It’s Time to Focus on the Retail BrandRamesh Venkat, PhD, Professor of Marketing, Director of the David Sobey Centre for Innovation in Retailing and Services
The following article is reprinted from the David Sobey Centre site.
Retailers often think that they are in the business of selling brands made by others (manufacturers) or in a business that sells product-brands (i.e., national and private label). That is a very limited view of brand in a retail context. As a result, most retailers have underinvested in their brand. Retailers must embrace the view that they are in the business of providing a brand experience.
Kantar Retail’s 2017 report on brand values of retail companies puts Amazon at the top of the list. Amazon’s brand is valued at nearly $99 billion, whereas Walmart’s brand is valued at only $27 billion. For Amazon, the contribution of its “brand” to this financial value is rated at 2 out of 5 (where 5 is the highest). In contrast, a significantly higher proportion of the financial value of Wholefoods (which was acquired by Amazon) and Nordstrom are attributed to their brand alone (at 4 out of 5). These two retailers are known for their differentiation in terms of products and customer experience. In
Kantor’s methodology, brand contribution is based on being meaningful (at an emotional and rational level), being different (or at least creating a perception of differentiation), and being salient (top-of-mind recall when thinking about buying in a category).
Brands that have a sense of purpose (i.e., have meaningfulness) and are not followers (i.e., have differentiation) are likely to engage customers at a deeper level. The path to creating brand meaning and brand differentiation will not be the same for a luxury retailer vs. a discount retailer. Each can, however, stay true to its purpose and take a different path from competitors within their category.
Research by marketing scholars shows that a significant component of brand equity is the brand associations (or beliefs about a brand) that exist in customers’ minds. These associations could be positive, negative or neutral. If a customer thinks of a retailer as offering great value or a “wow” experience, the customer is likely to engage with that retailer again. In contrast, if the customer associates the retailer with the belief that “they don’t stand behind the products they sell” or “they overcharge”, the customer is likely to avoid that retailer. The more positive these associations, the greater the likelihood of customer loyalty and willingness to spend more with the retailer.
Advertising can build brand awareness, but personal experience builds a connection between the retail brand and the consumer, thereby creating favourable brand associations. As Scott Cook, co-founder of Intuit, said, “A brand is no longer what we tell the consumer it is – it is what consumers tell each other it is.” Social media acts as a megaphone that amplifies personal stories about customer experiences, both good and bad, shaping the brand associations of other customers.
What does this all really mean for retailers?
- Your retail business is a brand. Building a brand is about standing for something different, delivering consistently on that promise and creating favorable brand associations.
- The experience you provide shapes the brand associations in the customers’ minds and the brand meaning that is collectively shared by customers.
- Pay attention to customer experience. Orchestrate it, deliver it, manage it and measure it.
- Customer perception of the “retail brand” does impact the financial value of the business. The brand deserves attention at the c-suite level.
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