License to Brand

Can an Exclusive Brand strategy be overdone? At Target?

It may be possible to have too many exclusive brands…but the real question should be “how good are those brands,” rather than “how many brands are there?

Mike Duff at BNET raises some interesting ideas in a recent piece when he says, “Target is turning into a souvenir stand as the company marks occasions ranging from store openings to the change of season by rushing another exclusive line of products through its stores.” He goes on to say that consumers may be overwhelmed by the amount of exclusive brands at Target.

I can’t speak to how these short-term exclusives tie into Target’s overall strategy. But it seems that in this economic environment, adding excitement and discovery to the shopping experience is a worthwhile focus. And exclusives, even if not explicitly recognized as such, are a way to freshen up a store’s customer experience. 

The question that I think merits discussion is, “Is Target picking the right exclusives based upon a clear strategy for the brand on the front door?” Generally I believe that no one does it better than Target. They don’t just throw brands out there to see what sticks. They are selective with the brands they introduce and their exclusives consistently reinforce the Target brand’s overall positioning….fun, fashion, and excitement.

Exclusive brands can drop more pennies to the bottom line but their real value is that they can nurture and enhance the chain’s banner brand. If they do that, then the specific amount of those exclusive brands is less important. 

What do you think of Target’s short-term exclusive brands as a strategist? Do you like them or do they just confuse and overwhelm you as a shopper?

 

Nielsen checks in with some definitive and interesting findings on Private Label

Nielsen, THE source for retail information has been consistently taking a closer look at the world of private label in recent years. Their latest study release confirms what we have been hearing from multiple sources….the tough economy has combined with better private label products and more strategic marketing by retailers to have fueled continued growth in private label sales.

 

Growth of both dollar and units sales have achieved shares of total sales of 17.3% and 21.9%, respectively. While still not equal to the shares enjoyed by store brands in Europe, these numbers indicate the steady march upward of store brands as retailers consolidate in every category and dig for the better margins and value that store brands provide.

 

7-Eleven Announces Private Label Beer Game Day - is it a winning strategy?

If you follow my blog, you know I’m watching the private label spirits evolution with great interest. And I’ve also been following 7-Eleven’s focus on private label as well….so I thought the news this week that they were planning a private label beer was really interesting.

 

I’m not sure if “Game Day,” as the lager is called, has the stuff to make it happen. This has nothing to do with the taste or branding of the beer, but more about beer drinkers’ passionate devotion to their beer of choice – be it high end or low end.

 

They’ve also got a previous failure under their belt in this same space. In 2003, they launched a beer called Santiago as a means of grabbing a piece of the premium/imported beer pie, but that didn’t work. Paying premium prices for private label beer doesn’t make any sense.

 

But they’ve learned from their mistakes with Santiago, so this will be a premium beer selling at a budget price.

 

And they might be able to give the Goliaths like Anheuser-Busch a run for their money since they own the real estate.

 

All of this COULD appeal to 7-Eleven’s core demographic, which has been hit the hardest by the recession. They’re male, age 21 to 27, blue-collar workers, who are facing the decline of industrial jobs.

 

But even though it sounds good on paper, beer is a very different animal than a lot of product out there. It will be an uphill battle for 7-Eleven to even stay in the running with Game Day, let along pull off a “Two Buck Chuck” phenomenon.

 

What do you think? Can 7-Eleven score a touchdown with its private label brew, or will it get benched?

Private Label Spirits – Is Image Still King?

As part of my ongoing work in the private label industry, I’ve been seeing more and more articles in the last few months focused on private label wine and spirits. For instance, Sam’s Club just announced that it now offers private label vodka in 241 of its locations. Additionally, Rouses Supermarkets has introduced a line of store-brand traditional and premium wines. Last but not least, Legacy Wine and Spirits International Ltd. is in the process of producing the first of its own brand of select wines under private label.

 

It’s certainly an interesting development for the private label arena, but I have to say, the success of this approach is still a big question for me at this point. I’m very curious to see how it pans out.

 

The reason I’m unsure is that alcohol is traditionally a very image-driven industry. In fact, I’d argue that there’s more difference between the brands than there is between the actual products. If you gave someone a blind taste test between three major types of vodka, I doubt a consumer could tell the difference.

 

So if consumers are buying largely based on image, would you be willing to put Sam’s Club vodka on the bar rather than Grey Goose at your next party? I’m thinking no.

 

But with the right imagery and branding, is it possible to change the way people buy liquor? That’s a tall order, but if there was ever a time to test that theory out, it’s with today’s uncertain economy. Price may be just the right thing to tip the scales as long as you’ve got a moderately good-looking package.

 

Pair that with the “buy up, buy down” approach people are taking to making purchase these days; for instance, the woman who buys a designer handbag and gets her dress at Target might think it’s chic to get a good bottle of wine for a better price. After all, think of the passion people have for Trader Joe’s Two Buck Chuck.

 

As you can tell, I’m on the fence about this still…what do you think?

P&G, Alice.com taking taking online shopping experience to the next level

For those of us who follow the industry, I’m sure you’ve seen the coverage about P&G’s e-store which represents the organization’s biggest step toward becoming an online retailer. They may be playing down their intentions to become a major business-to-consumer e-commerce player and plans compete head-to-head against established online and multichannel retailers that sell its brands…but fact is, that’s what they’re doing.

 

And in my opinion, they seem to be doing it right so far. Rather than trying to manage the technical elements of the web platform, they’ve outsourced to PFSweb Inc. Instead, their focus will be on merchandising and marketing.

 

When you think about it, it’s an unprecedented window for them into how consumers interact with ONLY P&G brands. For instance, if a consumer goes to another online retailer they may buy P&G products like Tide, Bounty and Dawn, but opt for Huggies rather than P&G’s Pampers brand.

 

This new approach enables them to put ALL of their products in one spot online and watch in detail the brand relationships that internet shoppers have with each individual product. The amount of data and insight they could glean from this is unbelievable.

 

An article from Internet Retailer this week said:

The web store, which is being piloted internally by several hundred Procter & Gamble employees, will debut with about 700 products representing about 20 popular brands such as Tide, Pampers and Gillette, says PFSweb CEO Mark Layton. “The store will debut with multiple well-known brands and with a significant opportunity to add more products over time,” he says.

 

The site is expected to be up by the end of the first quarter or beginning of Q2.

 

Another piece of interesting news relates to Alice.com. If you haven’t been on the site you should check it out, it’s a great-looking, very consumer-friendly site for internet shoppers. They’ve just announced plans to launch a platform that enables CPG manufacturers to create branded storefronts on their own websites.

 

How it works is, the participating manufacturers ship their inventory to Alice’s warehouse and Alice handles delivery to shoppers. The manufacturer continues to own the products and sets the products’ prices and Alice charges an undisclosed fixed percentage of the sale.

 

According to Alice President Mark McGuire, “If I’m Sony or Apple, it’s easy to have a siloed online storefront where consumers can just buy my products, but in the household essentials category most people don’t just buy from one manufacturer. So to replicate the traditional store online is different. If each manufacturer has their own web site the customer won’t go to what could be 12 different sites. That’s where the power of Alice platform comes in.”

 

I think we’ll see more and more of these type initiatives as major brands look to connect directly with consumers.

 

In fact, Retail Analyst and Principal with Deloitte Consulting LLP Kasey Lobaugh says, “The fact that more retailers such as J.C. Penney Co. are developing additional private-label brands also represents a growing threat to consumer goods manufacturers. Major consumer brand manufacturers are going to have very aggressive plans for e-commerce. To maintain control of their brand and deal with the consolidating ranks of retailers, competing private-label brands and shrinking store space, they will be doing much more selling online.”

 

I love that private label has a hand in some of the great innovation and evolution the industry is experiencing. There will only be more to come!

 

I’m curious to know what you think of the P&G e-store and Alice.com’s branded storefronts. Let me know what your consumer experience is when you try them out.

Brand Partnerships that Paid Off…and Those that Tanked

It’s hard to believe 2009 has come to a close and we’ve kicked off 2010. At the beginning of the year, it probably seemed like Tiger Woods was one of the safest celebrity endorsements possible. One year can change a lot, with Accenture and AT&T severing ties and Tag Heuer as well as Gillette dropping him indefinitely. From Michael Phelps’ infamous bong photo earlier this year to Chris Brown’s assault of his then-girlfriend Rihanna, it’s always risky business to partner with a celebrity. But on the other hand, a well-chosen partnership can result in a huge payoff for a company, such as Jenny Craig spokesperson Valerie Bertinelli. Who would have thought she’d look so great on the cover of People?

 

It got me thinking about partnerships with a pay off…and those that didn’t pay off.

 

Of course, H&M, Kohl’s and Target are masters of the retailer-exclusive lines. Kohl’s boasts star power like Daisy Fuentes, Avril Lavigne, Vera Wang and Britney Spears. Target just signed runway designer Zac Posen, but also has Isaac Mizrahi, Rachel Ashwell and Paul Frank in its stable. H&M may do it the best, with Jimmy Choo, Stella McCartney and Chanel’s Karl Lagerfeld designing clothes for their customers.

 

Another area worth mentioning is how brands are leveraging technology and social media.

 

iPhone Apps:

This year was chocked full of brands jumping on the iPhone bandwagon and building apps as a way to connect and engage audiences with the brand in a totally new way. Some brands have done really cool things with their iPhone apps. For example, Timberland has an app that helps people find outdoor expeditions in key cities across the country, lets users view a “microcatalog” of Timberland products, gives people a fun game to play on their phone and provides tunes that are great to listen to for outdoor activities.

 

Here’s a good article on the Timberland app and why they did it:

http://www.xconomy.com/boston/2009/09/11/apperian-builds-iphone-app-to-lead-you-to-new-england-hikes-and-timberland-retailers/ 

 

If you’re an avid concert attendee, then I know you appreciate Zippo’s iPhone App, which has been called the most popular branded app on the iPhone. Here’s a brief article on it and a YouTube video showing the app in action: http://www.gomonews.com/zippo-concert-lighter-iphone-app-has-become-most-popular-branded-download/

 

Brands on FB:

Facebook is another area where some brands have been crowned king. This article from Slate takes a look at “the Facebook 50”: http://www.thebigmoney.com/slideshow/big-money-facebook-50-0

 

You can peruse the additional list below, but what about you? What brand partnerships were winners (or losers) for you in 2009? Any you’d suggest that folks haven’t dreamed up yet?

 

Additional Brand Partnership Winners:

Cindy Crawford andJC Penney

Miley Cyrus and Wal-Mart

Bob Vila and Sears

Ty Pennington and Sears

AMEX – Ellen Degeneres, Kate Winslet, Tina Fey

Ashton Kutcher and Nikon

Gwen Stefani and HP

U2 and iPod/iTunes

The Food Network and Kohl’s

 

Brand Partnership that Didn’t Work:

Anna Nicole Smith and Guess

Paris Hilton and Carls Jr.

Danica Patrick and godaddy.com

Joan Rivers and Geico

P&G takes on private label

 

The gloves are coming off! CPG manufacturers are sometimes a little slow to take private label seriously, but that’s not the case with P&G. According to an article that ran this weekend in the Financial Times, in addition to stepping up the marketing of their products, P&G’s also dropping prices on national brands like Tide and Pampers.

 

Here’s what the guy at the top had to say:

“We don’t think there is any reason any consumer should have to use a private label. We should be able to innovate at multiple price points to delight all consumers,” P&G’s CEO Bob McDonald told the newspaper.

 

The Financial Times article went on to state that, “A survey by research firm Consumer Edge suggests 30 per cent of US households now use private-label toilet paper. Just over 53 per cent of households surveyed were "very satisfied" with it, indicating shoppers might stick with private labels after the recovery, the firm says, underlining the challenge to P&G.”

 

I like this because it means they understand how powerful private label DONE RIGHT can be. Check out the full article at: http://www.ft.com/cms/s/0/215f0218-eb76-11de-bc99-00144feab49a.html?nclick_check=1

 

 

PLMA Idea Supermarket – an outstanding demonstration of the evolution of Private Brands

This year’s Private Label Manufacturers Association conference (held in Chicago from November 15^th-17^th) included a number of innovations. The best for me was their Idea Supermarket. In simple, no frills, 4 foot displays, it highlights some of the most notable private label brands and programs ranging from Wal-Mart to KaDeWE (Germany).

There were some real stand outs that demonstrated that - at least in terms of packaging and presentation - retailers are finally starting to think beyond the traditional store brand paradigm and are laying the foundation for real brands that could some day have real brand equity. I haven’t been overly complimentary of Kroger’s premium private label efforts to date – they’ve just been too “cookie cutter.” But their new MIRRA skin care and anti-aging brand looks great and may do well competing with the national brands at a great price point. It certainly has the potential to give some of CVS’s proprietary brands a run for their money.

Another unexpected stand out for me was from Price Chopper. Its new line of premium skillet meals under the “Central Market Classics” brand looks fresh, up-to-date and the packaging screamed quality. Will what’s inside deliver? That will be the ultimate test of whether price Chopper is just good looking design or whether they’ve put together the whole “package.”

Some other notables include the “de-lish” brand from Duane Reade – it looked like real quality. And perhaps the best is Via Roma, A&P’s Italian specialty line. A&P and Duane Reade leading the pack? I know! That’s unexpected. Cool!

Outside of food and packaged goods, one has to tip their hat to Staples “M” brand and Office Max’s TuL and Divoca lines. Mike Kitz at Office Max has really put it all together. In contrast to these thoughtful and well executed brands, one display pitted Targets “Home” brand against K-Marts “Essential Home” brand side by side. Oops! They look exactly the same. So what good does that do either store? Generic-sounding brands on generic-looking products that don’t differentiate the two retailers.

Another disappointment for me was 7-Eleven’s “7-select.” Kudo’s to 7-Eleven for seizing the opportunity - but it could have been so much more! I always look for these new brands to elevate the customer’s expectations – at least a bit. They have the potential to create a surprise and make the shopping experience more fun. 7-Select is true to the 7-Eleven brand in its look and feel but it lacks that something extra to make it a real brand.

Look for some of these brands in the stores as you have a chance. It’s also fun to see how POS display can make a brand come alive. Let me know what you think.

Do consumers find private label candy spooky?

I’ve seen some media coverage recently about the fact that shoppers are cutting Halloween spending to the bone in this frightening economy. From costumes to decorations to candy, people on the prowl for bargains.

 

In fact, a recent article cited these statistics:

“Nearly nine of 10 consumers -- 86 percent -- said they will spend less or the same on Halloween this year, according to a survey by Corporate Research International, a retail consultant.

 

About half (49 percent) said they would spend no more than $50 on costumes, candy and decorations. Only 12 percent of shoppers expect to spend more than $100 and fewer than one in four (22 percent) will buy decorations.”

 

But it turns out the area where they are MOST likely to spend is candy. This same article stated,

“While shoppers are buying more generic and private-label products at the grocery store, they are still opting for name brands when they buy Halloween treats, according to a report by the Nielsen Company.”

 

Unless all of these are brand name promotions and price reductions – which I don’t think is the case – that means that even when cash is scarce, people will STILL turn to brands that they trust.

 

This represents a missed opportunity for retailers, but one that can be remedied. Whether retailers bring well-positioned store brands to market, or they license a brand that can catapult them there, it’s obvious that Halloween can be treats instead of tricks for savvy retailers.

 

What about you? Do you splurge or save when it comes to Halloween?

Retailer Private Label Foods get a Quality Vote from Consumer Reports…

Consumer Reports has just announced a study that showed that a group of private label brands taste as good as or better than their national brand competitors.

 

 

According to Consumer Reports, “Some of the clear winners were Archer Farms Chewy Soft Baked Cookies (Target), Kirkland Signature Organic Medium Salsa (Costco) and Great Value Whipped Topping (Wal-Mart), which outperformed products from Pepperidge Farm, Old El Paso, Betty Crocker and Kraft.”

 

I’m not surprised with the findings. And coming from this well-respected publication, it’s a very worthwhile piece of research. I’ve commented on the steady quality improvements private label manufacturers have made in recent years, which have been driven by retailers’ need to compete head to head with national brand vendors.

 

But to put another perspective on this research one has to realize that when it comes to taste – taste isn’t really all that matters. What I mean is that brand perception has been shown to affect consumer taste buds. Yes, it’s true.

 

Over the years we have been involved in the “reverse” of this research. And time after time it’s been proven that the brand directly impacts taste perceptions. Consumers served the exact same product but with different brand names will perceive different taste profiles and imbue the branded products with more favorable attributes than the exact same product bearing a “lesser” brand. After tasting the EXACT same product, Sunkist orange soda tastes better and “more orangey” than Fanta. Oreo Cookies and Cream Ice Cream is crunchier and richer than Breyer’s. Killian’s Red is smoother on the throat than Bass Ale. And the bubbles in Perrier are more refined than those in Poland Springs.

 

The product has to stack up if retailers are going to continue to grow their private brands. NO question! And this report clearly shows that it’s happening. But the branding has to be right for retailers to ever really win the battle for their customers’ hearts - as well as their minds.

 

It takes time to build brand equity. Consumer attitudes about proprietary brands are improving, but it will take years before they can compete head-to-head – no matter how good the quality in the box.

 

As I’ve said in past blogs, one solution can be for retailers to develop strategically sound, exclusive licensing relationships and co-branded lines that compete with the national brands from day one. This is the way for retailers to acquire brand equity for their private sourced businesses quickly and efficiently. (For instance, check out previous blogs such as Costco signs deal with Iconix to sell Charisma line or Staples maximizes in-store assets to build its brand.)

 

Developing brands the right way requires a clear vision of the retailers’ long term branding goals paired with on-target research and creative abilities.

 

Have your taste buds ever betrayed you because of your trust in a favorite brand? Let me know your thoughts about the benefits and drawback of building versus licensing proprietary brands.