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 ego-
expressive 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
External – as perceived by the Internal – organizational processes
dimension /
customer that deliver the brand
value
• Clear articulation of what the
• Awareness of the brand brand is.
attributes • Emphasis on desired attributes
Perception of
• Need fulfillment through • Identification of all mechanisms
the customers
appropriate merchandise to deliver brand promise
– feelings –
• Quality – product and • Orienting / creating org
emotions
service processes to deliver value
• Image / experience (organizational commitment,
empowerment, rewards, etc.)
• Staff belief in brand value /
identity
• Preference
• Feel empowered to deliver value
• Purchase intention
Attitude of • Engage in developing brand
customers • Willingness to pay a
loyalty
premium, and / or make an
• Committed to deliver brand
extra effort to find
promise

• Use empowerment to deliver

• Customers choose value through multiple
Behaviors
• Frequency of choice or use opportunities
• Marketing activities
Outcomes - • ROI • Believe that brand promise leads
Financial • Growth to better financial results
results • Market share • Rewards for delivering value

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. re-
positioning 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