I spent last week in the US on a retail tour with an Australian client. A wise and experienced senior grocery manufacturer exec who, unusually, had run grocery stores in the earlier part of his career.
It gave him an interesting, retailer-turned-brand owner perspective on the mix of product and display in a store: one that I benefited from, and added to my own.
However, both of our perspectives were based on the traditional and fast-changing mainstream grocery model we have both grown up in. The one in which the manufacturer owns the brands, invests in them to maintain a dialogue with the consumer, in order to bring the consumer into store as a shopper. The consumer turned shopper then finds and chooses that specific shampoo brand over every other.
The retailer’s role is to create a retailing environment that’s the preferred one over every other retailer selling those manufacturer brands, showcases all brands and lets the shopper choose the one they want.
The manufacturer only cares that we choose their brand today and next time we need it, irrespective of store; the retailer only cares that we come into the store for that brand, but is happy with our choice of brand so long as we choose one in their store, and come back to that store next time we need it.
That model is being turned on its head.
Plano and Frisco NW of Dallas, Texas, are used as test areas by retailers to trial new store concepts and formats. So are Bentonville and Rogers in Arkansas. For different reasons.
Plano and Frisco are wealthy, optimistic but diverse areas with lots of space and business-friendly zoning laws. You can design, build and test stores easily. Arkansas is the home to Walmart. Test a store in the lion’s den and you’re sure to be noticed, as the top retail, manufacturer and investment execs in the world live in or visit these towns frequently.
So amongst all the HEB, Market Street, Walmart Neighbourhood, Tom Thumb, Kroger, Walmart and Sam’s Club stores were two that were hugely busy for the time of day. Their success comes from the fact that they break the traditional product brand owner/retail brand owner model. There is only one brand – the retailer’s.
Whole Foods Stores are big on sensory overload. Fresh or freshly produced, huge footprints and item range, music, product tasting and experts in coffee and vitamins, permanent in-store kitchens and cooking smells, takeaway, freshly made meal solutions, organic everything including pet food, craft wine and beer, and some clothing, with next to no national manufacturer brands present on shelf.
Amongst the sea of Whole Food-branded product, and regional small specialist brand owners we saw, San Pellegrino and Illy plus some mainstream beer and wine brands were the only ones noticeable.
Much of the product was completely unbranded: olives, coffee, ionised water sold by the gallon for 39c if you bring your own container. And to keep costs down and service up the store associates are all Whole Foods employees. Their role is to manage the displays and talk to the shoppers. Price ticketing is all electronic shelf edge, so no need to spend time changing prices and printing tickets.
Trader Joe’s has a much smaller footprint and fewer items, but was again marked by music, fresh, organic and gluten-free products, with all store associates dressed in Trader Joe’s Hibiscus flower branded clothes with name badges. Again, there were permanent tastings and again a small number of national brands, including San Pellegrino.
Again to keep costs down and service up, the store associates are all Trader Joe’s employees. They were constantly filling the constantly emptying shelves and talking to shoppers. Price ticketing was again all electronic shelf edge, so no need to spend time changing prices and printing tickets.
These successful and fast growing retail models challenge not only the need for free standing, nationally known branded product, but all the ancillary support needed to manage them in stores. That successful new model is a threat to me and my client’s jobs. However, he’s better placed than me. He has run a store before and could do it again. I may just have to write for a living!
CROSSMARK CEO Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores.