Retail Brand Case Studies: Turning Your Customer into a Fan
Two US retailers have a clear competitive advantage because they clearly defined their “brand promise” and tailored their experience to a specific customer.
Per a 2014 report on top retail brands by Interbrand, “Best Buy was the second most valuable retail brand in the US after Walmart in 2009. Consumer electronics was the fastest growing retail sector, with Best Buy far out front. By 2011, weakening sales and online competition chipped away at the company’s dominion and by 2013, Best Buy had lost more than 50 percent of its brand value. In 2014, its brand value dropped another 42 percent.” Ouch. US consumers had (and still have) a love affair with technical products but the retailer who sells it to them has become far less important. Physical and digital retail options are everywhere and the price pressure is intense.
The threat is imminent in many retail sectors. However, this threat can also be a catalyst for change, helping a retailer become a “living theatre, a crucible of human creativity and the field where brands and consumers meet to foster prosperity and co-create a new [retail] reality.[1]” In other words, a changing competitive landscape favors those that who get creative and uniquely stand for something their customer cares about – a lot.
Two US Retailers are doing just that: Trader Joe's and Total Wine and More
Trader Joe's
Trader Joe’s offers only 4,000 products, whereas most US grocery stores stock nearly 50,000 items. Upwards of 80% of these 4000 items are private label, with a focus on organic, vegetarian, imported and other unique foods. These items are sold at a significant discount to brand name equivalents. Many of these unique products have quirky names and the whole store environment has sense of humor, including the employees who seem to genuinely like their jobs and enjoy what they are doing.
The result? Sales per square foot at a reported $1,750[2] – double that of Whole Foods. It also made the list of top 5 grocers in the US, second only to New England’s Wegmans, by Consumer Reports rating system.[3] But almost more impressive is what their loyal fans say about Trader Joe’s. There are multiple consumer-authored blogs, articles, and websites that support the retailer and the products they sell.[4]
Here are a couple of consumer quotes taken from yelp.com that seem to capture what Trader Joe's is all about:
“I absolutely love Trader Joe’s. Normally I despise grocery shopping but I actually look forward to my trips to Trader Joes with my boyfriend. It’s like a date night activity for us…Keep up the amazing job!”
“I don’t know what it is about this grocery store but I just love their selections…Customer service means a lot to me. Trader Joes has this perfected. I seem to get the best cashiers every single time. They are quick, efficient and so friendly! Even though it’s small talk, it makes a world of difference.”
“Trader Joe’s is more than a grocery store. It is a tiki/trader-themed grocery experience…They sell lots of random but excellent products that you didn’t know existed, but end up buying."
These customers reward Trader Joe’s with their business and their endorsement because Trader Joe’s stands for what they believe in and appreciate – turning their shopping trip into a fun-filled, treasure-hunt experience.
Total Wine and More
Total Wine and More is a family-owned, privately held alcohol retailer and a two-time US Retailer of the Year[5] winner. They operate 113 stores in 16 states and are quickly expanding. With a very large footprint (most stores are over 20,000 square feet), they sell wine from just about every wine-producing region in the world, but also spirits and craft beers – specializing in the hard to find micro-brews, imports, and locally produced products. They invest in creating relationships with their winegrowers to get direct distribution to cut down on costs. Their prices are comparable to Costco, which is unusually low for a specialty retailer with this depth of assortment. And they invest in hiring experienced employees. Twenty percent of their employees are wine “professionals” and all employees undergo extensive wine training before they can support the sales floor. Their philanthropic efforts are unique to each market, helping create a “we support you” localness which dove-tails into their marketing efforts too.
Here is a sample of what their customers are saying on yelp.com:
“If too good of customer service could be considered a bad thing, Total Wine would nail it! The staff is extremely friendly and very educated on their spirits. Why is this a bad thing, you ask? Because if you are already a bit of an impulse shopper and then receive friendly, knowledgeable suggestions to back it up, the chance of getting out of Total Wine with only what you intended is pretty slim. Oh plus there's always vendors sampling beverages from wine to whiskey which also helps fill your basket."
“Nothing else compares...if you can't find it here, you can't find it. Love this place....great staff that knows their stuff. Very approachable and willing to make recommendations for any budget.”
“For all of this I say: Bravo, Total Wine! You have mastered the art of selling fairly priced and unique liquor/wines/foods/cigars to the masses and have made me a lifetime customer!”
Four Common Elements to a sustainable retail brand
These two brands have successfully created a bit of retail “theatre” to separate them from the competition. There are four key elements they have in common:
Clearly defined customer
Awesome curation of products that these customers LOVE
A shopping environment their customers want to get lost in
Fair prices – typically priced below the marketplace norm
1. Clearly defined customer
These retailers are creating a retail experience for a specific type of customer. They are not crafting an experience to please everyone or the average shopper, but rather are seeking to delight a clear target.
Their target is sizeable yet defined by a shared set of values, beliefs or interests. Using a bulls-eye target framework, this customer would be in the center of the bulls-eye. They create the ideal shopping experience for them. This bulls-eye target in turn rewards them with their shopping loyalty and by their word of mouth influence. This then attracts a broader audience of customers who become curious as to the appeal and have to see it for themselves.
2. Awesome curation of products that these customers LOVE
By knowing their target customer well, finding products they really want is easier. These three assort functional and popular items and then add the unexpected and unique products that delight their customer. When these unique items are exclusive to the retailer (i.e. Trader Joe’s and Container Store) or hard to find elsewhere (i.e. Total Wine and More), the customer is hooked.
3. A shopping environment their customers want to get lost in
Assorting amazing and unique products is clearly a secret weapon but selling it in an environment that is engaging and energising is what locks the target customer into an emotional relationship. The retailer’s personality is brought to life in the way the product is merchandised, through the experience with the employees, and in supporting marketing.
4. Fair prices – typically priced below the marketplace norm
It would be tempting for these retailers to set premium price points, but with an ELDP pricing strategy set at or just below competitors these retailers ensure that nearly all target customers, independent of financial means, is a viable consumer. And when a customer really loves a product, getting a perceived “deal” on it is incredibly energising which enhances the emotional connection to the experience.
Combing these elements creates a retail value proposition that emotionally connects with its target customers and attracts secondary targets as well. They have successfully created retail brands that are protected from commodization because their customers love the products and the experience.
[1] Wine Enthusiast Wine Star Award, 2013 and 2014
[2] Wikipedia, Trader Joe's
[3] 26 March, 2014 Consumer Reports article “Wegmans, Trader Joe’s, Publix, Costco & Sprouts Top Consumer Reports Supermarket Ratings”
[4] Here are a few to check out: thingsiloveattraderjoes.com, traderjoesrants.wordpress.com, traderjoesfan.com
[5] Interbrand 2014 Best Retail brands report
