Retail brands - Store as a Brand or Brands in a Store Introduction Jumbo a short time ago received the ‘Superbrand’ award

, and the Rivoli group recently released advertisements of its flagship Rivoli store, distinguishing ‘Rivoli’ as having an identity beyond the brands it carries. Both managements, I conjecture, believe that ‘Jumbo’ and ‘Rivoli’ are brands in their own right, and mean ‘more’ than the brands they carry. Retail branding has three key benefits. One, retail branding creates a distinctive customer perception about a store, influences customer’s decision where to shop, and induces store loyalty increasing revenue and profitability. Second, retail branding insulates a company from competing retailers. Third, retail branding indirectly decreases purchase costs by increasing the retailer leverage with the brand manufacturer. A strong retail brand image increases the market power of the retailer vis-à-vis the customer, and also increases their share of the total channel profit pie. Unique Aspect and Potential of a Retail Brand A retail brand is significantly different from a product brand like Tide, and the application of branding principles for creating and maintaining retail brands are very different from those used for managing product brands. For Tide, beyond the product, branding predominantly relies on advertising to conjure images for creating a sense of identification in the mind of the customer for the brand. The purchase occurs in a relatively simple environment. In contrast for a retail brand, the customer purchases products in an ambience created by the retailer, and experiences the product in a multitude of ways e.g. by the store design and layout, the quality of the products, the product assortment, the merchandising, the pricing, the staff interaction, in-store and post-sales service, etc. The experience of a retail brand, therefore, is more multi-sensory in nature, and retailers have opportunities to create a retail brand experience through a whole set of activities that contact the customer, and not rely just on advertising. It is well established in research that the way a store is defined in the mind of the customer is partly based upon functional tangible qualities (location, price and merchandise, etc.), and partly psychological attributes. A shopper seeks a store whose image is congruent with the shopper’s self-image. Some stores intimidate customers whereas others are too infra dig. A store is acceptable for some goods and not for others e.g. a customer can shop for groceries in Carrefour, shop for daily wear at Zara, but buy table ware from Tanagra. The utilitarian shopper seeks dependability, practicality and economy whereas the hedonistic or egoexpressive shopper bases shopping decisions on the symbolism of the store to the status and life style. A store that lacks a sharp image or identity in the minds of consumers i.e. doesn’t mean anything special, ends up being an alternative store. The customer doesn’t head for such a store as a destination or primary place to shop. It is reasonably well established that customers make more

frequent visits, buy larger value, and often pay premiums when they identify with a retail brand. How does retail branding operate? What is it that draws a shopper to one store vs. another? Is it just the brands in a store or a store as a brand has meaning beyond the brands? According to the American Marketing Association a retail brand identifies the goods and services of a retailer and differentiates them from those of competitors. A retailer’s brand equity is exhibited in consumers responding more favorably to its marketing actions than they do to competing retailers. And the basis of the brand equity is the image of the retailer in the minds of consumers. The Constituents of Retail Image Many retailer attributes contribute to overall image e.g. merchandise variety (e.g. fashion, styling, and brands) and quality, price, depth and frequency of promotions, services like refund and company procedures, professional, knowledgeable, and friendly staff, physical store appearance (internal layout and design) etc. There is a commonality of attributes that influence customers but the precise mix and relative priority differ based upon the nature of shopping excursion. For grocery trips store ‘cleanliness,’ ‘ease of accessibility,’ and ‘speed of check out’ assume importance, whereas for department stores ‘value for money’ and ‘product quality’ are valued, and in specialty stores customers place a priority on ‘product choice,’ ‘promotions,’ and ‘store atmosphere.’ The five critical dimensions are reviewed hereunder – brand assortment, price and promotions, advertising, service, and store design. Brand assortment But what is the role of a brand in retail image? To what extent do manufacturer brands influence a customer’s image of a retailer? Brands influence customer perceptions of a retailer in two ways – as signposts for quality, and price. A brand name represents to consumer aggregate information (e.g. the brand name subsumes all aspects of the product like identity, quality, value, etc.) about the product, and is therefore an important extrinsic cue for the customer to infer quality perceptions about the product. If a customer sees the particular brand at a retailer, the brand often serves as a benchmark of the quality of merchandise carried by the retailer. Brands also influence buyers internal reference prices based upon a perception of quality. Therefore merchandise and brand assortment carried by a store affects store image through quality and price perception, both of which in turn influence store patronage decisions. The retailer’s brand assortment strategy therefore is a particularly potent tool for retailers to develop their own brand name. To the extent "you are what you sell," and regional retailers have used exclusive distribution arrangements of

manufacturer brands to create an image and establish a positioning for their stores, generating consumer interest, patronage, and loyalty. Rather the image and equity of many a regional retailer brands has been overly dependent on the brand equity of the manufacturer brands i.e. it is the manufacturer brands are the “ingredient brands” that influence consumer pull, often much more than the retailer brand does. Stores in the region can be categorized on two extremes. At one end are a lot of domestic retailers like Jumbo, Rivoli, Jashanmal, Paris Gallery, Salams, Grand Stores, Rodeo Drive, etc, who are multi-brand retailers, and have developed their own brand identity based upon strenuously developing brands they carry. On the other end are home grown domestic retail brands like The One, Home Center, and Nayomi that offer own sourced value-priced merchandise, and are not dependent upon manufacturer brands for their brand equity. Many other domestic retailers like Damas, Jumbo, Hour Choice, Al Futtaim Electronics, and Splash, and international retailers like Carrefour not only carry manufacturer brands and but have also developed their own brands (e.g. Damas – Damas, Jumbo – Supra, Hour Choice – Cruiser, Continental, Al Futtaim – Aftron, Splash – Ms, Zync, Nexus). Retailers who have launched private label products have done so either under their own unique brand names (like Splash) or under the retail brand name (Damas). This approach allows the retailer to differentiate its offerings from competing retailers, although often without the support afforded manufacturers brands. International retailers like Zara, Mexx, Massimo Dutti, Gap, Ikea, etc lie outside this categorization. They design, manufacture (or source) and market their own merchandise, and use pricing, style, color, and assortment to create brand strength. In the case of fashion clothing, brands are essential to image. In other retail sectors, the influence is less so. Price and promotions Price and promotions go hand-in-hand in influencing retailer brand price positioning image. Price of a product represents in tangible terms what must be given up to acquire a product, and directly influences consumer perception of retailer image and store choice behavior. A retailer’s price image is influenced by factors like average level of prices, extent of price variation over time, frequency and extent of promotions, and level of store service. Consumers develop general price perceptions of products in a store, and use that to evaluate whether or not the store is expensive in relative terms compared to other stores. This perception is not static, and changes based upon how frequently a store offers a price advantage on a set of products through promotions, and the magnitude of the price advantage. Retailers often use promotions involving price discounts (increasing customer perception of value) to increase store traffic and stimulate purchase. Retailers desire to attract customers through discounting is at odds with the effort to maintain store margins. Price promotions and discounting also has the potential

to hurt store image. Price is used by customers as a surrogate for product quality, and frequent discounts may be construed as an indicator of poor quality. Frequent discounting also influences the customer internal reference price downwards (i.e. customers start to perceive the true value of products is lower) reducing the perception of value of a promotion. Retailers need to be judicious in deciding what discount level in an effort to balance margin goals, with customer perception of quality, and perception of value. Consumers develop a favorable price image when retailers offer frequent but smaller discounts on a large number of products than when they offer less frequent, but steeper discounts on fewer products. Also products that have high unit price, and are purchased more frequently are more salient in influencing a retailer’s price image. Advertising Advertising is an important means of communicating a store image since customers encounter advertisements more often than actual visits to stores. Advertisements are an outcome of a retailer identifying a target market segment and store positioning, and convey a meaning based upon what the is being emphasized - price or quality or brand assortment or product features, or store image, etc. Advertising also conveys whether the store is a dependable store, or a family store, or a promotion driven store or is a high-brow store that is expensive and formal, and so on. Advertising establishes in the mind of the customer what to expect on a visit. It is critical that the symbolic meaning conveyed in advertising be congruent with the experience of visiting the store. This congruence requires an integration of different direct and indirect (e.g. point of sale, customer-staff interaction, service center experience, home delivery experience, etc.) communications through which customers experience the retail brand. In the domestic market, advertising often follows the format of a fashion store through the use of models and images, but visit to the store is an entirely different experience. Retailers need to be sensitive to the fact that advertising is just one means of communicating the retailer brand image. Service Quality Employees are the heart and soul of the retail branding exercise. It is the frontline staff that delivers the retail brand promise to customers, and who make the store image real and tangible. For this to occur frontline staff must have a high regard for the store, its products, and their work environment, otherwise they will not exhibit the appropriate behaviors at the store level while interacting with customers. We have often encountered store staff whose body language is sending us quite different message. A high level of consistent service quality requires careful recruitment of frontline staffs that are by nature friendly, enthusiastic, approachable, and cheerful, giving them the required skills through training and retraining to achieve congruence in their beliefs about what the retail brand stands for, empowering them to deliver quality service, and creating appropriate incentives to sustain service quality.

Store Design and Ambience The feeling aroused in customers during a store visit influences their behavior, with a greater likelihood of purchase in more pleasant settings. Different elements of a retailer’s in-store environment, e.g., color, music, and crowding, can influence customer’s perceptions of a store’s atmosphere, whether or not they visit a store, how much time they spend in it, and how much money they spend there. It is possible to categorize the elements of in-store atmosphere into physical features like design, lighting, and layout, ambient features like music and smell, and social features like type of clientele, employee availability and friendliness. Store environment factors, particularly physical design perceptions, significantly affect consumers’ perceptions of merchandise price, merchandise quality, and employee service quality. A pleasing in-store atmosphere encourages customers to visit more often, stay longer, and buys more. Although it also improves customers’ perceptions of the quality of merchandise in the store, customers tend to associate it with higher prices. From a branding perspective, an appealing in-store atmosphere offers great potential in terms of creating a unique store image and establishing differentiation. Creating a Retail Brand The outcome of a retail branding exercise is the reality of the brand as it exists in the minds of customers. Customers perception of a retail brand image has three dimensions - emotional (how customers feel about the brand), rational (how customers think about the brand), and behavioral (how customers respond to the brand marketing). The table is a working tool that correlates different dimensions of a retail brand identity with organizational processes that a manger can use to influence / deliver them. The last row focuses on the financial implications of the branding exercise.

Brand dimension / value

External – as perceived by the customer • Awareness of the brand attributes Need fulfillment through appropriate merchandise Quality – product and service Image / experience

Internal – organizational processes that deliver the brand • • • • Clear articulation of what the brand is. Emphasis on desired attributes Identification of all mechanisms to deliver brand promise Orienting / creating org processes to deliver value (organizational commitment, empowerment, rewards, etc.) Staff belief in brand value / identity Feel empowered to deliver value Engage in developing brand loyalty Committed to deliver brand promise Use empowerment to deliver value through multiple opportunities Marketing activities Believe that brand promise leads to better financial results Rewards for delivering value

Perception of the customers – feelings – emotions

• • •

• • • • Preference Purchase intention Willingness to pay a premium, and / or make an extra effort to find • • • • Customers choose Frequency of choice or use ROI Growth Market share • • •

Attitude of customers

Behaviors Outcomes Financial results

• • • • •

Conclusion Consumers usually carry a vivid store image in their minds, and store image is an information-rich input into the consumer decision-making process. Store branding and image has a direct and positive relationship with purchase intention, and it can be stated that consumers do derive some amount of ‘added-value’ from store image. Millions of dirham is spent in designing and refurbishing stores to portray an image appealing to their current and potential customer base e.g. repositioning of Burberry required complete store rebuild all across the world. Store image is usually based upon physical environment, service levels, and merchandise. Increasingly, brands are being positioned on the basis of their intangible attributes, benefits that transcend product or service performance. Even if the products and brands stocked by a retailer are similar to others, the ability to create a strong in-store personality and rich experiences can play a crucial role in building retailer brand equity. © Manoj Nakra 2005

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