How to Develop a Private Label Expression Aligned with Retail Brand Strategy

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August 16, 2011

By Todd Maute

A private label brand portfolio can be one of a retailer’s most powerful marketing tools, helping to keep its merchandise mix fresh and relevant in a rapidly changing marketplace. When the brand portfolio is properly aligned with the store experience and other marketing messages, it also helps foster a clear brand positioning in the minds of consumers. By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Successfully achieving this objective requires a retailer to understand who its customers are and when, why and how they shop. They need to study the market and the competition intimately and to develop a strategy that targets key customers while at the same time drawing in new ones. Retailers that can execute flawlessly will be in a good position to leverage private label as a tool to build their desired brand image.

Perhaps no retailer in recent memory has executed on a private label brand strategy as successfully as Duane Reade, the venerable New York City drug store chain that was subsequently acquired by Walgreen Co.

Duane Reade launched an extensive research effort to help it better understand its customers and market, and it used those findings to determine key areas of focus. The insight led to a strategy that focused on convenience, beauty and health, with an overall mantra of “New York Living Made Easy.” Critical components of the chain’s rebranding effort included a radical redesign of its stores and the focused development of a clear private label portfolio that addresses key learnings from the consumer research initiative. Marketing efforts then were targeted on what that research identified as being most important to New Yorkers.

The retail design strategy was focused on creating a new image for Duane Reade that would appeal to demanding New Yorkers. At the same time, the private brand strategy focused on leveraging the chain’s New York heritage and its hometown consumers’ desire for unique products coupled with everyday value. Duane Reade drove the business by integrating product development and great design, followed by outstanding merchandising at store level.

On the beauty front, it decided to leverage that it was in a market with intelligent, trendy, forward-thinking consumers. Rather than trying to compete with price-driven retailers, Duane Reade made beauty a key platform, using unique brands and private label beauty products to drive traffic, boost margins and differentiate it from competitors. It also saw an opportunity to grab some share from up-market channels such as department stores and specialty cosmetics shops.

Its health and wellness strategy was built around revamping the pharmacy, and the convenience component sought to take advantage of New Yorkers’ fast-paced, time-sensitive needs. The convenience factor was addressed through the development of unique and differentiated food products as well as items that offered New Yorkers great value in key categories.

Our firm helped Duane Reade create a multiple brand strategy, starting with deLish, an upscale line of food products that were unique and different from the competition, all wrapped in a New York-style design. We redesigned the DR O-T-C brand to fit nicely into the clean and contemporary stores. The chain also had a cosmetics utensils line called Apt. 5 that lacked relevance in the new strategy, so we changed that brand to cover a line of household items, cleaners, mops and other essentials New York City apartment dwellers need. Finally, Duane Reade knew that even affluent customers are price-conscious, so we created an unnamed value-driven brand featuring New York City landmarks such as the Statue of Liberty, Brooklyn Bridge and the city’s subway system. The goal was to support the chain’s New York focus and to appeal to loyal New Yorkers.

The private label program was an integral part of a broader go-to-market strategy that included revamping its loyalty program, launching a new marketing campaign and delivering unique events at store level.

Since the overarching strategic element differentiating Duane Reade from its competitors was its intrinsic “New York-ness,” that became a unifying theme in everything from package design and graphics to in-store signage. Everything worked together to endorse the idea of “New York Living Made Easy.”

In developing a private label expression that aligned precisely with its retail brand strategy, and desired image with New York customers, Duane Reade now offers New Yorkers a shopping and product experience that is 100 percent unique to them -- quite the aligned strategy!

Todd Maute is a partner at New York-based strategic branding agency CBX, where he is responsible for building retail brands for clients across a number of trade channels including grocery, drug, discount department stores, pet specialty, consumer electronics, convenience, foodservice, office products, warehouse clubs and auto aftermarket.

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