The goal of branding: is it exclusivity or recognition?

Discount Store News, March 23, 1998 by Jennifer Negley

When Sears unveiled The Great Indoors concept in Denver a month ago, perhaps the greatest surprise about the merchandise mix was not that its price points ranged from $16,000 home office sets to 89 cent paint brushes. It was this: the sight of a Martha Stewart Everyday paint department at a retail outlet other than Kmart.

Say what? Isn't Martha Kmart's special friend?

Another eyebrow-raising unveiling took place only two weeks ago when California-based Fry's Electronics took the wraps off its first Apple Computer store-within-a-store. The launch was held just one day before CompUSA kicked off its own grand opening of Apple store-within-a-store departments---a merchandising touch that was supposed to have been exclusive.

So what gives?

What gives--in both cases--is the fine print. Martha Stewart Everyday is exclusive to Kmart in every product category except paint. The paint program is manufactured and sold by Sherwin Williams, which not only sells the line to Kmart but also is free to sell it to other retailers.

As for the Apple stores, it turns out that when the computer company announced in January that it was pulling its products from all stores but CompUSA, what it really meant to say was that CompUSA would be the only national chain to offer its products. Apple considers 17-store Fry's a regional chain.

Not that CompUSA doesn't flex the definition of exclusivity itself when it comes to its own proprietary PC products. Visitors to JcPenney's home page on the Internet are no doubt surprised to find that the first listing under the Cybershopping heading is devoted not to JCPenney product but to CompUSA, "a new way to meet your computing needs."

What follows is a link to information about the CompUSA American Series and American Pro Series proprietary computer lines, both of which were launched last fall with great fanfare.

Which is not to say that CompUSA's deal with JCPenney isn't a smart move. And in the same vein, it's perfectly understandable why Sherwin Williams would want to sell as much Martha Stewart paint as possible and why the beleaguered Apple sales team would try to get its computers into as many stores as it could.

But if the mission of building exclusive brands is to drive traffic and cement customer loyalty to a particular retail chain-and it is--one has to wonder what the long-term effect of these types of brand expansions will be.

If consumers find Martha Stewart Everyday paint in The Great Indoors, why should they not also expect to find Martha Stewart towels in the bath department?

If Sears and other retailers that end up hosting Martha Stewart paint departments start getting enough customer complaints about carrying incomplete Martha assortments, why should they not reasonably put pressure on the Martha Stewart empire to develop product lines exclusively for their outlets?

If Martha Stewart begins launching a variety of product lines priced, promoted and packaged for a variety of retail tiers, what does she do to her own brand franchise--maximize it or weaken it?.

For that matter, what happens to Kmart's $1 billion a year Martha Stewart Everyday business?