Private Brand is the Strategic Priority for 2011

Retailers in 2011 will be intent on actively growing their businesses and improving customer insight capabilities, in addition to continuing efforts begun during the economic downturn to stabilize operating costs and focus on financial discipline, according to a report from the National Retail Federation’s research and education arm; and KPMG LLP, the U.S. audit, tax and advisory firm.

In surveying 318 retail executives for the ninth annual Retail Horizons: Benchmarks for 2010, Forecasts for 2011 report, 41 percent said their companies intend to increase domestic store expansions in 2011, up from 25 percent in 2010. Additionally, 25 percent will expand overseas, up from 21 percent a year ago.

Signaling an overall consensus that the worst is behind them, 58 percent of retailers surveyed reported cost reduction/cost containment will remain a companywide strategic initiative, down from 81 percent in 2010. The survey also found retailers are signaling that mobile e-commerce or m-commerce will be a top focus. In fact, 69 percent identify this as a strategic initiative, up considerably from 28 percent a year ago.

“It’s quite obvious retailers are anxious to put the recession behind them and build upon their customer service initiatives, enhance their mobile platforms and even grow their footprint,” said Katherine Mance, executive director, NRF Foundation. “As we move forward in 2011, retailers will strive to keep costs low, but will also continue to focus on providing positive and unique shopping experiences for their customers. This year’s report paints an encouraging picture of the coming year for both retailers and consumers.”

Mark Larson, partner in charge of KPMG’s retail group, said, “These findings dramatically demonstrate that retail expansion is back on the agenda. After several years of belt tightening, retailers are also ready to begin experimenting again with new brick and mortar concepts, hoping to appeal to shoppers interested in buying discretionary items once again. They will, however, move ahead with cost discipline in mind.”

Expanding the array of consumers’ Private Brand options is a strategic priority for more than 30 percent of retailers surveyed. The number of retailers implementing nationwide pricing and markdown strategies is increasing, this year’s study indicates. The trend could point to the growing role that value-based pricing plays in gaining share of wallet, the study’s authors say. Seen thus, Private Brand can be part of a well-aligned pricing strategy based on quality and value, which, is retailers’ number one concern today.

The economic turbulence over the past year created a renewed cash consciousness on the part of shoppers and retailers alike. While retailers used the period to slough off waste, shoppers made it clear that value for money was top of mind. Those sentiments are likely to persist even as the economy regains traction. As retailers respond, merchandising and pricing strategies will play an increasingly critical role.

The challenge for retailers will be balancing the demand for value and keeping prices down, the report says. While sales and price cutting appeal to budget-minded consumers, the industry must be mindful of the risk of promotional fatigue as well. Given the ongoing climate of uncertainty, more predictable, value-based pricing may be more reassuring for consumers.

Other survey highlights from the Retail Horizons: Benchmarks for 2010, Forecasts for 2011 report, include:

  • With significant changes in customer shopping behaviors, 74 percent of retailers in 2011 will increase their consumer insight and data gathering initiatives (up from 65 percent in 2010).
  • While 56 percent of retailers surveyed in 2010 said customer service would be a top priority, 75 percent said it would be in 2011.
  • The number of retailers who report using Twitter jumped from 61 percent in 2009 to 79 percent in 2010, with an additional 18 percent planning on using the social networking site for their e-commerce program during the next 18 months.
  • In reviewing customer insight initiatives, 78 percent of the execs ranked customer loyalty programs first, up from 65 percent a year ago.
  • 80 percent of retailers surveyed said leadership development will be a top priority in 2011, up from 69 percent in 2010.

This year’s edition of Retail Horizons includes responses from 135 North American retail companies and more than 318 individuals responding on their behalf. The report documents retailers’ key business priorities and plans, and tracks established and emerging retail trends.

For more information the report go to http://www.nrffoundation.com/



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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.