Carol Spieckerman's Brain On...Amazon's Impact

In Carol Spieckerman's latest contribution as a Retail Wire Brain Trust panelist, she comments on Amazon's ongoing (and overlooked) impact on retail.

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Here's what she had to say ... "Amazon continues to change the game in ways that have been largely overlooked. Thanks to Amazon, traditional retailers are becoming category-agnostic and expanding away from their category-defined cores as never before. I see this dynamic accelerating online (I included the the spate of "marketplace" launches as one of two significant events of 2011 that flew under the radar) and in store (drug retailers forays into food, grocers launching beauty lines, etc.). The more endless Amazon's aisles get, the broader everyone else's assortments become in response. What are the implications of everyone being a marketplace?

Amazon is still portrayed as a pure-play etailer when in fact they are pursuing alliances with retailers on terra firma (the site-to-store beta with 7-Eleven). As formidable as Amazon is, perhaps they are actually being underestimated when relegated to virtual-only status.

Amazon will further transform retail in 2012 in multiple ways while most pay attention only to the obvious implications."

Heading to CES? Carol will be participating in the conference panel, Electronic Retailing in the 21st Century on January 11th at 1:30 (North Hall, room N260) and conducting private corporate presentations throughout the week.

To schedule a meeting with Carol at CES to discuss your 2012 retail and brand strategy, contact her directly at carol@newmarketbuilders.com 

Carol Spieckerman's Brain On...Promotions vs. EDLP

In Carol Spieckerman's latest contribution as a Retail Wire Brain Trust panelist, she comments on a recent study from the Stanford Graduate School of Business that makes a compelling argument against everyday low pricing (EDLP) for retailers attempting to compete with big boxes.

Here's what she had to say..."Interesting findings considering that this year, Walmart, J.C. Penney and Lowe's all made various vows to end promotional shenanigans and either return to (Walmart) or initiate (the others) EDLP-ish models. With the big guys zigging to price consistency, smaller-scale competitors would seem to have a mighty zag in moving toward promotional pricing."

Read the full discussion

Additional thoughts from Carol...

I agree with the study conclusions that pricing strategies aren't to be taken lightly since variances will tarnish consumer trust and the process of re-educating consumers about new strategies can be long and costly. Although the study focused on grocery, I see this applying to all categories and retail tiers.

Walmart learned that when last year's "atomic rollbacks" backfired. Far from being grateful, Walmart's loyalist customers questioned whether they had been getting the best deal all along and in the meantime, dollar stores' massive scale and convenience factor tugged away at Walmart's base. It's journey back to price leadership has been fraught with foibles but a recent quote from Walmart's Chief Merchandising Officer, Duncan Mac Naughton, hints at the real reasons why more retailers are abandoning promotional high-low games in favor of uniformity.

In his fourth quarter presentation in Bentonville, Mac Naughton stated that Walmart is committed to delivering price leadership "community by community, store by store, category by category." Why so specific?  Because as difficult as it has always been to manage promotional strategies across a few thousand stores carrying the same brands and products, it is nearly impossible to do so as retailers localize the brand and product profiles of individual stores, explode online offerings, and ramp up site-to-store capabilities, all under the watchful eye of smartphone-wielding consumers who can exercise their right to tap out a price comparison and/or make an online purchase on a whim...and do so while visiting an alternative retailer's physical or virtual space.

Among the most promotionally-driven retailers in the country J.C. Penney announced in November that it will move toward an everyday low price strategy beginning in spring 2012. Not coincidentally, Penney simultanously announced its plans for a significant relaunch of its e-commerce site which will include adding to its online-unique assortments and enhanced mobile interactivity.

One of my 2011 Earth-shattering Events that Escaped (Almost) Everyone is retailers' mania for online marketplaces which promises to further complicate the pricing and promotion picture. Lowe's is portraying its announcement today that it will acquire online retailer, ATG Stores as an example of its committment to provide an "endless aisle" of products. I'll say. ATG's virtual portfolio contains over 500 websites featuring 18 category divisions. Over 3.5 million products from more than 3,300 manufacturers are featured on ATG websites.

Let the limber and land-based have a go at promo. 

For the scale-busting behemonths? EDLP, please!

"Rethinking Retail Scale" on Retail Wire

RetailWire picked up Carol's LIMA blog, "Rethinking Retail Scale," on October 25th, and it generated a terrific discussion among their Brain Trust panelists.

Not that long ago, retailers ran their online and offline operations in silos. In many cases, they actually competed against themselves in different channels. These days, retailers from mass to class see all channels — including mobile — as synergistic and seamless touchpoints and, along the way, scale has been redefined.

Read the rest of the article and what the panelists had to say.

Banner Brands: Blah or Brilliant? Take Two from the Private Brand Movement Conference

Carol's second take from the Private Brand Movement conference ran on Retail Wire this week. In the article, Carol ties together insights from several presenters on the use of banner brands and puts a spotlight on the differences between European and U.S. retailers' banner brand perspectives. 

BrainTrust Query: Let Your Banner Wave?

Should retailers align their private brands with their banners or build their brands separately? Based on presentations at the Private Brand Movement conference, it depends on whom you ask. 

In his presentation, "Creating Value Together: How European Retailers and Manufacturers Collaborate to Innovate," Koen de Jong, founding director at IPLC, noted that, for most European private brands, store banners "drive the offer." He cited Carrefour as an example of a retailer whose good, better and best private brands each bear the Carrefour name. 

In a co-presentation on the following day, Maggie Hodgetts, head of design for U.K.-based Waitrose and Jonathan Ford, creative partner for Waitrose's design firm, Pearlfisher, detailed the painstaking process that led up to the creation of Waitrose's mid-tier, health-oriented banner brand: Waitrose LOVE Life. 

The launch was portrayed as an expression of Waitrose's personality, its existing values around health and its reputation for care, consideration and quality. According to Mr. Ford, the Waitrose brand values were already a "great starting point," so the overarching opportunity was to be more "explicit" about those values and, in the process, express the positive side of health and well-being. The brand essentially became Waitrose writ large. 

Stateside retailer presentations told a different story. Alex Petrov, Safeway's VP of consumer brands spoke to the need for private brand quality to "ladder up" to the banner and vice versa. Interestingly, he confessed that, in some cases, Safeway's private brands seemed to "fall behind" and out of alignment as they upgraded store environments. With Safeway's private brand portfolio, including its new launches, heavily weighted toward non-banner brands, the company obviously believes that achieving alignment doesn't have to be an exercise in literalism. In fact, Safeway's non-banner O Organics brand led the way in its retailer-to-retailer brand model just as Craftsman and DieHard did for Sears. Clearly, major brand equity can be built separately. 

In her presentation, "Branding with Southern Style," Lisa Edwards, Belk's packaging design manager, indicated that the re-working of Belk's private brand has focused on modernizing its existing non-banner legacy brands, such as Kim Rogers and Red Camel, and creating a few more, such as accessory brand, Via Neroli, and the soon-to-be-launched cosmetics brand, Parisian, rather than attaching the Belk name to these products. According to Ms. Edwards, Belk customers perceive and receive the retailer's private brands as national brands, particularly in rural areas where Belk is the only game in town. Belk has encouraged individual store teams to use their imaginations to interpret the brands in their particular store's environment, enabling a form of localization-on-a-shoestring, and driving even more passion for the brand portfolio. Belk would seem to serve as a great example of how non-banner brands can more easily take on national brand characteristics. 

More than once during the conference, Trader Joe's was cited as a rare U.S. retailer that effectively leverages banner brands to drive differentiation. Does the fact that Trader Joe's is owned by German retail icon, Aldi, take them out of the running? 

Read what the Retail Wire Brain Trust had to say.