A BRAND IS A BRAND IS A BRAND…OR IT IS… 11-01-9511-01-95



Byline: Robin Lewis

According to the consumer, there are brands and nonbrands, period.

Their definitions of brands may also include the names of stores as brands and the labels on items in the store (that were made just for that store) as brands. Definitions commonly used in the industry: “private brands or labels,” “retail brands or labels,” “private brands,” “tertiary brands” or “all other brands,” do not exist in the consumer’s lexicon. Therefore, they should probably cease to exist in ours. Even though the trade definitions may be expedient for distinguishing merchandise internally, the danger lies in losing focus on what the consumer wants or expects. Equally destructive is the sometimes hostile relationships between retailers and their branded vendors competing for share, when they should be coexisting or partnering to provide the consumer with more and better, thus getting them to spend more. As the research indicated, there are still too many retailers and manufacturers developing labels (as brand “hopefuls”), primarily out of internal needs like higher profits, filling a price point, differentiation or other financial reasons, as opposed to an external focus on what the consumer might want. Ultimately, most of these brand “hopefuls” will fail because they were internally conceived.

Brands exist only for consumers. Brands that are not developed to satisfy a consumer’s

need are brandsthat will disappear.

This is a strong statement that might be expected from a brand manufacturer, but, its logic can’t be denied. The numbers of names and labels being introduced as brand hopefuls are clearly on the rise. As the competition intensifies, only the strong will survive. Those will be brands that have been built from the outside in vs. inside out, that is, from understanding a consumer’s need that the supplier is capable of satisfying versus the supplier’s need to improve bottom line, and then seeking a consumer who might be interested in their brand.

A consumer will pay more for a brand because it stands for more.

The consumer equates brands with better value because for a name to be deemed a brand, it has to stand for a set of characteristics, including style, image, quality, fit, reliability, consistency and confidence that you’ll look good. These points of value are more important to the consumer than price. Thus, they will pay more for brands. A brand can be considered a “trustmark,” a guarantee of value that binds consumers’ loyalty.

Consumers will seek out the brands they like. They will return to stores that carry their brand because they trust the brand to deliver what they expect. They are loyal to the brand.

Brand and consumer relationships are built and reinforced over time.

Loyalty and trust are the cornerstones of a brand’s relationship with its consumer, which takes time to build, and requires continual reinforcement. It is not enough to develop a product for a need that may be superior in attributes and name and image and that might be successfully launched with almost overnight national exposure. Reliability, consistency, dependability and expectations for constant innovation are the dimensions that drive loyalty and trust. And, all of those dimensions take time to build. Those dimensions also require operational perfection, including zero defects, superior distribution and delivery systems, excellent service and sophisticated marketing strategies (packaging, advertising, PR, and superior p.o.s. presentation/ service). Loyalty and intent to repurchase are of great value, considering it now costs approximately four to six times as much to get a new customer as it does to retain an old customer. However, the costs to retain a customer are also sizable. Advertising, continual product innovation, perpetual delivery of the brand’s quality and image promise, and constant improvement of the marketing systems all require major investments. Yet, without loyalty, there is no equity. And it is the brand’s longevity, higher margin returns and its equity that make the brand-building investment and maintenance worthwhile.

Without loyalty, there is no equity. Without equity, there is no brand. It takes time and money to build both.

How Do Retail and Vendor Brands Coexist in the Same Store? Is There Competition or Collaboration?

Except for non-specialty stores, where the store name is the brand name, all other stores that carry a mix of their own and vendors’ brands will have to address two issues: (1) mix and (2) control. A perfect world would find retailers and vendors sharing in the decisions regarding these two issues. However, retail/vendor sharing would seem to be an oxymoron, according to our research.

As the research indicated, there are differing opinions among retailers and vendors regarding how and for what purpose brands are used. A key point of contention centers on who controls the selling environment, with the manufacturers’ interests leaning to their brands’ integrity and protecting their marketing investment and the retailer wanting to drive traffic, revenues, profits and some degree of competitive differentiation.

“Yes, there are tensions. And more on the horizon. We see a narrowed vendor structure, private label increasing and the drive to differentiate accelerating with consolidation. I believe the outcome will be a new level of partnership, but it is not clear to me what that is yet — maybe more exclusive labels from us, or running a complete part of their business using our skills.” — Brand Manufacturer

These points of contention can only be resolved by truly partnering and agreeing on the best positioning for each of the brands: the different consumer needs they are meant to fulfill, the purpose of each in terms of image vs. financial factors, what the mix should be, and how the management and control of the brands into and through the selling floor should be shared.

Large manufacturers of nationally distributed brands that have years of brand management experience are often better equipped to manage and control their brands all the way through the supply chain. In fact, there is a growing phenomenon in the food industry, where manufacturers manage the entire product category that their brand is in. Called category management, it will likely take hold in apparel retailing, as well. The logic is to effectively share core strengths to yield maximum returns. So, if a vendor has greater resources and more experience in tracking takeout, replenishment, pull-through marketing, p.o.s. presentation and service, etc., then it makes financial sense for them to perform these functions. Traditional branded manufacturers will also most likely increase their production of the stores’ brands, as well as offer variations on their own brands such as sub-brands or store exclusive brands. Private brand manufacturers must also become closer working partners with their retail customers to maintain their loyalty.

Brand Growth Is Accelerating Over Nonbrands and Will Continue

Long-established brands, and brand “hopefuls” that have become brands, are growing in importance and share of market, while nonbrands are shrinking. While this should not be surprising, due to consumers’ long-held desire for brands, the growth is in an accelerating trend for three other major reasons:

1. Oversaturation: The over-supplied market is forcing retailers and vendors to fight for the same con-sumers’ dollar, just to stay even. Consolidation is a strategy that works until there are no companies left to acquire. Price promoting is deleterious to all segments and lowers all ships over time, witness price deflation. And since the industry has conducted major surgery in cutting costs over the past several years, there is not much left to cut. Therefore, as discounters have discovered, brands become a potent weapon in the battle for bucks. 2. Vertical Integration: All of the cost centers between product origination and consumption (or stopoff points for the product to have something done to it, like fabric to garment) have markups that the consumer ultimately pays for. As evidenced by the price deflation at retail, the consumer is clearly not paying those markups. Simply, they do not have to, and they are forcing a flattened, more efficient supply chain. Consequently, vertical integration is becoming the buzzword for the new millennium. The cheapest and shortest distance between two points (product origination and consumption) is a straight line.

And, whether the integration is formalized as retailers integrate backward into their own sourcing, or manufacturers become retailers, or informally executed through partnerships, strategic alliances, etc., it will continue because long term it is better for the industry and the consumer. It is about logistics and distribution, and getting better product to the consumer cheaper, quicker and more often. This is called value.

Brands will play an increasingly important role in this integrated structure because of their intrinsic value and their ability to provide a distinctive and cohesive image. Specialty store chains like The Gap. Victoria’s Secret, Talbots, et al., are good examples of vertically integrated operations with distinctive and cohesive brand images between the apparel in the store, and the store itself. 3. Micro-Marketing: The de-massification of our society will result in fragmented population enclaves as well as fragmented and parochial needs/ wants. Accordingly, there may be more diverse need for new brands. It also means that nationally distributed brands may have to differentiate their products for many diverse market wants, as opposed to their present homogenized mass offerings, while actually strengthening the homogeneity of their brand image to avoid a diffusion of what it stands for. In fact, it will provide a litmus test to determine if their information, distribution and logistics technologies can respond to the different needs of these micro-markets. For the smaller, localized vendors and retailers, this narrow focus will be easier, and it may provide ease of entry for the smaller entrepreneur.

Micro-marketing is the future. It will increase the demand for known brands and for new brands. It will favor and increase the growth of small retailers and vendors. It will require the giant manufacturers and retailers to use their technological superiority to become a lot of smaller companies.