Books: How shopkeepers got the upper hand

True, retailers are putting the squeeze on producers, but this book underplays the binding spell of brands, says Rita Clifton.

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Last Updated: 31 Aug 2010

This is an interesting concept for a book for several reasons. Some years ago, I remember interviewing someone who was looking to move from retail. At the time, I was working with a quite traditional FMCG company and it was obvious that it would have to up its pace and develop deeper customer relationships to survive.

It would have been a good idea if someone from the more brutal world of retail marketing were to put a metabolic firework in the traditional marketing sphere. However, the recruitment traffic was still going from FMCG to retail then and you saw how quickly recruits became 'retailised' - or died.

In fact, the best retailers have been great at 'brandisation' and have profited from that in every sense. That few packaged goods brands have had the energy to push the other way makes retailisation a potentially important subject.

So how about the book itself? Retailization defines the term as 'optimising sales by connecting brands to shoppers through the power of retail thinking'.

It starts by explaining the four 'squeezes' for traditional brands: the retailer squeeze (so many retailers are now bigger and more powerful than individual brands); the shopper squeeze (shoppers 'adore the whole process of shopping'); the private-label squeeze (the growing acceptance of private-label); and the media squeeze (the fragmentation of media preventing mass awareness and the need to move communication focus to point of purchase).

A range of eye-popping facts about the rise of retailer power includes the effect of consolidation. In China the retail market is already dominated by four major retailers; and if Wal-Mart were an independent nation, it would be China's sixth-largest export market after Germany. All of this obviously creates a severe imbalance of power for even the biggest manufacturer brands to deal with.

The authors then talks about changing shopper expectations and the growing polarisation of many habits (eg, the discount-store-and-Prada combo).

It urges better segmentation in this way - eg, 'discount, premium discount and luxury' - to overcome the danger of getting run over if you are in the middle of the market road.

The book features up-to-date global research about how many consumers believe private-label to be as good as the well-known brands and how few are really prepared to change shops to get the brands they want. Yet even small loss of business is bad for low-margin, high-volume retailers, hence the need for co-dependence.

The chapter on changing communications will not come as a surprise, but it's good to have sobering facts (typical US household have 100-plus TV channels today, and 70% of people claim they'd pay money for products to help them avoid ads ... now a living reality with TiVo).

The rest of the book is devoted to 'how to think like a retailer'. It also discusses the shopper's need for constant stimulation (Tchibo, the German-born coffee shop now sells anything that will turn its shoppers on). And not forgetting product, product and product.

Here I depart from the authors. They seem to separate branding from product: 'The brand will not sustain sales and profits in the long run. Products will - and, more importantly, they will continue to grow your business.' Funny, that, since the brand is demonstrably the most important and sustainable asset in any business. It is the central organising principle stitching in sustainable advantage through every part of the brand experience, including the product. Retailers have discovered this.

The last sections are about how to enhance store experience, keep up excitement, communicate in new ways and tap into 'hot' communities like hip-hop and the pink dollar. Finally, the book gives instances companies that have reorganised around retail principles.

This book has one too many glib observations: 'create demand through a superior product', 'the only constant is change'. And how many brutal retail buyers did the authors sit in front of to get 'greater co-operation'?

But it's a stimulating book with many useful facts, figures, examples and ideas.

Retailization: Brand survival in the age of retailer power; Lars Thomassen, Keith Lincoln and Anthony Aconis; Kogan Page; £19.95

To order, visit www.mtmagazine.co.uk

Rita Clifton is chair of Interbrand and a non-executive director of DSG International and Emap.

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