December 22, 2009
Because brands are a retailer’s prime differentiator, most who are serious about their private label business want to move their portfolios from labels to brands in order to achieve deeper customer loyalty and sales growth.
In fact, retailers who move their business to a more advanced strategic model also are accelerating speed to market, and better controlling costs, product consistency and compliance, according to Jeremy Whinnett, business solutions director U.S. for Agentrics, a retail and supply chain solutions company that provides synchronization, product lifecycle management, and integration, communications and collaboration software tools.
Whinnett outlined the 10 best practices and business processes that typify highly successful store brand retailers in a keynote presentation at the Private Label Manufacturers Association annual trade show in Chicago. “These are characteristics that move operators from private label retailers to private brand practitioners with the most successful and advanced implementation,” he said.
• Private label as a brand – Those who have basic private label programs (in the early development stages that are mostly product focused), have “no real strategizing about the brand or the concept. What we’re talking about is moving toward a structured brand, which demonstrates what the retailer truly stands for,” Whinnett said. The best way to develop a sound strategy is to understand the customer and target them appropriately by analyzing buying and spending patterns, drafting shopper profiles and relating them to the brands. Finally, you must set brand objectives and strategies. “You can then grow the market basket by using the brand to promote yourself. Once the customer has a good experience with one of your products they will begin to expand purchases to other categories and lines.”
• Communicate the brand strategy -- The process is complex and requires intense communication. “So often the private brand strategy is a private piece of information held in one area and not really communicated,” Whinnett said. “Or, as we often find, you have individual groups working in silos and the message (brand values) gets diluted as it goes through the development process.” It’s critical to have a centralized “knowledge base” of information that serves as the single point of communication and ensures a consistent message to all (internal and external parties), he added.
• Full collaboration with suppliers – “There has to be one version of the truth, and you have to bring suppliers on board with the communications message,” he said, adding that they often find very jumbled and mixed communication systems at retail, resulting in brand problems and missed strategic opportunities.
• Product innovation with suppliers – Once the proper communications tools are in place, retailers can move into product innovation (i.e. sustainability, organic, natural, premium). Before true innovation can happen “suppliers must understand the messaging [a retailer] wants to get across to customers and then they can help you achieve that.”
• Validated product specifications – Let systems do the work. “One of the biggest issues we’ve come across is that many retailers keep their information on a Word document or in an Excel spreadsheet or have hard copies in a file cabinet somewhere. This manual and scattered approach “introduces tremendous risk into your brand management,” Whinnett said. “Through a sound validation process, you reduce risk and errors in the system because you are using the system to manage the information going in. You are saving yourself time, resources and making it easy to access critical information.” One system that collaborates with suppliers, audit companies, research and development, testing labs, etc., is needed.
• Integrated artwork (product and packaging) -- “You need to take ownership of your brands and make sure the artwork companies have all the information they need to make sure specifications are correct, and vice versa. If artwork companies make changes…they get logged back into your system so that specification information is always held by [the retailer].
• Assure quality standards and control -- “Projecting your brand effectively is key to maximizing your ROI, Whinnett said, adding that the days are over of paying lip service to quality assurance – including product testing, regulatory compliance, auditing, supplier score-carding, site visits, self -assessments and shopper feedback and complaints. “The quality standards you dictate to your suppliers will actually manage your brand and protect you from your customers. This can be a very positive thing. Your customers need to have confidence in you.”
• Integrated critical path management -- – This includes managing and controlling the process from idea conception to launch and post launch review. Whinnett showed a “stage/gate process” designed by a Harvard professor (see illustration below). This type of structured release plan helps maximized brand impact and accelerates speed to shelf, as well as synchronizes launches, redesigns and marketing. “Innovation is a lot about beating the trend and beating your competitors so you are actually one step ahead of them. So you need to look at ways to maximize the efficiency of how you get products to the shelf.”
• Crisis management and communications ––Product recalls are a reality of the business, Whinnett said, but how they are managed separates excellent operators from the weak. “You need to ensure that your crisis management is spot on” by using proper communications tools that enable a single and unified message that goes out to suppliers, customers and the media. “You need to be really sure of the information you’re holding” if you want to give your customers a reassuring message such as ‘we’ve checked it, we’ve identified it and acted on it.’
• One-truth database – All of the above best practices hinge on a central hub of data so that the entire organization and supplier community is “singing from the same hymn sheet,” Whinnett said. “When you have many system with many different interpretations, you are not getting consistent data.”
An added benefit of strong unified data is the marketing intelligence it yields. “Most advanced retailers are making this information sweat, meaning they are using the information as a marketing opportunity with customers,” Whinnett said. “There’s no point in having this wonderful database if you are not going to make the most of it…and use it to increase customer spend and loyalty.”