Five key questions to determine if you are best-in-class
The rare air of “best-in-class” is difficult to achieve, and is a distinction that goes beyond the numbers. It is tempting to look at best-in-class only from a penetration perspective, and if you do, you should look no further than Trader Joe’s, Aldi, Lidl or Ikea, where everything (or nearly everything) they sell is under their own brand portfolio.
The share and penetration metrics are definitely something you should utilize to gauge success versus industry peers, and you should employ them on a category level too, but using them alone as an indicator of best-in-class is dangerous.
Here are the five most important questions you can ask about your own brands program to determine if it is best-in-class. They provide an excellent gut-check for retailers who want to go beyond the numbers, and explore the true power of their own brands.
The Internal Question:
Does my entire organization intimately understand my own brands and what they are designed to achieve?
When I get on the front lines of many retailers, the operators in the stores are often not crystal about the own brands portfolio, how it is positioned, and the brands’ key advantages. Ensure that from the new hire indoctrination in HR all the way through the employee’s tenure, that everyone meaningfully can get on the offense about your own brands. Offense, not the defense, selling proactively, not answering reactively. Front line understanding is an indicator as to whether your own brands are really culturally ingrained and part of the day-to-day conversation.
The External Question:
Are my consumers in love with my brand?
The gap between “like” and “love” is cavernous, and the retailers who are true best-in-class performers have consumers who are in love, and truly addicted to their brands. Wegman’s, Sainsbury’s and Trader Joe’s have addicts, and their aspiration is to cultivate this loyalty through own brands. Don’t just settle for “like”, or worse yet, “indifference”. Don’t think that love is impossible for your brand, it is not.
The Destination Question:
Do I have consumers who ritualistically purchase my own brands, and where does repeat purchase exist?
Many retailers obsess about penetration when they should be obsessing about repeat purchase, and most don’t know where that happens and across which categories. Building destination products beyond the obvious wins in commodities (milk, bread, eggs) is what best-in-class retailers do. You have to track your shoppers’ behavior first to get a grounding for the existing category rituals, and then look opportunistically to trends, to competition and your own strengths as to where new destinations in own brands can be built.
The Marketing Question:
Do my own brands “pay to play”?
At many retailers, own brands “pay to play” just like the national brands, paying to be in the weekly circular, paying for position within the ad, paying for retail merchandising/planogram support, and paying comparable rates for product demonstrations. Retailers that require own brands to shoulder the cost of this media and retail support (on equal footing with national brands) do not generally exhibit best-in-class behaviors. The retailers that embed real marketing, media and merchandising support for own brands innately into their protocols invariably care about own brands more.
The Supply Question:
Do I have enduring supply partners that consistently provide innovation?
When you have honest discussion with leading own brand manufacturers, what they say about best-in-class retailers is that the relationships tend to be more enduring and have tenure. It’s not that they don’t have category review schedules and a sense of cost consciousness, but it is not an RFQ-ruled environment where innovation, category intelligence, marketing prowess and other factors are not held in equal to higher consideration. If you are a best-in-class retailer, you will easily be able to point to suppliers that have stood the test of time for you.
The share and penetration metrics for own brands only tell part of the story, and they are good because they are black and white, but don’t be afraid to go beyond the numbers and ask these five questions about your own brand program.
As seen in Global Retail Brands Magazine, November 2014, page 69