The soft drink industry sees trouble

The soft drink industry must wake up to a new reality.

You see, there are all kinds of business trends that are transforming industries. We’ve already seen what our smartphones have replaced. Streaming media has made CDs and DVDs obsolete. And, as we’ve written extensively, cold breakfast cereal is in its own mess.

The failure to recognize what’s going on and building your brand to respond to market forces will leave you in the dust. Retailers are flat-out ignorant of enacting true change to adapt to a new reality, which includes dead malls.

The soft drink industry is also experiencing massive change. Bottled water has replaced many of our sugar-infested soda drinking habits, with soda sales dropping 1.5% in 2015. The industry itself is responding with ads saying its players will reduce the amount of sugar and offer smaller sizes.

This is, of course, the equivalent of the tobacco industry saying it will have light cigarettes with less tar in them. The industry itself knows that it has a problem, but is trying to stem the tide of consumers leaving it.

However, the soft drink industry is also responding by diversifying their portfolios. The epitome of irony is that those soft drink companies now own most of the most recognizable bottled water brands.

How the soft drink industry can survive.

If I were to make a prediction, I’d say Coca-Cola has the best chance of surviving for one simple reason. It’s the only one with a meaningful and preferred brand. Pepsi once held a direct position against Coke by being about youth, while Coca-Cola was about nostalgia.

Since those heydays, however, Pepsi has been all over the map and must consider a new direction. Today’s youth are veering away from soft drinks. (A 19-year-old son of a co-worker has never sipped a soda in his life.) Capturing the imagination of Millennials is important, but that means all the players need a different strategy. Not just thumb plugging a hole in the dam.

Even Coke’s recent announcement of a selfie bottle won’t do the trick. It’s a gimmick. Big whoop.

A repositioning is in order for all the players. Otherwise, it demonstrates another industry failing to respond to trends in a meaningful manner.

Rebranding Do’s and Don’ts for marketers

Rebranding is an effort that shouldn’t be taken lightly. That’s why, when the decision to rebrand is made, it should be completed with honesty and no holding back.

Many don’t choose that route, however. Most rebranding is actually just a refreshing of a logo, holding on to sacred cows that may not have any meaning in the marketplace anymore. Brands simply update their logos, refurnish their locations, add a category benefit-defining message and call it rebranding.

RebrandingThat’s not rebranding. That’s spitting into the wind.

The reason you rebrand is because your current brand does not resonate with target audiences. It isn’t helping you steal market share from the competition. Revenues have become static (or are in decline) and you understand that the brand’s meaning has lost relevancy.

Most companies who decide to rebrand understand the reasons why. But few know how to accomplish it successfully, especially when the effort must result in increased market share, an uptick on the bottom line and increased importance to target audiences so they cannot choose anyone else.

Rebranding for the right reasons

Every CMO would agree that rebranding without compromise is the only way to go. But getting there can be difficult. It takes a marketer with a strong spine and backing from the company leaders to get it done. There is simply too much at stake.

If you get the rebrand wrong (or, less than optimum) then you are stuck. Rebranding without truly becoming meaningful drops you into conducting the Burger King approach. You just keep adding meaningless menu items in the hope that something will catch on and give some oomph to the brand.

So what are the pitfalls during the rebranding process? Where are the opportunities to get it right?

Rebranding pitfalls

Let’s start with the pitfalls. To start, throw everything you know about your current brand out the window. While you have knowledge of your industry, that can sometimes be a hindrance to having a truly innovative brand.

Think about it this way. Every industry believes it is unique. There are market forces that exist in your industry that my not live in others. But the end result of any rebranding is still the same: Understanding human behavior. That is even important in B2B businesses where emotional preference often overcomes price.

RebrandingThe auto industry, for example, is one that believes so strongly that its market is unique that it rarely looks outside the industry for help. In fact, an agency must have auto experience in order to work on most auto brands.

Sounds reasonable, right? Well, like many other industries, that means that the players within that industry just trade agencies back and forth, believing that it will someday make a difference. Yet few industries spout such similar messages as automobile manufacturers do and market share stagnates.

Truly rebrand against the competition.

Another pitfall. Listening only to your own customers. The art of rebranding is to steal market share, not just keep the customers you already have. If you have preference with a portion of the audience, that means they have already bought into what your brand. It’s the customers of your competition that you are looking to attract. And, right now, they are ignoring you.

That means you must focus on them. Focusing on your current customers often leads to the stale refresh of a brand rather than something designed to steal market share. That’s how you become stagnant.

Where are the opportunities?

Quantitative research uncovers the main strategies of any rebrand. But there is research and there is research. Most do usage and attitude studies that rarely tell you anything groundbreaking that you already didn’t know. While some of that data is useful, it doesn’t help in the rebuilding of a brand.

There are honest values to test, but they should not be the category benefits of what you offer. “Better technology” or “low prices” are not switching triggers to test because they are simply definitions of what the category offers. The switching triggers to test are often the emotional messages that prompt audiences to prefer you in the face of rational reasons to not.

RebrandingThat’s where precepts come in. Few, if any, advertising agencies or brand companies understand how human behavior works. Our actions as humans are driven by our belief systems. Our wants and needs come from a belief. Most marketing and branding stops at needs and wants, without any understanding of why they are important.

Those belief systems are the emotional triggers to preference. These precepts are first uncovered in behavior modeling, then tested in the research.

Rebranding is difficult because it asks its guardians to take a hard look at what the brand is currently doing in the marketplace – and the news is usually not good. It means letting go of past efforts that are actually holding you back from creating true preference.

The root of emerging with a meaningful brand is understanding the emotional drivers of your target audience’s behavior. The brand is not something you own. It’s something the people you are attracting own. Therefore, a successful rebrand comes from those audiences, not yourself.

Department Store Rebranding: Mandatory

Department Store Rebranding
Merchandise is too crowded

Why talk about department store rebranding? Because the department store market and the retail industry needs a complete reset (read a detailed market study of the entire retail category here). Department store chains are closing stores.

Malls are empty, traffic is down 5.8% from last year nationwide. Consumers spend their money on experiences (hold that thought), such as dining or travel rather than shopping. And too many retailers count on bountiful holiday sales to save their year.

Department Store Rebranding What the retail industry truly needs is clear: Department store rebranding— a complete rethinking of the model.

Department store rebranding is the highest priority. Change is needed. Without change, retailers that depend on sales from their brick and mortar locations are irrelevant.

It is worse and more desperate for major department stores. They will become extinct. This is especially the case for the legacy department stores. In a nutshell this is the entire argument for department store rebranding. Change now or die.

Amazon in particular and the web in general is the new normal for shoppers, dominating the retail industry. Amazon dominates by being an online portal for items ranging from electronics to toys to apparel. You would be hard pressed to find anyone who has not purchased through the online giant.

Department stores. What’s next?

Department Store Rebranding So what are retailers to do? More specifically, what are department stores to do? There are all sorts of tactics they can employ to stem the plunge of market share. But they will fail.

Department store rebranding from the ground-up is a needed strategic decision and not just a tactical one. Without this complete overhaul of department store rebranding initiatives and the total repositioning this means the vaunted old brands are finished.  And finished soon.

We’ve dissected many retailers, including a report written for the Retail Customer Experience which encourages retailers to merge their in-store and online personalities.

We’ve also said “stop trying to be everything to everybody”. But tactical changes won’t save department stores. They need strategic change. They must redefine the value proposition for the target shoppers and convince them that their brands are relevant.

Department store rebranding restores relevancy.

Department Store Rebranding One way you recapture relevancy in a market — and even succeed — is rebranding. Department store rebranding pulls them out of the ditch because, done properly, they are meaningful to target audiences. And the store is more important than simply restating product or category benefits.

Without that preference, no tactic or strategy can ensure the brands future success. If you are a department store, rebranding is the only way you can survive.

Rethinking is more than just rebranding department stores and their messages.

Department Store Rebranding Rebranding department stores is more than just a new name, logo and tag line. It is fundamental change— real changes in operations and structure. Changes implemented to magnify and support the new brand strategy.

Even traditional rebranding does not go far enough. Retailers must rethink everything.

The market, especially those large department stores like Macy’s, Belk’s, JC Penney, Harrods, Bergdorf Goodman, Lord & Taylor, Bloomingdale’s, Sears, Debenhams, Meijer, Von Maur, Boscov’s, The Bon-Ton, and the like, are sliding into irrelevancy and, in many ways, are already irrelevant to the new shopper.

Department Store Rebranding Shoppers vote with their dollars. And the department stores feel like they have passed their own time limit on this earth.

Right?

Probably right. Department stores: Be something different than what you are today. That’s how you survive. The ongoing sales promotions and specials that you rely on don’t do the trick. Black Friday won’t save you.

Their stores are overcrowded with product, there are no sight-lines, crowded shelves does not say variety rather it creates a feeling of being hurried. As a result shopping for apparel is boring at best and harried at its worst.

Department store rebranding for experience.

Department Store Rebranding Remember, earlier on when we spoke about consumers spending money on experiences? Shopping in department stores is mundane and it does not get the pulse rising. Part of department store rebranding is to revitalize the experience and make it deeply personal.

It’s especially problematic for women. There is more selection and yet more difficulty in finding clothes that both fit and are appealing.

Men walk into a store, know their inseam, waist, arm and neck sizes and, voila, there is a suit. As a result, men are free to purchase based on the look, style, price and brand. They find what is available in their size and they buy it. Minor alterations are acceptable and easy to accomplish. Many times, off the rack is a real phenomenon.

Department Store Rebranding
The problems at Macy’s are systematic of the retail space.

Women shop on size and department, which varies by store and by brand. Go into a Macy’s, for instance, and find a size 4 that’s a size 2 at another department store. It’s even worse than that. Shoppers shop in that same Macy’s, find a size 2 that fits and another size 2 that doesn’t.

That variation in experience is confusing and…dull. Women look at overcrowded and jammed racks in poorly set up departments. And all this to find a garment that appeals to them aesthetically.

As a result they are forced to search the jammed racks for that design or style in their size – even though they know that label size is no guarantee of proper fitting. This means they try on everything and sort through all sorts of retail disappointment. This is not an experience. It is a nightmare.

That’s not shopping, either. It does not translate into purchases. That’s solving the Pythagorean theorem.

An example of rethinking everything at department stores.

Department Store Rebranding Large department stores must rethink everything, from their brand to their operations to really rebrand effectively. Rethink the in-store experience. Attract more women shoppers. REAL preference is job number one.

Ladies apparel is a $225 billion business; so preference, not just dropping in, is immensely profitable and increases relevancy in a dying industry. It is optimal to make the department store the destination. And not just for Christmas.

Is the solution transitioning to on-line?

That still raises important business facts. Department stores own large amounts of real estate. They have expensive long-term leases. What does it do to profitability if the great department store chains are forced to retreat and rely on web sales only?
Can they survive that sort of apocalypse? There is another answer. There has to be.

Department Store Rebranding and AmazonIf the Amazon model IS the future then bankruptcy and chapter 11 is the interim step to treading water and waiting for the merciful euthanasia. Any numbskull can suggest the move to on-line sales.

The problem is it won’t work with the current structures. Department stores desperately need an answer that lets them protect the brick and mortar investments that revitalizes shoppers today and in the future.

Success leaves clues. Shoe department retailing.

Department Store Rebranding
Shoe departments hold the clues to success

So back to the problem of finding the right fit. That is not a problem when shoppers shop for shoes or handbags. Consumers easily see what’s offered without the clutter, find the style they like in the right size and are off with it.

Shoe sizes are universal. The shopping experience is positive. Shoes are displayed on roomy racks and displays and the shopper scans all the shoes (including style, color and form) and then the shoe salesperson bring the shopper the shoes in their size.

Funny how simple it is. How civilized the experience, despite being in the morass of other crowded and jammed departments of clothing.

Department Store Rebranding Why can’t women’s apparel be like that? Department stores rebranding is possible building on that successful model.

Rebranding requires retailers to rethink their stores operations and how technology is utilized. Sadly, the highest level of technology in retail today is a copy of Amazon’s model. Order online and pick up.

But apparel is a different animal, especially in women’s apparel. The sizing of women’s garments is useless. A standard that unifies sizing everywhere sounds like the big answer. Is it?

Yes, absolutely. The sheer amount of returns because clothing does not fit is an issue for Amazon too. There is no regulatory agency to govern sizing so that changes takes real effort from the industry.

Use digital tailoring software. Make the experience personal.

Department Store Rebranding Instead, we recommend retailers of women’s apparel adopt the sizing structure that works in the shoe department model. That is, just use measurements. Display style samples and have sizes in the back warehouse.

Even that is unmanageable because women, unlike men, don’t share a basic shape.

However, the playing field changes as shoppers provide a profile of their exact measurements. Can high-end apparel stores  digitally measure the consumer and privately store those measurements in a private file? Of course they can.

Is it then possible to alter custom fit clothes to their specifications? Yes, but that is not the best model. Executing that on a mass scale so a Macy’s or Dillard’s use it is a challenge.

Department stores can afford to automate it. Do it digitally.

As a customer visits your store for the first time, direct them to a private dressing room and digitally scan their measurements. Their exact measurements are stored in their personal and branded app.

Department Store Rebranding
Use technology to customize customer service

As customers shop in the newly designed departments with newly redefined department titles based upon lifestyle rather than the traditional Juniors, Petite etc., departments.  Shoppers can look at every offering, all displayed in a size 4. They now shop by cut, fabric, color, brand and style. Not size because only one size needs to be on display (just like the shoe department model we discussed earlier).

The convenience of their smart phone is utilized, They scan the code of the item of interest and the app stores the choice. The store is no longer jammed with every offering in every size. The result? The branded experience of shopping is civilized.

The racks are not crowded and the styles themselves are highlighted. The retailers use their merchandising skills to highlight offering. Suddenly, there are sight lines in the department store and an opportunity for the retailer to practice their skill at displaying wares and merchandising.

How it benefits you.

Department Store Rebranding
High-End stores have the right merchandising model

Here’s how this complete department store rebranding works. Simplify the offerings on the store floor much like high-end retailers. Customers actually see the garments in lengthy and leisurely glance. Consumers develop a digital profile on their measurements that is part of the retailers database. Because you know them and they now know you, a relationship is established.

When they return to the department store, consumers open the app to say they are in the store and what, in general, they are looking for.

Department Store Rebranding If the garments are bar coded by actual measurements, then a warehouse employee gathers those garments in real time from the back warehouse (remember the shoe model) that actually fit that customer.

When shopping is done, the shopper tells the app and are assigned a dressing room. The promise is that, in 10 minutes, everything they scanned will be in their dressing room and in their size.

Better yet, customers could use the app to say they are coming to the store and to get their personal rack ready and pre-placed in a dressing room.

Think about this. If implemented, it creates a preference for the department store brand (which reflects the change in the retail experience) and a database is established to enable more effective buys from designers and better PERSONALIZED service (read how affinity programs fail here). The customer chooses if they want the clothing in the dressing room or if they require human assistance.

The newly branded department store experience.

Department Store Rebranding
It is about the experience of shopping

The new experience reconfigures the department store experience and decreases the display space and increases the warehousing. It requires an investment in logistics and warehouse systems.

But the new department store is now an adventure in experience and we know that customers covet that. The department store rebranding process combined with new thinking provides new preference.

Think it’s not possible? Amazon can do it, and Amazon is the retailer that terrifies the rest of the industry. The online retail giant, who just announced plans to open brick and mortar stores, is threatening to take over the entire industry while its players stand still and watch.

Amazon transports product anywhere in the world overnight. Is a tight logistics system that creates in-store logistics providing results in 15 minutes impossible? Believe that and you are doomed.

The future in department store rebranding is in personalized automation.

Department Store Rebranding All it takes is an automated, software system that makes it easy to find the right clothes at the right time from your warehouse space. It, therefore, allows the shopper to buy and shop based on taste, style and color, just like they do with shoes and handbags. It means sales improve because shoppers see the entire inventory.

Plus, in the spirit of discovery, the store adds a few surprises— a few alternatives for that shopper based upon the customer profile and design preference. All of this accomplished by an algorithm.

Department stores, don’t get caught up in — “That can’t be done.”

Department Store Rebranding Change or die. That’s the simple truth. This is just one idea. The point is that department store retailers, whether they are in apparel or not— let go of age-old habits. Dead brands are full of leaders who once said, “That can’t be done.”

Department store retailers must do two things. 1) Consider a total rebrand because few retailers position the brands against the competition and as a result are not meaningful enough to target audiences. (Here’s how we rebrand for our clients.)

2) Rethink everything. Ask the right questions in brand research that goes beyond simple usage and attitudes. The current model is a rapidly dying one. And given the current trajectory, there will only be room for one of the major department stores.

There is a third strategy retailers can adopt (and many are). Do nothing and watch Amazon destroy your business. But, as in most things, victory belongs to the first mover.

 

Read more about the retail market and department stores here:

Amazon and Black Friday

Macy’s loses importance

Another retail casualty the CEO of Stein Mart

Macy’s National Hiring Day

Macy’s should have known better

Which retailers will survive?

Retail in a nutshell

The blinding of Sears and JC Penny

Brookstone needs rebranding

Staples is not fixed

Promotions and Millennials

Bad experiences at Best Buy

Why Sports Authority Died

What about Black Friday?

Amazon Prime Day 

Here are some articles and blogs on REBRANDING

Rebranding GlenGuard

Grocery Rebranding and Amazon

Rebranding of Mastercard

Rebranding Electrolux

Rebranding is all about mindset

Rebranding Steven Colbert

Rebranding Constantly

Stealing Share. Rebranding Experts.

Choosing a rebranding company. The rules.

Rebranding Newspapers. Finding new importance

Analyzing a brand for rebranding opportunities

Sporting Goods are not Immune

The outdoor and sporting goods segment has seen its share of shakeups over the past couple of years. Large big box chains like Sports Authority have closed stores or closed shop altogether. Recently, we have seen behemoths Bass Pro Shops LogoBass Pro Shops and Cabela’s consolidating. The trend in the outdoor and sporting goods segment is mirroring the trends in the rest of the retail market.

At least on the surface. Dig a little deeper and there are some major differences.

Big box retail has long suffered through a period of decreasing same store sales, as once loyal customers flock to other alternatives. While some of these alternatives are certainly other brick and mortar stores, many more are simply online retailers. Amazon has picked up the lion’s share of the fleeing customers.

In the outdoor and sporting goods segment, the defection from brick and mortar to online hasn’t occurred yet, at least not to the degree in other parts of retail. The outdoor and sporting goods segment is, at least for the moment, insulated from the migration to online platforms.

Sporting goods are kind of personal

A key reason for this is that, for the core outdoor and sporting goods consumer, purchases are very personal. Bow hunters need to feel how a bow handles. A fisherman needs to feel the flex in a rod and an avid hiker would likely not purchase a boot without knowing how it feels being worn. This has allowed many of the outdoor and sporting goods retailers further insulating themselves from online alternatives.

Bass Pro Shops, Gander Mountain and REI focus more on outdoor activities like fishing, hunting aDicks Sporting Goods Logond camping, respectively, while stores like Academy Sports and Modell’s focus more on traditional team and individual sports. Dick’s is much more of a generalist, calling itself the “largest omni-channel full-line sporting goods retailer in the US.” Dick’s also owns Field and Stream, Golf Galaxy and True Runner, which further demonstrate the industry’s move to specialization.

While many outdoor and sporting goods stores have been successful in carving out their niche, it is a niche carved out only by their product focus, not their brand focus. Closer examination reveals that there is little differentiation in this category beyond some of the pseudo-specialization of products that is occurring. While meaningful, the brands themselves do not differentiate one versus the other. That is, the brands do not provide a value to the consumer. Consumers generally go to these stores for a product they want to touch and feel before they make their purchasing decision – not because of the store’s brand.

This is not to say that a consumer might decide to go to a Bass Pro Shops, REI or Dick’s just to look around. But the products are what bring consumers to the store, not the store itself. These retailers recognize this too, with each of them is trying to create a better in-store experience. (You get the full treatment at the Bass Pro Shops in Springfield Missouri.) More and more, stores like Field and Stream and REI are also trying to make their stores more of an experience, putting the focus on the store, not the brand.

At this point, it is difficult to imagine further consolidation in the outdoor and sporting goods category and the major players are surviving this nasty retail environment for the moment. However, they all must make investments in their continued viability. While creating a better shopping environment is critical, it can be easily be copied and improved upon. Investments must be made in brand differentiation that goes beyond outdoors, country, athlete or camper. These terms describe what their customers are but fail to describe who they aspire to be. Aligning with that will differentiate the outdoor and sporting goods stores from the others.

How grocery chains can beat Walmart

The bad news for grocery chains is that they have become a cauldron of consolidation. The past few years have seen major grocery chains buying smaller competitors to forestall the Walmart takeover of the industry.

Kroger’s buys Harris Teeter and Roundy’s. Albertson’s buys Safeway and Haggen. ACME Markets, a subsidiary of Albertson’s, buys a bankrupt A&P. On and on.

Grocery chainsThe consolidations hints at several trends for the grocery industry, even if the largest grocery chains (such as Kroger, Publix and Albertson’s) are seeing this as way to fight the retail behemoths of Walmart, Target, Costco and others. By increasing distribution, those chains are hoping to out-large those big boxes so they can overtake market leadership.

For the smaller and regional groceries, the consolidation spells doom. Soon, they will either be put out of business or forced to accept an offer from the large chains.

For all those groceries, this is not a good trend. Walmart isn’t going anywhere. It is already the market leader and some reports say more than half of its earnings come from grocery. It has even been able to win with its private label brand, Great Value, leading the way. If anything, Walmart will increase its emphasis on grocery.

So what are grocers to do?

Leveraging the trends

Before we answer that question, let’s take a step back. There are two trends flowing through the industry that are diametrically opposed to each other, if you think about it. On one hand, groceries have often captured market share through sales, low prices and couponing. The weekly newspaper circular still exists today even though newspapers themselves are not as relevant as they once were. (That’s why apps are becoming the couponing system of choice today.)

The problem is that, now that Walmart has entered the fray, that tactic is not as effective. Walmart’s brand, encapsulated in its theme of “Save Money. Live Better,” is so embedded in the minds of consumers that consumers who shop on price shop there.

Walmart beat grocers at the price game because low prices were never part of their brands. They were only marketing messages while Walmart means low prices.

In our corner of the world in North Carolina, a once-thriving Food Lion was doomed the instant the nearby Walmart added a grocery. It closed months later and has sat empty ever since.

Grocery chainsThen there are the shifting eating trends. Consumers want healthier options, which have led most groceries to increase their organic offerings. Whole Foods is the organic food leader, but it will never be the market leader because organic foods are expensive. It remains only part of the equation.

So how do you approach the changing food environment (with its higher prices) with a large segment of shoppers buying based on price?

Grocery chains scouting themselves

Grocery shoppers have preferences but a majority of them will buy groceries from more than one place. You can buy the basics at Walmart (where price supersedes quality), a prime choice of meat at Fresh Market and have the occasional trip to Harris Teeter or Kroger on the way home.

What grocers have struggled with is finding their positions in the market. Kroger has used a theme of “Fresh Food, Low Prices.” How is that different than Walmart? When consumers are faced with all things being equal, they will choose the market leader. (Therefore, Kroger’s theme only works if there’s not a Walmart nearby.)

Couple the Walmart copycatting with other unemotional messages, and preference ends up depending on location. Hence, the number of mergers and acquisitions.

The messages have become throwaways

Even more, those messages are just used as just that. Messages. They are not firmly affixed to the brand the way Walmart has affixed its theme to the brand. When that happens, even if the message is differentiating (and most are not), they are not believed because they just sound like marketing.

Albertson’s has used “You’re in for something fresh,” which sounds like it was written by an ad agency and does nothing to distinguish the chain from the competition.

Grocery chainsTo compete with Walmart, those chains and others must be truly different and better. Copying Walmart’s ownership of low prices is simply a loser’s game. Trying to build your brand (or advertising campaign) on fresh food just defines you as a grocery store.

Instead, grocery chains must define who their customers are when they use your brand. That’s how preference is created. If your brand is a true reflection of the target audience, then consumers will be incapable of choosing anyone else because it would be going against their own emotional natures.

Apple users Think Different. Nike users Just Do It. What do your customers do?

By Tom Dougherty

Stealing Share President and CEO

Originally published by Supermarket News.