Retailers are shifting some of their conventional marketing spend–away from media to “shopper marketing.” This trend has been developing for while now, and lately it seems to be coming to the fore more and more.
Reason? According to a recent survey by Deloitte Consulting and the Grocery Manufacturers’ Association, shopper marketing gets “higher marks for return on investment than most conventional media”. This data was reported in an Advertising Age article titled, Brand Giants Weakened as Retailers Get Savvier.
In short, retailers are now devoting more time, attention and resources to developing their own store brands than ever before. In essence, they’re competing with CPG manufacturers’ national brands in a more significant manner. By hiring marketing talent away from CPG companies, retailers are fully on board brand management, dedicated advertising and sophisticated packaging for their private label brands now.
While store brands always competed with national brands in the past, there’s a huge difference now. Gone are the generic-looking products relegated to bottom shelves in the supermarket. Game on: store brands are working to appeal to consumers on many levels, whereas they used to be only price driven.
Now tools like Nielsen’s Prism that measure media and sales impact of in-store programs can be used to measure store brands as well as national brands. Traditional focus groups are being used by dedicated retail marketers to assess current store brand offerings and make changes to them as necessary. Ditto for adding new products to assortments.
Retailers are monitoring how consumers are experiencing their store environments and every touch point, making changes as necessary to improve customer experiences within their stores. Let’s face it: since the retailer is the developer and marketer for new products now, and they have ready-made environments for testing, new products can be brought to market and slotted fairly quickly if customer response is strong.
The benefits for retailers:
* The ability to truly create branded environments.
* A better understanding of the customer and how to improve the customer experience.
* A quantum shift from being purely distribution outlets to becoming marketers of products, and gaining significant expertise that enables them to innovate.
* By increasing private label sales share, this is one of the best ways to increase profitability.
These developments beg the question: where does this leave consumer product manufacturers? Perhaps, having to stay on their toes more, by sharpening their own marketing skills, and even their pencils a bit. After all, retailers are directly competing more and more for market and mindshare among consumers with national brands. It might be a signal that CPG companies will need to become more price competitive themselves, as a result.
Who’s the ultimate beneficiary of this? The consumer. Right?
* How do you feel about store brands?
* Do you have favorite private label brands? If so, what about specific store brands appeals to you?
* Do you ever recommend store brands to friends and family?
I’d love to hear from you.