A brand by any other name … may sell nearly as well - Buyers & Sellers - Column

Discount Store News, Nov 7, 1994 by Don Longo

Just when I thought I was all "branded out," I am deluged with a number of new insights and observations about the marketing and merchandising of national and retailer brands.

Last month, DSN published its 1994 Power Brands survey of retailers and consumers. Among other things, the survey found:

* Retailers are devoting more space on their shelves to store brands.

* Consumers still prefer national name brands if given the choice.

* But in increasing numbers, shoppers are willing to give the value-priced store brand a try.

This month's issue of Food Merchandising (inserted after page 22 of this issue) devotes its cover story to "Solving the Brand Name Puzzle." In researching that article, news editor Laura Liebeck and I discovered that retailers now must think like brand marketers as they commit more heavily to store brands.

That view was supported by several speakers at a recent conference sponsored by DSN here in New York. Leon Galitzen, senior vp, strategic business development for Confab, the maker of store brand feminine hygiene and incontinence products, told the attendees that the retailer's store is a brand. "Retailers are now hiring brand managers," Galitzen observed, "and they are realizing that even the employees in the store are part of that brand equity."

Who could doubt that the friendly greeter at the front of a Wal-Mart store is part of a carefully-crafted brand image that begins with the deceased founder Sam Walton and is embedded in every merchandising and marketing strategy undertaken by the giant retailer? Wal-Mart, as a brand name, is as well-known as any, and perhaps more importantly, is viewed favorably by almost everyone, with the exception of a few middle-aged activists who can't find anything more substantial to protest nowadays.

Another speaker at the conference, Elinor Selame, president of BrandEquity International, defined brand equity as the incremental price that a customer will pay for the brand vs. a comparable product without a brand name on it. If no one will pay more for your brand than for another, all you have is a commodity, she said.

Selame pointed out that Kmart realized a 200% to 300% increase in store brand lawn & garden product sales by building a stronger brand image for its established, but unfocused, KGro line. Kmart created a uniform trade dress for the line and instituted a clear-cut "compare and save" strategy between KGro and the national brand.

Kmart followed up that success by extending the strategy to lawn & garden power equipment, its Power Pro line, and pesticides, KRid.

All this supports Bill Underwood's contention that a major revolution is occuring in retailer/vendor relations. Underwood is Kmart's senior vp for vendor and new product development, a new position at Kmart that coincides with the remaking of the discounter into a more nimble and customer-responsive retailer. Underwood, in his talk at the conference, said that Kmart is committed to working with vendors that can handle category management.

The increasingly extensive use of category management by Kmart and other retailers will likely result in even greater changes in the buyer/supplier relationship. Category management will result in a paring of brand offerings on the retail shelf and will intensify the battle between national brands and store brands in the coming years.