By Todd Maute
Commitment can be a sticking point when it comes to retailers and their private label brands. After all, making a serious commitment usually requires a willingness to sacrifice and take risks—and that can be scary.
True commitment also needs to be multidimensional. In retail, this involves fully supporting the brand, not just at shelf, but also within the broader context of the store and through the full gamut of available advertising, marketing and branding channels. Yes, the shelf is (and will continue to be) extremely important. But if merchandise amounts to, say, 80 percent of what consumers see in the store, what about the other 20 percent of that multi-sensorial customer experience? If a retailer has a clearly tepid commitment to their private label, it is hard for consumers to be passionate about the products. What has the retailer done with its signage, décor, graphics, color schemes or even olfactory environment to reinforce its private label brands? How many touch points inside or outside the store offer cues that reinforce the carefully selected attributes of that private label line?
When retailers do take the plunge and fully commit their resources to a portfolio of private label brands, they are often surprised by the way this “multiplier effect” yields a host of benefits. From a branding standpoint, they often discover that it is much easier to tell a consistent story if you commit to presenting your private label narrative in the store, in your circulars, online and at shelf. They also find that “owning” particular categories can become quite doable—and profitable—whenever you fully commit. To be sure, this is easier for private label–dominant retailers like Trader Joe’s, ALDI or Body Shop, all of which see their stores as blank canvases for their private label merchandising and branding strategies. Unlike typical mass-market grocers—where private label accounts for just 10 percent or so of the 40,000 SKUs—these chains are never forced to make tough choices about whether to commit square footage to a national brand in exchange for cash.
Nonetheless, plenty of retailers have managed to make strong commitments to private label even as they carry lots of national brands. The Home Depot, for one, puts heavy emphasis on the Behr portfolio, its exclusive private label paint partner, while also selling a whole host of name brand options. The Home Depot supports Behr by spending money on sumptuous, visually engaging advertisements that, in in turn drives traffic to the store. Stroll into the paint department at The Home Depot, and it is clear that Behr owns the category. This took commitment. National brands would pay good money for the perks now enjoyed by Behr, but The Home Depot continues to be faithful to its private label partner. There is even a mobile app geared toward fans of Behr paints. Along the same lines, Ace Hardware was committed enough to its Clark & Kensington paint brand that it redesigned certain stores to better show off the line.
These approaches are about investing in product innovation and understanding the broader context in which the private label brand lives, not just the appearance at shelf. To that end, it is important to think about how people actually shop the store. The centrality of the paint department at The Home Depot is no accident—it is meant to be a visual showpiece with bright colors and an interactive paint-mixing counter.
Even smaller gifts to the brand can yield dividends. That could mean putting more thought and creativity into end cap presentations (glance at the end caps at Trader Joe’s and you might just see some of the same products featured in the chain’s latest Fearless Flyer) or making sure your product demonstrations are a rich, brand-reinforcing experience (Costco’s Kirkland Signature line is a case in point).
But these connections can be subtle, too. If a national grocery chain were to launch a new line of natural products geared toward Baby Boomers, it could certainly take a traditional approach by mailing out coupons. A more subtle alternative, however, would be to produce a health-oriented magazine that happens to reinforce the brand attributes of that line, perhaps with no more than a tasteful mention or two of the new products. This would be a long-term strategy—again, a reflection of commitment to concept.
The point is to think in terms of touch points, which extend from the circular at the kitchen table, to the in-store experience, to the point of purchase, and even to the sight of the store in the rearview mirror. At Fairway Markets, the multiplicity of experiences creates positive private label brand associations almost through sheer osmosis. Fairway takes pride in carrying or importing new and delicious foods. It bills itself as “the only market to roast hand-selected coffee beans of the highest quality on premises” and boasts of “a selection that all other grocery stores are absolutely envious of.” Hyperbolic? Maybe. But there is theater in this, too. The unspoken message is that, if you find a product in Fairway, it is likely to be worthwhile. This gives Fairway’s private label brands a head start when it comes to winning credibility with consumers.
So retailers, you need to think about the importance of commitment and avoid being myopic and overly focused on the package at shelf. Context counts. Don’t be afraid to take the plunge.
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