- September 22, 2019
Retail Brand Re-Alignment
We have now entered what some marketers are referring to as the “Blur Age”. This term is being used most frequently when it comes to consumer packaged goods brands and services and, to a great extent, customer communications. But it also now applies to retailers and especially to convenience retail formats as well.
With some notable exceptions the six visible assortment strategies that used to differentiate categories of retailers are now being copied within and across a variety of channels. Douglas J. Tigert, Professor of Marketing at Babson College, defined the assortment strategies over 20 years ago as the following:
He also believed that the last three offered the greatest opportunity to yield high returns.
The only strategy that is not available for use in the c-store channel in the truest sense is power, which by definition refers to assortments typically utilized by companies like Home Depot and Toys-R-Us. That leaves five other assortment strategies available to distinguish, and set apart, retailers in the convenience store channel.
Currently the most common approach for c-store operators is to differentiate their stores’ product assortment by adding either a proprietary foodservice offering or by borrowing equity by adding a national and/or regional food franchise. There is certainly merit to both approaches depending on exactly how well they are executed.
The industry has seen its share of “good” and “not so good” examples of attempted re-positioning or realignments using foodservice as the lynchpin. The issue here is that this seems to be the universal approach within the industry. As a result this kind of store re-positioning could soon re-define the industry as a whole and its value as a point of differentiation be short lived.
Certainly not what most companies who are currently moving ahead with this strategy want to hear. Unfortunately, this is where the retail “Blur” can come in, especially if a conflict of “need satisfaction” arises between the old c-store customer base and the targeted new foodservice customer base.
This conflict accounts for part of the shortfall in actual sales versus the projected impact of adding / changing the foodservice offer (the rest is due to poor execution of the offer). Old (traditional c-store) customers go somewhere else and not as many of the new (foodservice) customers buy into the brand’s realignment as forecast. If not addressed, the shortfall will grow over time as the chain expands its offering into additional stores within its market.
Brand realignment takes time and money. For any kind of brand realignment to work the c-store marketer must align three structural dimensions: point of contact management, internal operations management and product availability / assortment(s) management. Too many c-store retailers still treat foodservice as another “category” and yet expect the public to see them as a viable alternative to existing fast food locations. They fail because they didn’t make sure that they had the requisite dimensional alignment.
Most companies try to maintain as much of the original product assortment as they can. They do this in an effort not to lose their existing customers. However, in my experience the c-store companies that have determined and addressed the required changes that enhance the total shopping experience for their targeted customers (new and existing) have realized the greatest financial rewards.
I believe that the three assortment strategies that will yield the greatest return for each dollar invested will be a combination of convenience, with special attention paid to velocity and differentiation with respect to proprietary innovation, not copycat segmentation.