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What private label brands can teach us about in-store marketing

Author: Bill Gerba on 2007-08-02 18:06:42

Our recent look at the Reveries study on building brands at retail showed that marketers and retailers both understand the importance that stores play in global branding strategies. Getting over 80 percent of a group to agree on something is quite a task, so the fact that fully 83.2% of the survey takers could agree with such a complex and nuanced concept has me convinced that some people really get it -- they understand how important the store has become not just as a place to buy things, but as a place for brands to build relationships with their customers. So I was very pleased to come across a new Saatchi & Saatchi X and POPAI study that indicated exactly the same thing, only this time by studying consumer buying patterns for private label goods.

Private label sales have fascinated me ever since I got involved in the digital signage business, as I always figured they'd create some persnickety situations if the store and name-brand manufacturers ever had to compete for screen time. Consider grocery stores, which the Saatchi study focused on. These stores make their money on volume, with name-brand products often selling at razor-thin margins. Private-label goods, on the other hand, typically command higher margins, even though they're often sold at lower prices. Thus, would a grocer with a digital signage network want to fill the screen with ads for their lower-cost, higher margin goods? Or would they want their vendors -- the CPG manufacturers -- to purchase time to promote their wares, driving ad sales revenue to the grocer in the process? The situation is fraught with complexities. For example, which sale is more likely to promote additional cross-sales? Are co-op marketing dollars paying for the screen time? Is the name-brand item a draw? Does it pull people into the store? As you might guess, the right answers to questions like these make the difference between a low-margin item and a high-value, customer relationship-building, sales-generating tool.

Adding further fuel to the fire are quotes like these from Saatchi and POPAI's study:

• Private label has been growing at twice the rate of famous household brands over the last 10 years.
• Shoppers realise that both brands and private label provide a balanced portfolio of price, quality, choice, convenience and innovation. Both are important. Both have their limits, but both are required.
• When we asked retailers why people choose private label apart from price and quality, they tended to focus on: "packaging, quality, taste and price."
• [F]undamentally, one of the key differences between the way brands and retailers view private label and perhaps why private label is proving so successful is that retailers understand what their shoppers actually want and how they behave.... As traditional brand loyalty swings increasingly over to the retailer and the role of the manufacturer brand in the category mix is beginning to change, brand owners are only just beginning to realise what retailers have known for years. Supermarket shoppers don’t buy brands so much anymore. They buy solutions.
• The store is the new battle ground and brands that can offer not only a superior product at a good price but also a better brand experience that rewards loyalty are those that stand to gain the most.
• Television may have been the greatest selling medium ever invented, but watch out – the next creative revolution will take place in store.

And the piece de resistance:

• The simple fact is that the channel not the brand manager, controls the brand.

Hmmm... The channel, not the brand manager, controls the brand. One more time? The channel, not the brand manager, controls the brand. It makes sense once you think about it. That first moment of truth that P&G talks about... where does it happen? At the store. The products advertised in those multi-million dollar commercials we watch during the Superbowl... where can we get them? At the store. Impulse buys, brand swaps, new product trials, coupon- and promotion-driven purchases... where do they all take place? At the store.

So the next time you're in a meeting with your management team trying to explain why earmarking millions of dollars for a chain-wide digital signage project is a good idea, add this to your argument: POPAI, the world leader in research about marketing at retail, has told us for years that over 70% of brand decisions are made in-store. Saatchi X, the agency created from the ground up to manage retail marketing and improve the store experience for behemoths like Wal-Mart, has confirmed that the channel controls the brand. And whether it's an internally-created private label, a world-renowned name brand, or something entirely new to the market, customers will have their first moment of truth with that brand at your store.

But your store carries thousands of SKUs, and your customers have attention spans that only last a few seconds.

If only there was a tool that could capture a customer's attention, excite them, and encourage a first moment of truth that might not have happened otherwise. It would have to be something really eye-catching, capable of delivering a lot of information in a short period of time, and it would have to be easily changeable. Shoppers would also have to view it as a trustworthy, authoritative source of information, and not just a one-sided dialogue that just says how great the advertiser is. If only there was something like that...

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