The consumer electronics magazine Twice published by Reed Business Information owner of Variety, Elsevier and the business search portal Zibb, yesterday posted an insightful story on Private Brands in electronics. However I think the observations are relevant to most retailer owned brands. The following is an excerpt form that post:
The Brand Aura ‘Wave’: Will You Ride It Or Be Swept Away?
By William Matthies
The reason typically given for a retailer pursuing a private-label strategy — and who among the big ones hasn’t given it a try — is that they hope to make more money than they would by only selling manufacturer-branded product.
If you are a retailer, it is best to take the path of least resistance and sell what consumers come looking for. Usually a combination of “pull” brands (so named because they pull consumers to the store), as well as some “push brands” (the ones you have to push to sell as a result of lower brand metrics), works well.
Why sell a push brand at all? Traditionally, retailers covet them due to the expectation for higher margin associated with such product.
But what if there are no pull brands?
When it comes to consumer electronics, until something changes, the 1980s will be seen as the golden period not only for sales but also for pull-brand predominance. Clarion, Denon, JVC, Jensen, Kenwood, Pioneer, Marantz, Panasonic, RCA, Sony and on and on and on, were all brands with significant brand presence, or “aura” as I like to think of it. A retailer really had to think twice (no pun intended) before attempting to compete against them with their own private-label product.
Today, not only are all brands mostly (but not completely) “push,” the products themselves are too, which is why retailers like Best Buy and others are revisiting private-label strategies. Does that mean they will succeed? We’ll see, but being one more push brand among many is not much of an advantage.
Explaining how we’ve come to this unfortunate situation could fill this magazine, but the short answer is we just stopped promoting brands, including retail brands as well as the products they sell. We did this primarily because it cost money to establish, maintain and continually evolve a brand, and for the last 25 years the industry’s focus has been on low price with almost no regard for any other aspects of merchandising.
Some insightful manufacturers and retailers, either with us now or soon to be, will figure this out, and when that happens we will once again see a brand wave as big or bigger than the last one to roll through.
The question is: Will you be on it or under it?