15239 Fri, 09/19/2008 - 1:16pm
By Barbara Thau
What’s in a name?
The answer is not so clear-cut when it comes to the sales-generating power of a retail or supplier home brand in tough economic times.
While lower-priced brands gain appeal during an economic downturn, some brands are largely immune to the macro climate due to their sheer equity, branding experts told HFN.
In an economic slump, home retailers and vendors should resist the urge to slash price points and skimp on the marketing accoutrements so important to the aura of many brands. These short-term moves could tarnish a brand’s image in the long run, they said.
Brands that retain their equity—regardless of price—when shoppers are tightening their purse strings include ones that have no lower-priced alternatives; enjoy “huge shopper trust”; and have “out-innovated” the lower-priced brand, Shilpa Bharne Rosenberry, senior retail consultant for market research and consultancy WSL Strategic Retail, told HFN. Home products, along with eating out and concert tickets, often rank high on the list of discretionary expenditures that consumers believe they can do without when money is tight. But the good news is that while shoppers will buy less expensive clothing and food, only 16 percent of women will trade down to a lower-priced home brand during a weak economy, Bharne Rosenberry said.
They’ll spend on a quality product—particularly for categories such as housewares—like a KitchenAid stand mixer, she said. By contrast, they’ll skimp on candles in tough times, a purchase that engenders little brand loyalty.
Rich Roman, president and chief executive officer of Revman Industries, knows a thing or two about the ups-and-downs of brands. His home textiles firm boasts a roster of high-profile, designer brand licenses such as Tommy Hilfiger, Marimekko and Laura Ashley.
It’s the mega-watt name recognition and quality connotation of these brands that have cushioned them somewhat from the economic downturn, Roman said.
Home textiles is “very difficult” at retail now, but “our business is holding up,” he said, particularly online.
“People will buy [those national brands] online and are less likely to buy a no-name online,” he said. “People are still seeking out quality.”
Revman also helped develop exclusive retail brands, such as the Simply Vera home collection for Kohl’s from Vera Wang, as well the Nicole Miller program for Bed Bath & Beyond.
But shoppers don’t always know that a private brand can only be found at a particular retailer, Bharne Rosenberry said.
“What might be interesting to home retailers and manufacturers is that most shoppers really don’t know that many of the retailer brands they see in stores are exclusive to one retailer,” she said.
WSL research found that of 31 retailer brands tested, a low percentage were identified by consumers as a retailer brand.
As retailer brands such as Sears Craftsman tools become better known, “Shoppers bump it up to national name-brand status and think it’s available in all stores,” Bharne Rosenberry said.
“It’s nice recognition for the brand, but it’s defeating the purpose of the brand as a retailer destination.”
Retailers need to be careful to not damage their brand image in an economic slump when they hit the markdown panic button, said Al Ries, chairman of Ries & Ries, the marketing strategy firm. “It’s a mistake to respond to every blip in the economy,” he said.
The auto industry, airlines and department stores are guilty of doing that, he said.
“You’re seeing some high-end retailers like Saks and Nordstrom doing couponing. … They’ll be sorry in the future because it undermines what their brand stands for.”
Instead of slashing prices, retailers need to recognize that recession-weary shoppers need an extra push to inspire them to make a purchase.
That’s when retailers should pay close attention to romancing the product with compelling merchandising displays. “Better presentation helps … and good copywriters” that can illustrate a product’s features and benefits at the point of sale, Roman said.
And when the going gets tough, home retailers and vendors would be wise to come up with more affordable spinoff brands.
“With so many shoppers cutting back, trading down and sometimes just plain opting out, smart companies are finding ways to provide their customers with affordable alternatives so they don’t lose them entirely,” Bharne Rosenberry said. “We’ve seen this lesson in other categories, such as Starwood Hotels opening their new more affordable Aloft hotel chain, Whole Foods starting a program to educate its shoppers on how they can afford to keep shopping there.”
Target appears to be taking the same tact.
The purveyor of cheap chic tailored its latest temporary pop-up store concept to the recessionary climate with what it called Bulls-eye Bodegas in New York City.
From Sept. 11 to 14, these Bodegas in the Union Square, SoHo, East Village and Midtown neighborhoods featured home products, beauty, fashion and accessories from 22 designers with an average price of $25.
“It’s more important than ever for home brands to ensure that their shoppers have options to cut back and trade down within their brand offering so that they don’t walk away altogether,” Rosenberry said.