Family Dollar Brings Internal Alignment to Its Private Brand Vision
By Carol Spieckerman, President, newmarketbuilders
At last week’s Private
Brand Movement conference, Mary Rachide, Family Dollar’s DVP of Private
Brands, discussed the challenges of developing private brands. Two of the challenges
identified were the need for internal alignment, most specifically between
merchandising and branding, as well as ensuring that internal stake-holders
are on board and moving in the same direction.
"Structure determines performance," stated Ms. Rachide.
The platform
for the structure is a "clean baseline" of shared
data. Everyone must first agree on a starting point. From there, "finding
and fostering" the champions across the organization, and co-creating
metrics and schedules encourages accountability and buy-in. She also emphasized
the need to clearly articulate timelines that are "synched with the merchandising
calendar," since everything takes longer than you think and, if you wait
until the end, "it will become everyone’s last priority."
Ms.
Rachide acknowledged that a "huge education" has had to take
place in Family Dollar’s merchant organization after years of "managing
their own house." However, the new framework has been so well-received
that the merchants have begun to call her in advance to ask what the measurements
will be for upcoming programs.
Family Dollar has also realigned the organization
to encourage collaboration and problem-solving, and has established clear roles
and responsibilities for the private brand buying, sourcing and marketing teams.
Before, brand and merchandising reported to the CEO, which discouraged either
group from sharing their challenges. Now, although private brand and merchandising
are still separate entities, they both report to the chief merchant. This encourages
them to work out any disagreements and to "lift the rug" by openly
sharing what works and what doesn’t. When something does work, Ms. Rachide
said, it is important to openly acknowledge it and to leverage success stories
in order to "build
momentum" internally.
The company has also begun to conduct corporate "Taste
of Family Dollar" luncheon
events, in which Family Dollar brands are showcased and served to team members.
By encouraging brand engagement and interaction among team members, the company
is reinforcing the importance of, and personal connection to, its brands.
Discussion Questions: What is the optimal organizational structure for
retailer private brand building? How should retail brand-building organizations
differ from those of CPG companies?
Alignment is critical to the success of any organization whether private label or branded. Without alignment, the wrong products make it inefficiently to the shelves, causing poor operating performance, shrink, and customer dissatisfaction.
Seems to me that as long as private label product quality is good and marketing is efficient, the brand can be built. I don’t think customers know or care whether Costco, Trader Joe’s or Publix have alignment within their merchandising organizations.
Alignment is important for different reasons. Alignment makes the process of integrating private and national brands more efficient…and that efficiency can spell the difference between making money or not. It insures that the overall assortment makes the most sense, and is appealing to the broadest mix of customers.
What people are learning is the downside to the Category Management structure. Under this structure the internal Private Label team is in direct competition with branded product representatives. When the evaluation structure is sales growth, private label is working at a disadvantage. The Private Label team must be operating on their own as they must support the corporate vision. The playing field must be level by changing the incentive structure and common evaluation for both private label and branded.
Family Dollar has taken an important step in creating alignment–it must be done. Often, management is left to a category or department manager, responsible for top and bottom line performance, but not part of the holistic vision for a retail brand. Without this integration and alignment, the shopping experience can be very uneven and disappointing. Also, keeping everyone on the same page can keep the focus consumer centric, critical to long term success.
The elevation of private brands at Family Dollar is much more than a technical adjustment to merchandising practice. It reflects a strategic marketing priority for the chain — a manifestation of the total retail branding proposition.
So mere “alignment” of private brand folks with merchandising folks seems necessary but quite insufficient. With its thousands of outlets, Family Dollar needs a reliable stream of merchandise that faithfully conveys its value proposition. Store brands can fulfill this role to a large extent.
It’s great that FD has its store brand and merchandising groups reporting to the Chief Merchant, but this area of business practice is so strategic that I want to know where the Chief Marketing Officer weighs in.
It appears we are basically in agreement that alignment is extremely important to the success of Family Dollar’s private brand vision. Equally as important is removing the chain of command from the CEO, and aligning with the Chief Merchant. Nothing can be accomplished by not being able to voice concerns and work out differences together. When the groups are able to work together for the common goal, success will follow.