CPGmatters: From Shelf to Storefront: Brand-Building via Retail
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
Consumer product manufacturers have historically focused on just one type of "real estate," that relatively small amount of shelf space where their brands jockey for attention in the store. But over the past few years, a few manufacturers have been doing deals with landlords to launch spacious retail stores focused exclusively on brands like Chobani Greek Yogurt, McCormick seasonings or Spanx hosiery.
When Chobani launched its New York City yogurt store back in August 2012, it created a kind of church dedicated specifically to the conversion of legions into Chobani evangelists. At the bustling Prince Street store, Chobani fans — foodies, dieters, health nuts and everything in between — delight in sampling and buying all kinds of yogurt creations whipped up on site by highly trained associates. The store may or may not turn a profit, but it definitely tells a good story.
The store is, in a sense, a lab in which the company can tinker with product offerings, tweak marketing messages, and absorb data related to the behavior and preferences of loyal customers.
In Baltimore, McCormick World of Flavors gives McCormick & Co. the opportunity to highlight all of its products in a colorful space filled with the sights, sounds and aromatic smells associated with cooking, baking and grilling. It’s one thing to see an ad for McCormick brands like Old Bay, Vahiné or Grill Mates; it’s quite another to taste expertly seasoned food spiced up on site in the McCormick store. The storefront, which opened in August 2012, even boasts its own line of flavored salsas, olive oils, vinegars and tapenades.
But even if such efforts fail to drive profits, they can certainly help manufacturers learn valuable lessons about how to be as focused and brand-centric as possible.
Today, retailers are adopting channel-neutral approaches in which they do their best to reach consumers in whatever ways the consumers prefer. Likewise, manufacturers now appear to be taking something similar to an "omni-channel" approach to brand building. In other words, they see offshoot retail locations as just one of many points of consumer contact, along with the likes of YouTube videos, Facebook pages and, of course, the all-important shelf space in other companies’ stores.
Discussion Questions
Do you see branded stores becoming an essential tool for CPG brands in the future? What questions should guide each brand in deciding whether to open a store?
Branded stores can be very effective in creating consumer awareness of what is possible. But, the learnings won’t scale to the rest of retail if the branded stores create “unnatural acts.” For example, if the branded stores have additional staff or “highly trained associates,” most retailers can’t replicate the execution.
Branded store fronts reach a very limited number of consumers in just a few major cities. In today’s omni-channel world, branded stores will be far more effective if they can bring experiences to a wide array of consumers shopping anytime and everywhere their smartphones.
Essential? No. There are, however, many benefits to doing so, especially in continuing to promote the brand, solicit feedback for new products, line extensions, etc. It has to be the right category and if the “Brand Store” creates an on-going dialogue with the consumer, ah sorry, shopper, then that is a good thing, right?
I’d lean to ‘yes’ if the store presents an experience of some memorable and repeatable kind. A true destination in other words. But I have trouble seeing that happen in very many categories beyond food, which may be why there are mostly food examples in the article.
Admittedly, I’m not a huge ‘brand’ devotee and my tendency is to always look around to see ‘what else is there?’ I look for innovation, for companies who are stretching to new possibilities. Consequently looking in one brand direction is far too narrow a perspective.
Retailers must focus on multiple brands including store brands. Manufacturers want more focus on their brands. By opening their own stores, manufacturers can achieve multiple goals. Apple is the big success story in this regard.
A manufacturer-owned store can be used to sample potential new products and line extensions, engage consumers to learn more about their preferences and showcase products in an ideal environment.
Most manufacturers will not approach the success achieved by Apple, but they can gather valuable information, both consumer and retail, from their own stores.
There is absolutely no reason for CPG brands not to explore Direct-to-Consumer (D2C) sales. Many brands have had stores for several years, especially in high-traffic areas, such as Times Square. Others are going D2C online, including one of the largest Household/Personal Care CPG manufacturers in the world.
Bottom line, this strategy creates awareness of the brand for the consumer and provides additional channels to acquire the goods. There are plenty of great stories here around the globe.
I’m not sure I would say these stores will become “essential tools” for CPG brands, but there is definitely opportunity to extend a brand’s reach through storefronts. Ideas such as these (Chobani, McCormicks, L’oreal, etc.), as well as pop-up concepts could build message ubiquity and strengthen brand loyalty. Questions should include: 1) what will be gained by the brand? 2) how does it compete with existing trade partners? 3) is the brand strong enough to stand on its own? 4) what is the true value proposition for consumers?
This is a really compelling idea that can help drive the brand experience. Shrewd placement in high traffic areas like Union Square in San Francisco, or Times Square, could be destinations. The Chobani example is fascinating since Greek yogurt is red hot right now. Can a store devoted to bacon be far behind?
I agree with ZB. Not essential, but a very useful tool for gathering consumer feedback and testing new products.
Real estate is expensive today, even in a down market. So I do not see this as critical to brand awareness; but there is something “essential” to be said about it if there is space and manpower available. For instance, McCormick has loads of space, both in downtown Baltimore and at their suburban headquarters north of the city. For McCormick this is a doable program and one with proven profitability both for them and their distribution network.
Essential marketing tool…I don’t think so.
The M+M store in Times Square is unique.
The Nike Store is very cool, but it is not CPG.
How long of a lease does Chobani have on the space in one of the hippest, most tourist traveled neighborhoods you can imagine? Keep in mind that Chobani can be consumed right then and there.
Creating a freestanding “Brand Experience” for a CPG is tricky and very expensive. Translating the “experience” into repeat sales within their traditional retail channels is a wholly different story.
Storefronts will create a buzz and curiosity, since it is actually a form of advertising or PR. Only the rarest of brands can afford it or successfully execute it.
If you live and work around Manhattan, you see many examples of fashion marketers who showcase their wares in fabulously expensive retail locations, which cannot possibly be supported by the retail business they generate. These locations are halo shops, which add mystique and value to their brand when it is presented outside of NYC.
How many CPG marketers have had great success with websites that are cheaper and far more flexible than actual real estate in creating a brand experience?
CPG marketers need retailers to sell their products. The fact that retailers have the upper hand right now is a difficult reality, but it is reality.
Yes, branded stores are essential in the 21st century and can be an economic driver. The World of Coke in Atlanta and Hershey’s Chocolate World in Hershey draw in thousands of tourists each day and provide a local impact.
Today, this brand experience can be brought down to the micro-level as a retail flagship store and employ mobile technology and consumer facing labs to sample and experiment with the brand.
While Sony and Nike flourished with this model for decades, Apple bringing their branded stores in shopping malls and other areas resulted in a boost in traffic and revenue of nearby stores.
It sounds like a no brainer, just take it directly to the customer! But here’s the thing: once you start talking about actually running those stores, you open a whole new can of worms. And that new can of worms is very expensive and very talent-driven. Talent CPG doesn’t have.
The should just outsource the ops … oh wait—they already do.
Brands are moving from crowded store shelves to standalone retail to create one-on-one customer experiences and engagements. It becomes much harder for brands to operate in this manner if the product is singularly focused, but if there are enough extensions past the core product (new variety, sizes, ancillary add-ons, hard to get items) it can be a draw.
Another point that should not be overlooked is if the main focus is bottom-line sales, it will likely not pay out. However, if the larger marketing objective, for example, is to launch a new product, create sampling opportunities, test and learn, reward loyal customers, or provide deeper interaction with the product or product representative, then it can be a very successful initiative.
Concept stores, pop up stores, mobile retail and interactive kiosks are all creative retail channels that should be explored by brands and integrated into a unified omni-channel brand experience.
Some years ago I worked on designing a retail store for a single manufacturer. They were tired of fighting with retailers on deductions, damage, and demands for money. This manufacturer represented 11% of store sales. There was no way we could get the store to show a real profit. When Kraft started assembling Kraft Foodservice, many foodservice distributors simply discontinued their products which hurt Kraft.
Maybe a New York, Chicago, Dallas and Atlanta store as a customer interactive lab could be a good idea. As long as it is fun and the manufacturer learns, why not? Since most companies are having a real hard time developing new products, this might be a new approach.