Retail differentiation more critical — and more difficult — then ever

Differentiation is a critical competitive tool for retailers. But according to the August 2014 issue of Competitive Edge from the Barrington, Ill.-based Willard Bishop food retail consultancy, retailers' ability to differentiate their brands and stores is becoming more difficult as "click-and-mortar" retailing continues to drive omni-channel strategies.

That said, retailers could differentiate themselves in five critical ways, Craig Rosenblum, a partner at Willard Bishop and the newsletter's author, explained:

• Creating brand associations, which can be "unique products that separate the banner and create an enhanced position." For example, Trader Joe’s Two-Buck Chuck is one of the Monrovia, Calif.-based retailer's "key consumer messages and top sellers." Such associations also could be programs such as the long-running annual Can Can sale from ShopRite, New York.
• Leveraging private label, which has seen a major evolution "from the days of generics and the stigma of poor or inferior quality" to unique items and niche categories. Rosenblum said. Retailers that put the retail banner on the brand, as Rochester, N.Y.-based Wegmans does, integrate their overall value proposition. And others — such as Austin-headquartered Whole Foods Market with its 365 Everyday brand — have found success with non-banner brand names.
• Collecting and acting on shopper insights, which allow retailers to understand their shoppers, identify their needs and "localize existing and new stores (or formats) accordingly." As Rosenblum noted, retailers can glean a "tremendous amount of insight and nuances" about their shoppers not only from loyalty card data, but also by mining transaction log and credit card data.
• Communicating your difference, which calls on retailers to aim for "clarity" of their brand and difference in terms of mission, prices, products, services and more. Retailers also must actualize the banner’s mission, Rosenblum explained. And communication must go beyond in-store messaging to include multiple digital platforms.
• Truly delivering service, which Rosenblum said very few retailers truly do. "For service to be a key competitive differentiator, it must permeate the store," he explained. Retailers also must have reward and recognition programs in place to drive desired behaviors.

On the private label side, retailers who find a way to translate the value of the banner/brand to the own-brand assortment will have a differentiation advantage, Rosenblum told Store Brands. He pointed to Wegmans as an example of a retailer that's connected here through superior-quality offerings that represent a value to shoppers.

"They are all about fresh and quality, and they have been able to convey this in their [Wegmans] brand private label portfolio," he said. "The portfolio encompasses the entire store and is so powerful that they have been able to reduce their overall assortment and number of national brands without any consumer backlash."

To read the newsletter, visit http://willardbishop.com/blog/five-ways-to-differentiate-retail.