First-of-a-kind research shows both the strengths and the untapped potential for Licensed Private Brands to be valuable assets for retailers
“Licensed Private Labels Boost Spending, Frequency of Shopping and Good Word of Mouth” is the headline in the recent edition of The Licensing Letter announcing a new piece of research. This quantitative study looks at the marketing and branding power of retail exclusive licensed brands. I applaud The Licensing Letter’s parent company EPM Communications for this innovative piece of research. There’s nothing like it that I know of and it begins to address the most critical topic. Is all the private label/licensed exclusive branding worth it?
In this blog I have consistently argued that the ultimate potential for private brands will be reached when the brands become marketing assets for their retailer owners. Exclusive brands provide financial benefits to retailers through higher margins, and merchandising benefits through an enhanced shopping experience, but do they build the retailers’ brands overall? In order for them to provide this next “higher order” benefit, exclusive brands need to become “real” brands – with high awareness, clear links to their exclusive outlets, consistent consumer expectations and trust, and drivers of traffic and loyalty to the retailers.
For a complete look at the studies findings, I’d recommend that you visit The Licensing Letter website and even consider purchasing this reasonably priced study.( www.epmcom.com ) Here are a few brief observations about the findings.
Only 20% of the respondents could correctly link an exclusive brand with its retailer parent. An equal 20% “guessed wrong” by linking the brand with a retail competitor. And the vast majority, 60% just didn’t now which brand went with which retailer. Therefore, one could easily conclude that these exclusive brands are falling short of their potential. That’s true and there are lots of reasons why. Important ones are the immaturity? of many of the brands and a lack of marketing beyond in-store activities.
But I encourage thinkers in this arena to dig a little deeper into the study’s finding. A third of respondents who are aware of the brands indicate that the brands are a “destination” and that they spend more at these stores. And of those that think of the brands as destination brands, nearly two thirds say they shop there more frequently, 52% say they spend more and that they are more likely to recommend the store to there friends. Here’s where the potential is. If retailers can really create destination brands, the power of these exclusives could be massive.
The study also points out that there is considerable confusion about several licensed apparel brands. For instance, consumers think that Simply Vera Vera Wang is available not just at Kohl’s but also at more upscale stores like Macy’s. This is the same case with Norma Kamali at Wal-Mart. But wait a minute – that may not be all bad. These brands are certainly intended to create the feeling that they are more upscale and provide special fashionable excitement to the shopping experience. So they are not destination brands – yet! But they could be doing a great job in building consumers feeling about the store and their shopping experience. I believe that over time and with a little marketing the full power of these brands can be established.
Finally, I’d like to point out one caveat about the study and one of its findings. That is that this study is based solely upon consumer attitudes and not behavior. This can be a bit risky when dealing with brand issues. In my many years of working with brand research, we have found a negative bias against consumers “admitting” the power that brands hold over them. Their stated attitudes often do not reflect their actual behavior. For instance only 3% of the respondents of this study say that buying brands is important to them. Experienced marketers can see how this clearly understates the power of brands and demonstrates a potential bias in the data.
Congratulations to The Licensing Letter and EPM Communications on their study and the insights it provides. I look forward to future studies and refinements. And I hope retailers take advantage of this important data as they think about building their exclusive brands in the future.