This guest post comes from Rory Fegan, Senior Strategist with the agency Pearlfisher.
Private Brand diversification: the new middle ground power shift
In the past few weeks, the retail headlines have yet again shone a spotlight on Private Brands. While Tesco’s Fresh & Easy grocery chain made a very public exit from the US, Walgreens announced the launch of yet another brand line with their new baby range Well Beginnings. Once again, this brings up the topic of just when and how it is right for brands to diversify and just how far you could – and should – go.
Although it is something of a segmented picture when you look at the UK, European and US markets, there are two prominent strategies being engaged that are not just accelerating and expanding diversification but shaping and growing a whole new middle ground market.
Firstly, retailers are adding value and choice by either bringing in already highly successful and established brands or by creating new tiers of products from existing brands – such as Sam’s Club’s Artisan Fresh which was created from products formerly in the Members Mark brand.
Secondly, and perhaps more notably, retailers are either approaching producers to create ever-more tailored brands just for them or seizing the opportunity to create their own, independent sub-brands. In the UK, John Lewis has recently introduced The Kin collection, a new own brand fashion range including men’s, women’s and children’s wear, tied together by a tightly edited palette of colours and patterns. In the US, Walgreens is a master of the Private Brand with the creation of Ology, Nice, Good & Delish, each with unique positioning and equities.
Tesco produced the first incarnation of what they term a ‘venture’ brand in the UK market with the introduction in the 80’s of its ‘Finest’ range – a range still going strong today. The intention behind venture brands is to produce a portfolio of quality branded goods that can compete with established FMCG brands but at a lower price. And it is a strategy that more retailers are now adopting and gaining traction with but for some, such as Tesco, the venture brand premise is actually being hailed as shaping the future of the retail business model. Tesco CEO, Philip Clark has been discussing the way these new brands and businesses are bringing a “new form of entrepreneurship” into the business that is helping change the way it operates.
“We’ve brought in intrepreneurs – entrepreneurs that actually work for us. They’re changing the way the business thinks. We’ve done a good job with our in-store bakery but Euphorium is taking it to a whole new level.” (Source: Marketing Week)
And while both of these approaches have undoubtedly rejuvenated the traditionally static middle ground – and continue to do so – a new leftfield strategy by, yes, you guessed it, Tesco is potentially adding yet another dimension and opportunity into the mix.
Just as news was breaking about the closure of Fresh & Easy, Tesco also (and maybe shrewdly) chose to announce its plans to add its name back on to its range of food and household venture brands with products re-labeled ‘by Tesco’.
This is not supposed to just be a case study of Tesco but Tesco is one retailer boldly using a mix of routes and strategies to diversify the brand offer. Fresh & Easy may have bombed but it will be interesting to see what difference ‘by Tesco’ makes to its market share and profile. Especially as Tesco has not invested in a new brand or category but has chosen instead to put the focus back on its brand equity and identity – to adopt a new form of communication as the catalyst of major brand change. And, of course, there is the potential for further creative development across this portfolio.
And this brings us back to the power of brand design and communication – and is maybe indicative of where the new opportunity really lies? As the volatile power shift between the brands and the retailers continues to play out, design remains a constant and there is a very real opportunity for design to establish itself as a pivotal ‘intrepreneur’ in helping shape the communication – and fortunes – of this important middle ground market.
Rory Fegan, Senior Strategist, Pearlfisher
Rory combines logic, substance and storytelling to create compelling narratives that bring depth and richness to the brands we work with. Creative, yet analytical, he’s able to translate future insight into pioneering brand strategy, focusing in on a single strong idea and following it through to fruition. With an MA in Design from Central Saint Martins, Rory has an understanding and depth of knowledge about design that remains relatively rare among strategists. For Pearlfisher, it’s a valuable skill that translates into considered, constructive and well-crafted strategy that takes into account our designers’ needs as well as our clients’ aspirations. Imaginative and intuitive, Rory is full of ideas about how brands can use design to communicate – all inspired by his healthy curiosity into what makes people tick.