Retailer Brands - Lessons from UK and what it takes
Retailer Brands - Lessons from UK and what it takes
Everybody cites Tesco as a benchmark for retail brands. Most forget that without Masterfoods, Cadburys, P&G, Unilever, PepsiCo, Nestle, Kellogg’s and Coca-Cola, et al, consumers would simply not visit Tesco. These brand owners have little to fear. They are simply not replaceable. These companies stand the test of time by a commitment to constant brand refreshment and improvement. More important than that is the continuing dialogue they have with the consumer. That said, it would also be true to suggest that presently, these manufacturers are playing ’catch up’ with UK retailers in the area of consumer purchase behaviour. The manufacturer has to purchase retailer data to discover who buys their brand and why. And in the new world of one-to-one relationships, rather than the old blunderbuss techniques of TV advertising used to reach beyond the retailer, there is a delicious irony - income - for the Tesco’s of this world.
It is a fact that there are far, far too many food brands in Australia in too many categories, particularly where there is no ‘added value’ to the consumer. This is principally the fault of retailers. Anyone who allows listing fees/slotting allowances to dictate the choice of brands to put in store deserves the current overload of "me too’s". When I first visited Australia 12 years ago, and suggested it was crazy, someone remarked that ‘listing fees were the glue that held the grocery margins together’. Sadly I think it may still be true today. If it isn’t, why have six pasta brands? That’s not consumer choice - that’s poor retailing. Or at best, lazy retailing. It’s worth reminding retailers that whatever way they cut the profit cake it’s only so big, and remains the same size. It’s simply a construct of where one puts the margin earned - be it in slotting allowances, or saying NO to distribution requests, and as a result significantly improving the cost efficiencies in the supply chain by not stocking too many supposed brands.
The next battle has to be in the area of the consumer data they own, but fail to use effectively. That information alone is unique to each retailer. Everything else is able to be copied within weeks.
Let me try to explain Tesco’s success. It’s not entirely about retail brands. It’s about a real estate management department who had the foresight in the eighties to buy big plots of land and build big destination stores. It’s also about following the consumer and giving them what they want. As Sara Weller (the ex Marketing Director of Sainsbury’s) said “never under estimate how hard it is to change customer behaviour”. Sainsbury’s did, and rue the cost to this day. Tesco’s mission says it all: “... to build lifetime customer loyalty”. Tesco recognised that they had to have consumer trust… and that only comes when you listen, and respond, to what customers tell you. Tesco have a purpose to retailing. It’s called ‘every little helps’. It’s an all embracing experience for everyone, regardless.
What Tesco does, and does well, is respond to consumers. I don’t think Australian retailers respond as well to consumer behaviour, needs, or wants. Everything Tesco does is based on ‘what’s in it for the customer’. And if the retailer can’t see that, he shouldn’t do it. Can Australian retailers honestly say that? The day that Tesco acquires Coles, and Walmart acquires Woolworths is the day we’ll see a real war for the consumer’s heart in Australia.
The real question is: do Australian consumers trust their food retailers to the extent the British customers do theirs? On this alone will stand or fall retailer brand development.
And maybe one must ask the question of branded manufacturers, "Are youreally engaged in a dialogue with the consumers as well as the retailers?".
Retailer Brands Lessons from UK and what it takes - To learn more about this author, visit Frances Davidson's Website.
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Retailers are assuming that consumers will embrace retailer-owned brands. They may be in for a big surprise. Hopefully, being sensible, they will have researched this move. Not to do so would be naive. It is suggested that Stephen Cain, when at Coles, was behind the plan to move to a higher percentage of retailer-owned brands. Maybe, but it is worth pointing out that his experience of UK food retailing was with ASDA - a committed EDLP strategist. ASDA increased its percentage sales of retail brands in recent years by relying on PRICE not VALUE. There is a difference!
Everybody cites Tesco as a benchmark for retail brands. Most forget that without Masterfoods, Cadburys, P&G, Unilever, PepsiCo, Nestle, Kellogg’s and Coca-Cola, et al, consumers would simply not visit Tesco. These brand owners have little to fear. They are simply not replaceable. These companies stand the test of time by a commitment to constant brand refreshment and improvement. More important than that is the continuing dialogue they have with the consumer. That said, it would also be true to suggest that presently, these manufacturers are playing ’catch up’ with UK retailers in the area of consumer purchase behaviour. The manufacturer has to purchase retailer data to discover who buys their brand and why. And in the new world of one-to-one relationships, rather than the old blunderbuss techniques of TV advertising used to reach beyond the retailer, there is a delicious irony - income - for the Tesco’s of this world.
It is a fact that there are far, far too many food brands in Australia in too many categories, particularly where there is no ‘added value’ to the consumer. This is principally the fault of retailers. Anyone who allows listing fees/slotting allowances to dictate the choice of brands to put in store deserves the current overload of "me too’s". When I first visited Australia 12 years ago, and suggested it was crazy, someone remarked that ‘listing fees were the glue that held the grocery margins together’. Sadly I think it may still be true today. If it isn’t, why have six pasta brands? That’s not consumer choice - that’s poor retailing. Or at best, lazy retailing. It’s worth reminding retailers that whatever way they cut the profit cake it’s only so big, and remains the same size. It’s simply a construct of where one puts the margin earned - be it in slotting allowances, or saying NO to distribution requests, and as a result significantly improving the cost efficiencies in the supply chain by not stocking too many supposed brands.
The next battle has to be in the area of the consumer data they own, but fail to use effectively. That information alone is unique to each retailer. Everything else is able to be copied within weeks.
Let me try to explain Tesco’s success. It’s not entirely about retail brands. It’s about a real estate management department who had the foresight in the eighties to buy big plots of land and build big destination stores. It’s also about following the consumer and giving them what they want. As Sara Weller (the ex Marketing Director of Sainsbury’s) said “never under estimate how hard it is to change customer behaviour”. Sainsbury’s did, and rue the cost to this day. Tesco’s mission says it all: “... to build lifetime customer loyalty”. Tesco recognised that they had to have consumer trust… and that only comes when you listen, and respond, to what customers tell you. Tesco have a purpose to retailing. It’s called ‘every little helps’. It’s an all embracing experience for everyone, regardless.
What Tesco does, and does well, is respond to consumers. I don’t think Australian retailers respond as well to consumer behaviour, needs, or wants. Everything Tesco does is based on ‘what’s in it for the customer’. And if the retailer can’t see that, he shouldn’t do it. Can Australian retailers honestly say that? The day that Tesco acquires Coles, and Walmart acquires Woolworths is the day we’ll see a real war for the consumer’s heart in Australia.
The real question is: do Australian consumers trust their food retailers to the extent the British customers do theirs? On this alone will stand or fall retailer brand development.
And maybe one must ask the question of branded manufacturers, "Are youreally engaged in a dialogue with the consumers as well as the retailers?".
Retailer Brands Lessons from UK and what it takes - To learn more about this author, visit Frances Davidson's Website.
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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