Thursday, November 11, 2010

Is Your Brand on the Endangered Species List?

For some consumers, the brand of a product isn't their primary consideration in selecting a product. At Targets, Costcos and Walmarts across the country, people will buy things not because they have a connection to the brand, but because it is there and it is on sale. From paper towels to cleaning products and just about anything that is available as a generic, some consumers are willing to abandon any sort of branded connection in favor of price and availability.

But rather than dive into the relationship between brand and those products, I want to highlight a shift that is taking place in the brand ecosystem that really stood out for me during some recent shopping trips at Target. I used to shop at Target for products like toiletries, cleaning products, and paper towels. While I used to count on Target for carrying a fairly broad collection of products at prices, over the past year or two I've noticed that they are carrying fewer and fewer of the brands that I purchase. Now, instead of being able to buy these items at Target, I find myself purchasing at my local grocery store because they actually stock the brands of products that I'm looking for.

An Endangered Species?
What happens when the brand that you prefer is no longer carried by the big box stores? You have to expect that for the manufacturer, losing an outlet like Target is going to have a negative impact on your product's numbers. Meanwhile, distribution to traditional outlets like your local grocery store probably have more costs associated with them. At what point do you start thinking about EOL?

For years I have used Bon Ami cleanser, selected in part because my understanding is that it is more environmentally friendly. However, over the course of the past twenty years, Bon Ami has gone from something I could find on most store shelves to a specialty product that I can only find in select stores. I have actually gone on shopping trips looking for Bon Ami -- to grocery stores, hardware stores, you name it. Sometimes I've even bought two or three cans in order to avoid repeating the great Bon Ami treasure hunt. Think about what the future looks like for a product like Bon Ami.
  • Do they become an artisan cleaning product provider, making a product that people cling to like old candy brands?
  • Do they continue to struggle for retail outlets while brick and mortar stores continue to feel pressure from Internet sales and question ROI on every inch of retail space?
  • And what about brands with more subtle differences, like Quilted Northern versus Quilted Northern Ultra?
For some products, like deodorant or soap, brand adoption may simply be a preference for a specific scent. For products like that, it may simply be a matter of consumers forced to adopt a new favorite. But some products, the differences may be more significant and play a greater role in consumer preferences. For example, suppose one contains an allergen or, as with the two toilet paper brands, the paper is different. With these kinds of differences, manufacturers and retailers who stop carrying these products risk losing or alienating a passionate core audience.

In the specialty foods market, there are a number of retailers who have carved out a niche providing broader, gourmet selections. Here in Silicon Valley, grocery stores like Piazza's, Gene's Fine Foods, and Costentinos offer excellent examples of local retailers holding their own against the larger grocery chains. And yet, can you imagine a store like this focused on some of these other, non-big-box-brand brands? It will be interesting to see where this all goes.

No comments: