PLBUYER JULY 2011 The Ten Keys to Private Brand Success Guest Commentary BY PATRICK RODMELL 7 THE 10 KEYS TO PRIVATE BRAND SUCCESS: KEY NO. 7: PERFORMANCE MEASUREMENT Know what your customers think. I t’s pretty much universally accepted that – done right – private label can be a strategic lever for a retailer; it can help differentiate a business from competitors, support a stronger value proposition and, ultimately, drive shopper loyalty. But beyond looking at the sales and margin reports, how do you know if your program is really maximizing its strategic potential? The answer is quite simple. You must understand how your private label program is perceived by your customers – both your loyal shoppers and those who aren’t – inside and out. That’s why looking beyond the numbers, measuring and monitoring the performance of your private label in terms of perception measures, is another key to private label success. A study we recently conducted will shed light on the factors that influence a shopper’s retail Walmart for groceries (those who as provocative. Walmart core looking at by age, income, etc.) destination of choice. It’s called identify Walmart as their primary shoppers think that a given basket can help a retailer work on the Brand Perception Index and, grocery store) rate Walmart’s of private label products will the strategies and tactics that in a nutshell, it uses research we private label materially higher cost 26 percent more at Publix, will support retention of loyal obtained through an online study (index = 101) than “non-core” whereas Publix core shoppers customers; conversely, knowing to establish index ratings for a shoppers of Walmart (index = think the basket would cost only what non-core shoppers think number of retailers, relative to the 82). In other words, people who 7 percent less at Walmart! Put about the private brand – in a factors that influence store choice regularly shop for groceries at another way, when it comes to quantifiable manner – can help (price, quality, selection, etc.) One Walmart are generally quite private label, there’s a 19 percent uncover the triggers that will of the major areas of the study is satisfied with the quality of their price perception gap between ultimately bring new shoppers private label. private label, while the quality loyal shoppers of Publix and those through the door. Looking at the results from perception of those who don’t of Walmart. more than 1,400 shoppers in two frequent a Walmart store is So, who’s right? Walmart Patrick Rodmell (email@example.com) major urban markets – Dallas and significantly lower, relative to the shoppers or Publix shoppers? is president and CEO of Watt International, Jacksonville, Fla., we were quite competitive market. Does it matter? No, because a Toronto-based integrated retail agency surprised by some of the results Seems pretty logical, but what perception is seldom based on with more than 40 years experience in more which directionally gave insights was interesting is that the exact realities. What does matter is that than 40 countries around the world. The into areas of opportunity for each opposite holds true for Target the perceptions of price, quality company is well known for creating such retailer and reinforced the need in Dallas – non-core shoppers and selection of private label play landmark private brands as President’s to measure and monitor factors of Target for groceries actually a large part in establishing the Choice, Great Value and Safeway Select, and beyond the numbers. perceive the quality as higher (101) consumer’s overall perception of more than 100 other private brands world- For example, from Jacksonville versus core shoppers (92). the retailer’s brand. wide. To read the first six of Patrick’s keys, – when it comes to “quality of When it came to price Understanding the perceptions go to privatelabelbuyer.com and look in the private label”, “core” shoppers of perceptions, the results were just of core shoppers (especially when PLBuyer Voices section.