Ideations
A Retail Publication
Brand Brings Unity
and Profitability
A company’s brand is its unique way
of doing business—its purpose, spirit,
soul and ethos. Retailers convey their
uniqueness most frequently through
merchandise assortment and shopping
experience. So it follows that a store with
little that’s unique about the two wouldn’t
have a very strong brand.
Strengthening a brand through improved
differentiation is often overlooked in favor
of scale. Increased scale is the traditional
way to define retail performance, as the
net gain of each added store enhances
the bottom line. But when consumers are
cautious about spending and store growth
slows, costs increase faster than profit.
As Justin Wartell would have it, there is a
better way to improve performance.
“Classic brand management is a way to
find new growth and business opportunity,
because its aim is to discover how your
brand can work harder,” says Wartell,
Director of Brand Strategy at Interbrand
Design Forum. “When brand is the
foundation of your business, you look
at everything through its lens—your
corporate values, your brand positioning
and personality, and the things that drive
your target audience.
“Some really great brands have never
stopped to assess what drives the brand
and its hallmarks,” says Wartell. “But this
approach can get you out of a sameness rut,
and can unite your customer experience
across touchpoints. Further, it ensures that
whatever your store does works in context
with every other aspect of your business.”
Research around what people want from a
brand provides the insights that can lead to
the creation of a customer experience that
communicates the brand values clearly, for
an optimized customer experience, which
in turn leads to increased loyalty on the
part of the shopper. “Customer experience”
includes the store design and the online
channel, as well as every component of
marketing from traditional to digital.
However, even the largest leading chains,
the stores that seem to be everywhere
and always in front of the customer by dint
of size and reach, have an opportunity to
leverage brand as a catalyst for growth, not
as a task that needs to be checked off the
Issue 2 • 2011
list but an asset to be nurtured. Brand-led
companies have the means to remain true
to their values as they reach across the
country and around the world.
“Retailers that rely on scale over brand often
will simply add more items to the
assortment to increase the average ring.
Such initiatives aren’t driven by shopper
needs,” says Wartell. “They’re driven by
the analysis of dollars-and-cents data in
isolation, which fails to take the power of
balance into account. That is, determining
the products and services that align with
the goals of the brand. Financials balanced
with brand context will achieve a better
business result.”
Large grocery chains are often the victims
of scale. They carry the most goods of any
category, many have a problematic center
store and are typically not led by brand.
“In recent research, we’ve seen that
traditional grocery earns the weakest
customer loyalty scores,” says Wartell.
“In general, grocers tend to over-rely on
discounts, rewards and promotions which
undermine any move towards the kind of
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Retail Observations
The Reinvigorated
Retail Brand
A real, refreshed excitement is running
through the retail industry. It was
widely apparent at the 2011 GlobalShop
conference in late March. The entire
conference had a much stronger heart
beat. After two tough years, the thrill
is back. On top of that, I enjoyed some
of the most insightful and interesting
conversations with executives from the
world’s leading retailers.
It was our good fortune to present our
latest ranking of the world’s top retail
brands accompanied by a panel consisting
of Jose Gomez, Senior VP of Business
Development for Mango; Scott Klein,
Customer Loyalty Manager for Zappos;
Michael Mencel, Director of In-Store
Marketing and Brand for Family Dollar;
and the Executive Coordinator for Design
and Construction for Whole Foods, Adam
Smith. From apparel to grocery, we were
treated to the latest thinking in leveraging
brand to drive growth.
The common thread that makes these
companies leaders is their relentless focus
on doing the right thing for the customer
while remaining true to the brand. All
advocate that the customer experience
is what makes or breaks the opening of a
new store and the continued profitability
of the fleet—something of absolute
importance to brands who continue to
grow exponentially like Mango and Family
Dollar, as well as those who are returning
to growth, like Whole Foods. Online
retailer Zappos estimates it has only
scratched the surface in terms of audience
awareness. It’s putting massive amounts
of energy into reaching out, listening and
responding to new customers.
So based on all we learned and shared at
GlobalShop, what are the characteristics
of a reinvigorated retail brand? While the
strongest theme we heard amounted to
almost a brand mandate to put the target
customer at the center of every decision,
there have been some definite shifts in the
landscape shouting for attention.
There were noticeable indicators of a
trend toward localization, as brands
that are geographically closer to their
customers with more relevant service
and assortment gain favor. Walmart, a
company that is almost everybody’s
competitor, lost significant volume to
local supermarkets and value players last
year. These smaller rivals competed and
won not just on price perception, but on
nearness and easier-to-shop convenience.
In conjunction with that, there seems to
be an “anti-big” preference being played
out. Especially abroad, the hypermarket
format is struggling to be relevant, as in
the case of France’s Carrefour.
Recognizing that more consumers are
showing a preference for local, non-
cookie-cutter retail, companies are
developing various flexible formats
rather than rolling out chains of exact
replications. U.S. top 50 retailer J. Crew
is renowned for being a consistent brand
that offers a not-so-consistent store
experience, seeking out unique properties
for innovative executions. Auchan, like
Carrefour, is rolling out small format stores
that don’t require huge suburban lots and
a costly drive for consumers stuck with
steep fuel prices. The dollar store category
that benefited from the downturn is
going to see an uptick in competitors
entering its market.
Lastly, there’s a considerable trend for
expansion abroad, no matter what the
brand’s country of origin. It seems the
majority of companies in our Best Retail
Brands report* are expanding into other
markets to maintain growth momentum
and, in some cases, offset weakened
domestic spending. As a result, it seems
like everybody’s swapping places. U.S.
retailers are figuring out how to take their
brand magic and run longer with it, while
European and Asia Pacific brands continue
to cross borders. A perfect example is
Mango, opening a store a day in markets
that include Africa, Asia, the Middle
East and Latin America as well as North
America via JCPenney boutiques.
Which is all great for the consumer. We
look for the excitement and innovation we
saw at GlobalShop to spill over into great
shopping experiences for consumers who
are feeling more confident and, as always,
looking to retailers for something new.
Bruce Dybvad
* Go to interbranddesignforum.com to read the full report

Indivisible Corporate
Citizenship
Profits and philanthropy should no longer run
on separate tracks. The model today involves
blending the two.
In a world where business is both locally
and globally engaged, there is unprece-
dented pressure for transparency, codes
of ethical conduct, and better standards
for human resources coming from the
media, stockholders, governments, and
consumers. Companies must focus on
building relationships of trust that lead
to employee and consumer loyalty. At a
time when the whole world is a potential
marketplace, businesses have never
had greater opportunity to combine
philanthropy with business prosperity.
A new era of corporate citizenship
has arrived.
While the benefits of corporate citizenship
seem obvious—you can do good while
doing well—the decision behind a
company’s selection of the social issues
in which to involve its resources should
not be taken lightly.
In times past, businesses concentrated
on making profits first, then on an
entirely separate track giving back to
the community through charities and
foundations. Interestingly, there has long
been an unstated rule that the community
must be compensated for allowing its local
businesses to create wealth. However, the
two functions were considered separate
and sequential.
Today, a brand needs to consider how social
engagement fits with its core mission.
That means the pressure to “jump on the
bandwagon” by supporting the cause du jour
must be resisted in favor of serious research
to find a direction, if any, that’s right for the
brand. The wrong choice can impact both
sides of the financial performance. From a
cost perspective, philanthropic efforts will
Guest Feature
by Jay Myers
pull resources from traditional business
activities, both monetary in the case of
charitable donations, as well as in the form
of opportunity costs in the case of employee
time-off for volunteer activities. On the
revenue side, if a company chooses a cause Jay Myers
that misaligns with its target audience, it
Executive Director,
could conceivably have zero or negative
Analytics & Brand Valuation
impact on sales.
Interbrand Design Forum
The direction a brand chooses for corporate
citizenship demands self study—like any
initiative potentially costing millions and
Jay ensures the highest
potentially worth millions, a thorough
analysis needs to be completed. It should quality solutions are put
be seen as a creative opportunity for a
into place to answer clients’
business to solve social ills while improving
its reputation with the consumer. The business questions. He enjoys
appropriate cause and level of commitment
will vary depending on the company and its collaborating with his Interbrand
business culture. Design Forum colleagues to
The first decision to address is whether or blend the creative talent with
not to engage in corporate philanthropy.
our rigorous approach to
Despite all the pressure to do so, a company
could find it’s not in its best interest. strategy and research, producing
Questions to explore include: Will anything
actionable shopper insights
we do motivate our target audience to buy
more? Will these motivating strategies and optimal shopper-based
also be brand appropriate? Who within the
organization will take responsibility for solutions. Jay also serves as the
driving the citizenship efforts? What is the regional Analytics lead for North
time commitment? These are only the most
basic of questions, of course, but if you find and South America, providing
they can’t be answered quickly there’s more other offices with strategic
homework to do.
guidance on Analytics and
Once a decision has been made to pursue
Brand Valuation techniques.
a corporate citizenship program, there
are many more questions that will help
focus thinking. Which social causes
would motivate employees? Which would
motivate the target consumer? What
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Brand Brings Unity and Profitability
meaningful proposition brands need for
differentiation. It also results in low brand
strength as shoppers connect with the
price savings without a deeper connection
to why they chose the banner that was
above the door.”
Brand thinking begins with the idea that
addressing shopper needs is the way to
increase frequency and basket ring. It’s
also the working model for unity in a
fragmented space, a space the department
store category occupied in the 1990s,
when then-Federated Department Stores
was still pursuing a merger with Macy’s.
At that time, there were scores of regional
department stores throughout the U.S.
That changed when Federated, now
Macy’s, “debranded” hundreds of them
through acquisition and renaming to
create the first national department
store brand.
“The real estate play that began years ago
is really paying off now at Macy’s,” says
Wartell. “It was a multi-year process, as
the Macy’s brand needed time to mature
and claim ownership of the markets that
it serves. The company experienced an
adjustment period leading up to success,
but never waivered. It’s important to note
there was a moment when Macy’s pulled
the trigger, making a strategic decision to
consolidate behind brand for the delivery
of value, which enabled them to focus.
Ultimately, the focus led to profitability for
the business and value for the brand.”
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According to Wartell, a company’s brand
acts as a touchstone of trust, and as such
it is an asset that transcends marketing.
That’s why supermarkets in particular
should study Macy’s rise, as should
other categories. With 810 stores in 45
states, Macy’s works continuously on its
brand, addressing local shopper needs
and adapting the customer experience
accordingly. It brands every customer
touchpoint to align instore, online and
digital. Its sales have been up throughout
the past year.
“Consider this a call to other categories
that are fragmented as well—car washes,
bowling alleys and drug stores. Wherever
there is fragmentation, brand is the
method for discovering the optimum
customer experience that will help you
reap greater benefits from your assets,”
says Wartell.
Customer experience insights will become
more important, too, as companies
adjust offerings, services, and formats to
address the ongoing changes in consumer
behavior and escalating competition.
There continues to be a larger role for
brand to play.
Corporate Citizenship
is the competition doing? Is there a
particular philanthropic effort that would
complement the brand, or at the very
least, not contradict what the brand
stands for? Keep in mind that there is
no perfect answer. Some choices will
be better than others when it comes to
reflecting the brand values.
The pressure to rush the process is real.
Companies are facing high expectations
that they donate time, goods and
money to charities or invest in energy
conservation or environmental best
practices. Firms are not thought to be
optimized unless they blend together a
sense of community connection through
giving, along with a business mission
and purpose, both inside and outside
the company.
Let me say this: If you haven’t thought
about how corporate citizenship fits into
your overall brand strategy, you need
to. However, I do mean “think about
it.” The situation is not equivalent to
the Internet in the mid-90s when “think
about doing something online” was
interpreted as “create a website for your
product immediately.” Though corporate
citizenship is a hot button right now, it’s a
fundamentally different type of business
trend. Your company needs to navigate its
way carefully and thoughtfully in order to
establish a firm basis for trust and the best
possible return on investment.
Ideations
A Retail Publication by
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Bruce Dybvad, CEO
Jill Davis, Editor
Garrett Rice, Design/Production
©2011