License to Brand

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.

Long-Term Licensing Trends

 

 

 

 

 

 

 

In my role as Retail Brand Licensing columnist for The Licensing Journal, I write about the intersection of retailers and licensing. It’s a landscape that’s continually evolving and it’s an exciting one to be a part of.

 

The September issue of The Licensing Journal included my latest column, which focused on trends in the space. The article opened as follows:

 

“A year ago this article likely would have had a different tone. The winds of economic change were blowing. But few were predicting the gale force that would hit us in the fourth quarter. It’s an understatement to say that 2008 was not a good year for the licensing industry. Sales and royalty revenues were down in virtually every category monitored by industry resources and brands were no exception. According to EPM Communication, corporate brands experienced a downturn of 12 percent in the sales of retail licensed products for the year.

 

But historically, licensing metrics have followed short-term economic trends and have bounced back—following general economy and retail trends. So in looking at trends impacting the industry, we can’t ignore the impact of today’s economic reality as well as potentially systemic changes in how people think about the licensing deals that are likely to result. But in looking at the longer term future, there are a few other trends that I believe will impact the business long after we have forgotten CDS’s, bailouts, or an auto industry dominated by 'The Big Three.'

These long-term trends are:

· The role of the retailer

· “Doing good” celebrities as brands

· The web, communications, and the virtual world

· Globalization

· Demographics”

 

I spent the rest of the article delving into these long-term trends in the licensing industry. In a nutshell, “the times they are a-changing.” But retailers don’t need to be caught off-guard.

 

If you’re interested in obtaining the full article, call 1-800-638-8437 or go to www.aspenpublishers.com.

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.

Outlet Malls Offer Viable Means for Upscale Brands to Reach the Masses

I recently made a field trip (ok, I was shopping too!) to the Woodbury Commons Premium Outlets in upstate New York and had such a great experience.  Despite its substantial size and a few “tourista” buses, it had the feeling of a small, quaint village.  It was laid out with similar brands adjacent to each other.  There was a plethora of upscale brands from Chloe, Chanel and Jimmy Choo to Furla Luggage and David Yurman. It got me to thinking about the fact that it’s always a risk for a prestigious brand to go “down-market” to malls and even retail outlets, but it’s a very savvy strategy if done well.

 

As we’re seeing more and more, women’s shopping habits are changing…she might be wearing Michael Kors shoes bought at Neiman Marcus, a Marc Jacobs dress from Loehmann’s and carrying a Mossimo handbag from Target.  And with that evolution, retailers can make adjustments to the channels they utilize to reach consumers.

 

In fact, I just saw an article this week about the fact that Saks and Nordstrom are headed to outlet mall locations.  Even consumers who typically shop in luxury retail stores are worried about wealth destruction, retirement savings, debt and whether they’re still employed.  But they still want to shop at the Neiman Marcuses of the world – and have the same great customer service experience – all while paying less.  Retail options such as this allow them to do that.

 

In the past, outlet malls were used to clear out overstocked merchandise, clearance items or irregular sizes without hurting full-line stores.  But that’s a thing of the past, with outlet mall stores now also offering merchandise that’s exclusive to their stores.

 

Wal-Mart and Target have been doing this for years, with great success.  Think of Target’s Isaac Mizrahi or Rachel Ashwell product lines, or even Wal-Mart’s Norma Kamali line of clothing.  Kohl’s is another one that does this very well, with powerhouses like Vera Wang, Daisy Fuentes and Avril Lavigne in their retailer-exclusive arsenal.  So in essence, retail players like Saks and Nordstrom are jumping into waters these pioneers have already tested…but this also provides the benefit of having a stronger brand image than what is typically found at discount stores.

 

So now you know what I think – definitely a smart strategy…what do you think?   

Staples maximizes in-store assets to build its brand

A while back we commented on Staples introduction of is new “M” brand of stylish office supplies that crosses a range of product categories like funky push pins, cool binder clips and colorful file folders.  Staples believes that a sense of personal style can give the brand a personality and reason for being. We raised the question as to whether Staples was prepared to take the long view required to really build the brand or whether “M” would simply go the way of other “created” store brands that fade from a lack of support.

 

It looks like Staples is off to a good start by really leveraging its most valuable asset, which is its control of the retail environment. In a recent article in In-store Merchandising, Caren Putterman reports:

 

“The chain is devoting a majority of endcaps to Staples-brand products, which are merchandised beneath headers that read, "Save the easy way" and "Save with Staples brand." The theme is also communicated on ceiling banners and in-line headers in the seasonal department. Aisle violators in other departments feature product shots.

 

The program includes special in-line attention for the chain's M by Staples product line, with in-line graphics employing the brand's "My style. My way" tagline. The brand is also still merchandised on the upfront table displays deployed for its launch in May 2008.”

 

In our experience, retailers are still learning how to act like brand owners rather than just merchandisers. An easy place for them to start in thinking about this is by asking themselves a simple question….What do their national brand vendors want the most? The answer is right in their own stores and hallowed headquarters.  They want:

1. Favorable shelf space. 

2. Favorable off-shelf display.

3. Prominent features in circulars and other promotional vehicles.

4. Access to their loyalty card customer base.

 

It sounds like Staples is maximizing at least some of its own coveted marketing assets to build its brands directly in competition to their branded vendors. Good for them! It’s all about value – especially these days. Staples own-brand products are great quality at a great price. They’re more profitable for Staples and the consumer gets more for less. Marketing 101, everybody wins.

AMAZING FOOD CREATIONS AND CONSTELLATION MANAGEMENT GROUP FORM PROPRIETARY BRAND RELATIONSHIP

I wanted to share some news about one of Constellation Management Group’s (CMG) latest projects.  We’ve been selected by

Chicago-

based Amazing Food Creations! to develop a distinguished private label brand based on its leading-edge Chef Papillote™ cooking technology for healthy, high-quality frozen prepared foods.  Chef Papillot's brown paper pouch cooking technology is environmentally-friendly and is a unique cooking technology that maintains the flavor, freshness and proper texture of food throughout the cooking process, unlike other frozen prepared meals currently on the market.

Amazing Food Creations is relying on CMG to build a comprehensive private label branding strategy for the Chef Papillote line, which includes research, product and package development, sales, marketing and brand management.

 

The new Chef Papillote private-label line will be sold on a regional exclusive basis in supermarkets and gourmet grocery stores across the U.S. Right now, you can buy Chef Papillote at Sam's Club and we will be announcing more retail partners in the near future.  Stay tuned.

 

OfficeMax is Up to Something Interesting – Peter Walsh is in the House

OfficeMax is at it again.  As you may recall, last October I wrote about the company unveiling four new private label lines it developed in house.  These attractive looking new brands – called Ascend,

Canterbury

, Divoga and Infuse – were launched to add more colorful, design-focused products to the office supply retailer, which OfficeMax claims are not currently being carried in its stores.

 

Based on some new billboards I recently spotted in

Chicago

, now the company appears to be taking a different page from its private label playbook – licensing a well know brand to create a private label line vs building the brand from scratch.  According to these billboards, it appears the company will be unveiling a new private label brand with Oprah’s well known organization expert Peter Walsh.  There aren't many details available at this point, but I did just see Peter's January newsletter which mentions that he is "teaming up with OfficeMax this year to tame homes and offices across the country." I would expect that additional details about this new line will be hitting the wires any day.

 

At face value, I think this partnership is a wise move for OfficeMax and promises to be more successful than the four labels it launched this Fall, which I blogged about.  Why?  Licensing the Peter Walsh brand will enable OfficeMax to effortlessly gain a following and brand identity for its new product line with a fiercely loyal group of fans…and that is the beauty of licensing for retail exclusive brands.

Kudos to Kohl’s and its Exclusive Brand Strategy

There’s been a lot of talk lately about consumers favoring private label brands over traditional brands given today’s economy. You may have seen that the Nielsen Company recently reported that private label sales are "on fire," climbing 10% in supermarkets and 13% in drugstores during the past year. Total private label sales in all mass market retail channels now stand at $80 billion, up from $72 billion a year ago.

 

Most retailers, if they haven’t already, are strategizing about how they can jump into the private label game.  A good role model for companies making this decision is Kohls.

 

I’m shinning the spotlight on Kohl’s today because I believe the company is doing everything right when it comes carrying out its retail exclusive brands strategy in today’s economic times:  As I’ve written about in the past, Kohl’s has built an impressive cast of private label brands over the past few years including, Simply Vera Vera Wang, ELLE Contemporary Collection, Abbey Dawn designed by Avril Lavigne, apt. 9, and Food Network(TM). 

 

What I find admirable about Kohl’s is that the company is laser-focused on investing in its private labels and building value-driven relationships for its products with consumers.  They invest in building their private label brands.  Take their holiday marketing campaign for instance.  Most consumers are feeling a big pinch financially this holiday season.  Kohls, in turn, is aggressively promoting itself and its private labels as a one-stop destination for shoppers looking to get the most for their money.

 

Instead of putting its head in the sand until the weight of the recession lightens, Kohls is strategically investing in promoting its private label brands this holiday with creative new promotions and aggressive consumer incentives.  Kohl’s has also developed promotional events to drive traffic, with the goal of keeping Kohl's at the forefront as the consumer looks to make fiscally wise purchasing decisions.   Kohl’s comprehensive marketing campaign features a variety of marketing mediums such as broadcast and print advertising, digital media, charge card promotions, direct mail, e-mail outreach and public relations. It will also employ a national Hispanic marketing program.

 

Kohl’s is clearly investing in building long-term relationships for its private label lines with consumers and I think other retailers should seriously take note.  What other companies you feel are players to watch? 

Whole Foods Launches “Whole Deal” program

So what does a retailer that’s been focused on quality organic food do in today’s recession?  Sit back and wait for it to be over?  Not if you’re Whole Foods, also known as “Whole Paycheck,” a nickname that you do NOT want given the focus today’s consumer has on stretching every last dollar.  That kind of reputation can hurt a retailer both short- and long-term. 

 

Fortunately, Whole Foods has not chosen to sit back, instead developing a program called Whole Deal that focuses on its own private label brand, 365 Everyday Value.  According to their website, this is what Whole Deal is all about:

 

“We admit it. We're just learning that people really do want to know how hard we work to bring you the best available products at the best possible prices. There's no denying that quality costs, but when we get a deal, you do, too. And when something is worth a few extra cents, we can tell you exactly why. "The Whole Deal" is all about giving you the whole story,  so you'll know just how to get the most bang for your buck without sacrificing the benefits of natural and organic foods.

 

According to a recent Forbes.com article, “Grocers cash in as Americans Eat Cheap,” Whole Foods’ "Whole Deal" program includes in-store recipe guides and store tours where "value gurus" show shoppers how to shop on the cheap (and yes, that means a lot of 365 brand).

 

Whole Foods’ hope is that if it is up front and honest about giving people the best deals possible, wherever possible, people will be willing to pay a little bit more for quality organic foods.  This is a smart strategy, and it’s the only real option for them to compete, since they will be hard-pressed to win on price alone.  I applaud Whole Foods for creatively tackling this challenge and offering consumers the best value they possibly can.  What do you think?

 

 

Wal-Mart Tackles Premium Private Label Brands

Looks like Wal-Mart is ramping up its efforts to drive premium private label packaged-good sales at their stores across the country.  This is a fairly significant change in direction for the company, which has instead focused on national packaged-good brands for almost two years now.  In fact, according to a recent article in AdAge, the only private label they’ve put any muscle against is White Cloud products – and that’s a label they license, not own.

 

I thought Deutsch Bank Analyst William Schmitz’s statement in this article was worth discussion.  He states that he thinks it will be a real challenge for Wal-Mart to get traction with premium private-label.   "There are already some very strong value brands [in household and personal care]," he said, adding that efforts to build the more premium Sam's American Choice in non-food categories have foundered.  Part of the issue there might be the fact that the name Sam’s American Choice clearly gives it away as a private label product, and in my experience, premium private label doesn’t work without a premium image and product that are believable.

 

What Schmitz may be missing is that investing in store brand labels that are truly differentiated can create a real competitive advantage for the retailer.  With today’s economic uncertainty and value conscious consumers, it makes sense to invest in differentiating store brands that provide a unique image and extra value.  This is where real brands in the form of licensed private label brands can make a true difference. 

 

Because families still want to buy quality products for their families even in tough times.  So why not offer a premium private label product where mom feels like she’s getting a better deal than with a national brand, but she still gets a product she feels good about?  By investing in these products, retailers are giving consumers another reason to shop at their store vs. a competitor’s.

 

That’s my two cents on the situation.  Do you agree? Disagree?  Jump in with your perspective.