BrainTrust Query: Let Your Banner Wave?
Should retailers align their private brands with their banners or build their brands separately? Based on presentations at the Private Brand Movement conference, it depends on whom you ask.
In his presentation, "Creating Value Together: How European Retailers and Manufacturers Collaborate to Innovate," Koen de Jong, founding director at IPLC, noted that, for most European private brands, store banners "drive the offer." He cited Carrefour as an example of a retailer whose good, better and best private brands each bear the Carrefour name.
In a co-presentation on the following day, Maggie Hodgetts, head of design for U.K.-based Waitrose and Jonathan Ford, creative partner for Waitrose’s design firm, Pearlfisher, detailed the painstaking process that led up to the creation of Waitrose’s mid-tier, health-oriented banner brand: Waitrose LOVE Life.
The launch was portrayed as an expression of Waitrose’s personality, its existing values around health and its reputation for care, consideration and quality. According to Mr. Ford, the Waitrose brand values were already a "great starting point," so the overarching opportunity was to be more "explicit" about those values and, in the process, express the positive side of health and well-being. The brand essentially became Waitrose writ large.
Stateside retailer presentations told a different story. Alex Petrov, Safeway’s VP of consumer brands spoke to the need for private brand quality to "ladder up" to the banner and vice versa. Interestingly, he confessed that, in some cases, Safeway’s private brands seemed to "fall behind" and out of alignment as they upgraded store environments. With Safeway’s private brand portfolio, including its new launches, heavily weighted toward non-banner brands, the company obviously believes that achieving alignment doesn’t have to be an exercise in literalism. In fact, Safeway’s non-banner O Organics brand led the way in its retailer-to-retailer brand model just as Craftsman and DieHard did for Sears. Clearly, major brand equity can be built separately.
In her presentation, "Branding with Southern Style," Lisa Edwards, Belk’s packaging design manager, indicated that the re-working of Belk’s private brand has focused on modernizing its existing non-banner legacy brands, such as Kim Rogers and Red Camel, and creating a few more, such as accessory brand, Via Neroli, and the soon-to-be-launched cosmetics brand, Parisian, rather than attaching the Belk name to these products. According to Ms. Edwards, Belk customers perceive and receive the retailer’s private brands as national brands, particularly in rural areas where Belk is the only game in town. Belk has encouraged individual store teams to use their imaginations to interpret the brands in their particular store’s environment, enabling a form of localization-on-a-shoestring, and driving even more passion for the brand portfolio. Belk would seem to serve as a great example of how non-banner brands can more easily take on national brand characteristics.
More than once during the conference, Trader Joe’s was cited as a rare U.S. retailer that effectively leverages banner brands to drive differentiation. Does the fact that Trader Joe’s is owned by German retail icon, Aldi, take them out of the running?
Discussion Questions
Discussion Questions: Should retailers align their private brands with their banners or build their brands separately? Is it more or less important based on the category, whether grocery, apparel, electronics, etc?
It is crucial that retailers combine their private label program with their own banner. That’s the key to building exclusivity with the brand. Everyone knows that you can only get President’s Choice products at Loblaws (or their affiliate stores). Any private label program wort its salt must be co-branded with the store that carries it. It’s the only way to truly build loyalty with the line.
Aligning private brands with their banners is more efficient. However, building brands separately is more effective. In terms of positioning the retailer as a brand, my preference is for effectiveness over efficiency.
Integrated Marketing Communication (IMC) theorizes (where is Don Schultz when I need him) that you would want to align the brand and banner, with the caveat that you have to be starting from a good place. If you have a weak image, like Aldi in the US, you might not want to do this. But if you have a good image, say Publix, then you would reinforce the brand and the banner by linking them. No reason not to tier the brands in a good/better/best lineup or have offshoots like O Organics, but they can be clearly linked.
And yes, this may only apply to FMCG.
I think it depends on the category. From a consumer point of view, if it’s food or supplements, I want to know the brand behind it. Brands in these categories have a philosophy, and that’s important to me. As far as apparel is concerned, being perceived as different and new is important for some brands like Belk. Carrying brands that appear to be non-Belk gives customers a feeling of greater access. But, on the other hand, if I’m buying Chanel, I want Chanel.
I think it comes down to a question of whether the retailer brand is strong enough (well-enough defined) to carry over to a product brand. For a lot of retailers, that is a big “if.” Maybe the corporate team is good at articulating their company’s brand elements, but in many cases, consumers can’t — especially when it comes to grocery. What exactly is the brand promise of Safeway vs. Kroger? And how differentiated is that really? In those cases, you need another carrier for a different set of brand elements — in Safeway’s case, O Organics promises something much more concrete than “Safeway” does. But conversely, “Trader Joe’s” does promise something distinctive, which can indeed be carried over to its products.
I like a mix. Aligning “value” with the banner is a very good idea, especially in an era where we are seeing a mix of premium and value brands. I visited a Winn-Dixie store the other day and was impressed by 2 things: 1) The ubiquity of their “Chek” soda brand and 2) how well they were integrating the Winn-Dixie brand in their frozen aisle. I thought it was an excellent example of doing both.
I think the connection between banner and store brand strategies is driven by the retailer’s overall market perception. So either approach could work as long as the two strategies are aligned. Example: a store known for price will have a very tough time convincing shoppers that they offer a top-quality, own-label line. Conversely, shoppers will assume that a high-end retailer’s value brand is more expensive than competition’s comparable items. Retailers without a clear market perception could go either way, or both ways.
Let’s first make the assumption that the retailer’s brand is strong enough and well accepted. With this in place; why shouldn’t they align the private brands with their banner? The retailers have to believe in what they are doing and the success of their banner. That has to be the first step in the process. They have goals in place when they begin the program. From here it is a matter of creating a program to gain customer acceptance.
There is no one size fits all right answer to anything about store brands. The right answers and solutions depend on many variables including:
1 – What is the retailer trying to accomplish with its store brand program?
2 – Is the store brand attempting in itself to be a point of differentation?
3 – Is the store brand in itself trying to make a statement about the retailer?
4 – Who is the consumer base and what are the demographics and why do these particular consumers purchase store brands?
If the retailer’s store banner brand has true value in the market, then, yes, leverage it to the max. However there are just as many success stories with P/L products having brands that did not connect to the store directly and proved to be highly successful. Jewel Foods in Chicago led the way with their good, better, best P/L brands in the ’70s, and even earlier. This is not a “black and white” choice.
The question of whether or not to align the private brand with the banner has more to do with the intrinsic value of the banner brand than a strategic question as a whole. In Europe, as with Trader Joe’s, the banner brands have higher-end perceived value to them. As a result, it is easy to create credible brand value for the private brands associated with them.
As a rule, it is easier to broaden a brand “down” than elevate it higher. If a brand is associated with “low end” products or perceptions, then that is usually where you stay. As a result, the higher-end grocery banners are far more likely to be able to mirror the European stores’ success than the mainstream or downscale stores.
Retailers should understand and document the brand equity represented by their banner and then decide on the appropriateness of aligning their private brands with their banner. Furthermore retailers should understand consumer wants related to specific product categories and select or create private brand names that reflect those attributes. I’m just saying,”A rose by any other name….”
Looks like the panel’s opinion is as diverse as the presenter’s — and that’s probably a good thing.
While I personally favor building unique brands separate from the retailer banner (Kirkland’s Signature; President’s Choice) there are times when that is not the right strategy. Two immediately come to mind.
First is when the retailer can’t really afford to invest much in marketing and only carries one label across all categories. Then the banner is probably the best way to go.
Second is when the retailer is on a tiered (good, better, best) strategy. Then the banner can carry the mid-tier. But unless the retailer is an Extreme Value retailer, the banner should not appear on the “value brand.” That links the entire store with low price and hurts the credibility of the more expensive labels.
I believe the Safeway or Loblaws’ private label approach is the best for North American grocery brands. But to me, it’s all got to do with the perception of the mother brand. If consumers trusted Safeway, Albertsons or Kroger as much as they trust a new private label, then it might be better flipped — but that’s not the case. It may be the case with Tesco and others in Europe, but not here (Trader Joe’s, btw, is not really a grocery store; they’re a specialty store that happens to sell food).
Most food retailers here have established themselves as providers of great products provided by experts at doing that — and their customers understand that. When the role is reversed, the customer here is suspicious.
Let’s return to channel criteria ala Michael Porter. A retailer gets customers by delivering a specific promised value to the consumer — a location (even online) stocked with a chosen assortment that delivers their balance of value, selection, innovation, etc….
In most cases, though, the retailer’s value is that they bring together goods (they curate the goods in modern lingo). Aligning their brand too closely to any private label introduces doubt in the consumer’s mind that the retailer is doing appropriate curation.
Sears, for example, has run this risk when it stocks too many Craftsman brand power tools. Is Sears a solid source for tools? Or just a Craftsman outlet? Their success is built on offering Craftsman side-by-side with other brands and that’s what consumers trust.
If the retailer is using private label to create loyalty and if the products are carefully planned and well received then of course. If either of these conditions do not exist why are you doing private label?
The PL banner strategy question certainly merits the nuanced discussion that appears here. Elements of the decision include at minimum: the channel of trade, the category of product, and the retailer’s master branding and strategic positioning.
I believe grocery retailers and some others can often get good mileage out of store brands that are exclusively linked to the chain banner. (Trader Jose comes to mind…) But linking some PL lines doesn’t have to mean linking all, and in fact the blend of own label, banner-linked, exclusive premium and generic brands is a kind of merchandising language in which all retailers must attain fluency.