Image © Jill Wheeler
During the recent recession, retailers developed private label brands to improve margins, wrecking havoc on manufacturer brands that were competing for market share. Despite the widespread difficulties for retailers during this period, retailer in-house brands blossomed. Just five years later, in many areas of retail this trend has been largely reversed. Market brands are back in a big way.
While I’ve been aware of this reversal of fortunes for market brands for some time, it hit home for me when RadioShack’s new CMO explained the beleaguered retailer’s plans for a turnaround. One of their primary strategies is that the store will no longer be merchandised by category, but by manufacturer brand. The new RadioShack will be a playground of customers’ favorite brands. Likewise, their new TV spot advertising the Beats Pill features the Beats by Dr. Dre and spoofs Robin Thicke’s “Blurred Lines” video. The message is no longer about RadioShack’s service or value; it’s about the store’s carefully curated selection of merchandise that comes with built-in brand loyalty. I’ll be watching to see if this halo effect will work.
In other consumer electronics news, Samsung has recently rolled out 1,000 Samsung Experience shops in Best Buy. The in-store experience shop was once the exalted position of only one brand in this category, Apple. Where Apple and Samsung have gone, I expect others will follow, replacing product categories throughout big box stores with brand shops. Customers will come to Best Buy because of the relationships they have with the brands within, not necessarily with Best Buy. These brand shops will be tempted to merchandise their products together, creating interactive ecosystems of products that will keep consumers shopping in-brand, shattering traditional category merchandising methodologies.
While many manufacturer brands have had a loyal following for years, the Internet has changed the dynamic forever. Manufacturer brands can market to customers through smart phones any time or place without the filter of the retailer. This purity of message represents a new world for these brands, many of which have been emboldened to compete directly, opening specialty stores in malls where department stores have been carrying their products for years.
Image © Jill Wheeler
Recent arrivals to my local mall include the Eileen Fisher and Tahari apparel brands and MAC and Kiehl’s beauty brands, all of which I have purchased in department stores over the last 10 years. Customers now have a choice: Will they buy this garment from the specialty store that carries all the promise of the brand or at the department store where other brands are offered? How will multi-line retailers respond to this new reality?
One indication is that they will create fully outfitted brand stores for many of their vendors. This is the case in moderate priced department stores such as JCP and Kohls. Much has been written about Ron Johnson’s transformative plans for JCP, but in truth JCP was headed in the brand shop direction already. Sephora was a boom for JCP, and it followed quickly with MNG by Mango — both of which were the brainchild of Mike Ullman, JCP's reinstated CEO. Kohl’s is known as a retailer that adheres strictly to standardization within its store environment. It is increasingly brand focused as its vendors compete for lifestyle definition through unique identity treatments, custom fixturing, graphics, and scripted visual merchandising.
While luxury department stores have leveraged brand names for years, there is an evolution here as market brands strengthen relative to private labels. Where only luxury shops had “hard shops” prior, lower-priced brands are demanding control of their look and feel — and they are getting it. Many traditional retailer business segments are becoming more subtle or are disappearing as the vendor brands compete for customer awareness.
Image © Jill Wheeler
How can department stores and other multi-line retailers respond within this BRAND new world?
- Build your own “umbrella” brand. Use all the tools in the toolbox — including service, environment, customer loyalty programs, social marketing, and direct marketing — that present your own brand promise. Create a store environment where the “umbrella” brand is identifiable, compelling, and meaningful to all shoppers.
- Embrace your multi-line world and become strong brand curators who respond quickly and with flexibility to new trends and brand affinities among their customers. Understand the relationships that their customers have with these vendor brands and allow the brands to express themselves in the most compelling way.
- Back to basics. Control the chaos and stay true to good product merchandising and effective communications.
Jill Wheeler is an architect who was bit by the retail bug about 15 years ago. The constantly evolving retail landscape has ensured there hasn’t been a dull moment since. Her passion is fueled by this dynamic change as she seeks the perfect retail alchemy. Contact her at email@example.com.