know the retail world of today is very different from the retail world of a year ago. And though reports say the recession is officially over in the United States, the fact is, consumers are shopping differently, and their shopping patterns will continue to evolve. For the first time in many years, private brand products are on the radar screen of the national brands. In fact, many of the national brands seem to be nervous about what is happening as store brand growth continues to skyrocket.
Brand building is key
Despite impressive recent sales gains within the store brand sector, new private brand products are in no way guaranteed to succeed. But why do some private brand launches succeed where others fail?
There is no one "secret ingredient" behind success (or failure). Brand building is a fusion of four basic strategies:
- Understanding consumer needs
- Developing and positioning a strong brand foundation
- Creating the right imagery for the product
- Delivering on the brand promise
Product success does not happen without hard work, fore-thought and strategic planning. And retailers start by getting the tools they need to understand the strategic role private brands play in their portfolio.
When it comes to private brands, retailers need to deliver on their mission statement and touch on their corporate goals. It's about making sure private brands are a pillar of their companies and not just a "me too" product on their shelves.
The consumer is the heart
Getting to the heart of the consumer is key. Five years ago, our big industry push was around SKU and brand rationalization. At the FMI Private Brands Summit last year, Daymon Worldwide talked how important it was for retailers to make it easier for consumers to find products on the shelves and to ensure the brands that deserve a space are represented on the shelves. Daymon also talked about helping the industry move from one that is data-rich to one that is knowledge-rich.
At the same time, we as an industry also are evolving from private label to private brand, and from product-centric to consumer centric. This evolution is fundamental for going forward with a successful brand equity portfolio.
The opportunities for retailers and suppliers are vast. But again, to continue being successful, retailers have to put more emphasis and research into building their brands. Private brands need to be their strategic pillar if retailers are to succeed in the marketplace. They need to be part of a strategic plan and not a tactical play.
This evolution requires educating store managers and other employees within the organization with internal awareness campaigns. One of the best things a retailer can do is to make sure everyone in the company understands the company's portfolio brand. There is literally no better brand ambassador than a retailer's own workforce.
Daymon has seen many retailers grow their private brand product penetration by 2 percent to 3 percent just by focusing marketing efforts internally. Examples of such an internal focus include a letter from the president, coupons for associates, free samples, demonstrations and incentives.
Just as important to the equation is packaging design as the main communication vehicle. The evolution of private label into private brand carries with it not only a better understanding of consumer needs, but also an understanding of how to connect with those same consumers more effectively. Up until recently, packaging design has been the main communication vehicle for private label, as collateral marketing support has been minimal.
Packaging design plays an even stronger role in the new private brand era as retailers build their brands and focus more on what they communicate to their customers. Value is not just about price anymore, and successful brand and new product launches often emphasize key product attributes in the packaging as a way to better connect with consumers. New designs are lively and are starting to focus more on lifestyle attributes and imagery.
Other areas of growth
Looking forward, Daymon believes that many retailers around the world are going to start rethinking their premium strategy as economies improve. More of them also are likely to increase their focus on key growth areas such as sustainability, "green" and, as far as the United States is concerned, developing products that target the ethnic/Hispanic community, the 55+ baby boomers and the Gen Y generation.
This latter group speaks a different language. Their parents' stores are not for them. One of retailers' key roles will be helping to position store brands that speak to Gen Y, as well as to make sure they develop the right imagery and make sure those items deliver on their brand promise. Products need to answer, "What's in it for me?"
This is the time for retailers to further emphasize a brand-building attitude and implement processes toward their brands as they continue growing share. It is also a time when all brands (not only private brands) should evolve their marketing mix and pay more attention to social media and other avenues that encourage engagement and participation with their consumers.
By being involved, listening to consumer needs and developing solutions that satisfy those needs, retailers will help strengthen the future for all brands moving forward. While success will vary by category, in general, well-managed private brands that have equity with their consumers should continue to do well in the years to come.
Andres Siefken is vice president of marketing for Daymon Worldwide Inc., Stamford, Conn. Contact him at [email protected].
When it comes to private brands, retailers need to deliver on their mission statement and touch on their corporate goals. It's about making sure private brands are a pillar of their companies and not just a "me too" product on their shelves.
There is literally no better brand ambassador than a retailer's own workforce.
This is the time for retailers to further emphasize a brand-building attitude and implement processes toward their brands as they continue growing share.
