In an era of slow growth, tight margins, and fckle consumers, the key to success is to differentiate. One critical element in successfully differentiating is communicating that difference to consumers. Hence, branding will require special attention from retailers who want to stand out from the crowd. 

Aside from specialty apparel and luxury retailers, branding has not always been seen as important for retailers—especially those that sell food and other mass products. Yet for these retailers, branding has never been more important. 

Today’s most successful retailers typically have one of two attributes. First, there are those with the most effcient supply chains, which translates into lowest costs and prices. However, there are those retailers that do not attempt to match low-price leaders and have succeeded by managing their brands and demonstrating to consumers why they are different.

Read all Deloitte reports on retail in 2009 here

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“I thought I’d be able to tell the difference, but I couldn’t — I looked at the ingredients and they seemed almost the same,” says 30-year-old Ms. Mills, a stay-at-home mother of two in Ardmore, Okla. On her next shopping trip, “I’m going to buy the store-brand moisturizer and cleanser — it’s less money.”

Many Americans are changing their everyday purchases and abandoning brand loyalty, prompted by the persistent financial pressure of rising food, gasoline and electricity prices. 

Retailers are also sensing more shopper experimentation. This fall, supermarkets Safeway Inc. and Kroger Co. noted that sales of their store brands are on the rise. “In this economy, customers are much more willing to try a private-label item, and we’re seeing signs that this is happening more and more as the year progresses,” Kroger CEO David Dillon said on a conference call.

To be sure, overall sales of name-brand goods are still higher than those of store brands. Still, about 40% of primary household shoppers said they started buying store-brand paper products because “they are cheaper than national brands,” according to a September report by market-research company Mintel International, which interviewed 3,000 consumers. Nearly 25% of respondents reported that it is “really hard to tell the difference” between national brands and store brands of paper products. Store brands on average cost 46% less than name-brand versions, Mintel found.

The above paragraphs are extracted from todays WSJ’s article At the Supermarket Checkout, Frugality Trumps Brand Loyalty .

Crisis provides brands a challenge and an oportunity. Is the time that most of the brands will be put to test by tougher buying conditions or pricing beyond brand as a final buying argument.

It’s the time new brands can made their way up into the consumers minds and benefit later from surviving these harder times.

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1. Branding retailers in time of crisis In an era of slow growth, tight margins, and fckle...

Gap has suffered in recent years and each new set of financial results have brought new problems as the San Francisco retailer finds competitors have emulated its essential casual style of T-shirts and khakis and at a cheaper price.

Alternative strategic decision, helped by ongoing speculation in the market, is that Gap Inc. is ever closer to a takeover is being stoked by a news report that the struggling retailer has hired the investment firm Goldman Sachs to consider such offers or other dramatic changes.

A story to follow…

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While the summed importance of branding (of the carrier and the phone) in purchasing decision seems to remain constant at a total of 59% it is worth noticing that 19 percent of customers cite the type or brand of cell phone as a key factor during the initial process of selecting a wireless service, up from 11 percent in 2004. While the brand of wireless provider is still the most popular reason influencing the initial selection process, it has decreased significantly in importance, down 8 percentage points from 2004 to 40 percent in 2006.

Other key factors that influence the initial selection process are price/promotion (29%) and retail location (12%).

While this strategy is adopted due to high competition in the field, I honestly don’t find it sustainable on the long term because promoting the cell phone instead of the service plan and the carrier that provides that service may lead to sales growth in the short term, but it can potentially have a negative long term impact with higher churn rates.

The study actually shows this. As such, among customers who are most influenced by the cell phone brand, the likelihood of switching carriers in the next 12-month period is 60 percent higher than among customers who cite the brand of the wireless provider as their key factor in the selection process.

On the other hand study shows that among major wireless carrier-owned retail stores, T-Mobile ranks highest in customer satisfaction for a fourth consecutive reporting period. T-Mobile receives particularly high ratings in all four factors that determine overall satisfaction. T-Mobile is followed in the rankings by Verizon Wireless and Alltel, respectively.

Volume 2 of the 2006 Wireless Retail Sales Satisfaction Study is based on experiences reported by 7,530 wireless users who completed a retail sales transaction within six months prior to being surveyed. The results are from the two most recent reporting waves, which were conducted in April and July 2006. More about the study here.

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1. An emphasis on “engagement.”
Inserting itself between traditional marketing activities and an increasing demand for return on investment assessments, engagement will become the Holy Grail for marketers and advertisers. Defined as the outcome of ad and marketing activities that substantively increases a brand’s strength in the eyes of the consumers, engagement will be used more and more to allocate marketing budgets.

2. Using technology to better meet consumer expectations.
Consumer expectations in all categories will continue to grow. Expectations have increased more than 26% in the past five years while brands have kept up with these expectations by only 8%! Watch for smart marketers to take advantage of unfulfilled expectations via such values as “convenience” and “customization.” More and more marketers will rely upon Web sites and high-tech capabilities to accommodate these values and differentiate themselves from the competition. Professional services and other non-traditional brands will probably take advantage of the new technologies and start build up brands for themselves.

3. Expanding the potential of Websites and blogs
Engagement concerns and attempts to meet or exceed customer expectations will fuse and be most observed online, particularly on blogs. Watch for increased development of blogs and Websites in general beyond propaganda, information, and use as an electronic cash register toward the creation of “communities of ones.”

4. “Recombinant” experiences.
Disney and Vegas: Oil and water? Consumer values indicate a bipolar continuum for recombinant experiences. Watch for this to reveal itself in more online gaming, especially for adults. Interactive gaming with more and more players being able to compete at once will become table stakes for online games. Marketers concerned with engagement will close their eyes to “appropriateness” and leverage online gaming as a more acceptable venue for virtually every brand.

5. More branded entertainment.
Popular culture, with its rabid consumption of music and technology, will see market and brand leaders leverage plugging-in as a method for customizing entertainment and selling products. For instance, music-related paraphernalia such as T-shirts, posters, and artist-related merchandise will infringe more and more on the dominance of bricks-and mortar retail.

Read full article here.

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