The ultimate battle: brand vs retailer

Simon Porter

  • Managing director, Havas Commerce
Simon is a senior brand and retail strategist with experience across multiple international markets. In an omni-channel retail landscape where personalisation and convenience have never been more important, Simon believes in the power of customer experience to shape relationships with brands. His experience includes working with the likes of Samsung, Diageo, Vodafone, Nestle, Sony and Unilever.

At the beginning every brand is pure. Every founder with a dream cherishes the brand like a newborn. But very soon that newborn goes out into the big wide world.  

Where scary retail bullies are waiting. Stardust is wiped from a brand’s eyes and purity gives way to pragmatism. Because every brand needs listing and distribution across retail estates. It’s here retailers start enforcing their power.  

Brands are captive to this power imbalance. Over time, a form of Stockholm syndrome sets-in and brands relinquish ever more control. This is shown in-extremis in Australian FMCG retail and the power Coles and Woolworths exert. The retail champion of the people Aldi only makes the power imbalance worse for brands, using their equity and years of blood, sweat and tears for their own-brand rip-offs.  

Some category leaders like Coca-Cola or multinational brand collectives like P&G with deep enough pockets make an occasional stand. But, more often than not the fight is on price, not their cherished brand and the way it shows up in retail.  

Coca-Cola are zealots on how the brand shows up across owned, earned and paid channels. But, in retail stick it on a palette or gondola end and happy days, the buyer and their trade marketing counterparts are happy. This has always bemused me, why not be as focused on your brand in retail as on TV? You’ll get just as many eyeballs on each.  

Gaining brand control

Steve Jobs recognised brand control is everything. In his second coming at Apple, control became the foundation: Not just control over the Apple ecosystem but control over the brand.

Every detail of the brand was sweated from the technology, to design to the pseudo religious experience of unwrapping the packaging. He saw the future for Apple and that future was premised on control as much as innovation or technological development. Jobs wasn’t about to let any old consumer electronics retailer take control over how his brand showed up in-store or even worse be hostage to the spivs and incentives that are stock in-trade among Australian consumer electronics retail salespeople.  

It’s a truth universally acknowledged, scarcity builds perception of value in a brand or product or even, dare I say it, a relationship. Jobs recognised this and limited Apple to only retailers who would accept the brand in its purest form and on his pricing terms. Flipping the tables on the traditional brand and retailer dynamic.  

Underpinning this was a direct-to-consumer model that ensured there wasn’t over reliance on retailers.  

It’s a model taken up by Nike, adidas and more. Nike is cutting ties with wholesale partners in the US and UK (among others) and even restricting product lines with approved retailers. It’s not just physical retail where Nike is flexing its muscles: In 2019, the company even cut ties with Amazon as a first-party vendor.  

Nike is only prepared to work with retailers that invest in Nike, its brand image and merchandise in the way Nike wants. A physical example of this is the new JD Sports flagship in New York, which you’d be mistaken on entering for thinking is a Nike flagship. Retail partners have to offer a unique, innovative experience that builds Nike’s brand or risk losing their business.  

It’s a major problem for sports retailers like Sports Direct and JD Sports, as suddenly they are beholden to the brands. Nike and adidas have recognised the brand power they hold and are exercising it to the enth degree.  

Underpinning this new strategy for Nike is prioritising DTC channels. The ultimate brand power play in retail. In 2019, DTC made up roughly 30 per cent of Nike’s revenues but the pandemic has fuelled this further.

It isn’t just taking control over the brand and growth of an owned retail footprint underpinning Nike’s strategic pivot. The past few years have seen acquisitions in technology and data companies, as the organisation focuses more on expanding data science capabilities to complement digital commerce growth.

Nike continues to innovate in its owned omnichannel footprints, from hyperlocal formats like Nike Live stores to community driven Nike Unite stores and its experiential House of Innovation flagship concept. Testing is also taking place for a Nike Rise concept store that blends community with digital smarts.

All of this shows a brand tapped into cultural trends, unencumbered by retail legacy wholesalers and increasingly empowered to move at the pace of culture rather than the pace of a wholesale buyer.

Obviously, Apple and Nike are power brands that have tapped into culture in a way an FMCG brand cannot. However, the principles that have guided these brand-first models should be best practice for all brands.  

Brand first, invest in the brand across all channels but prioritise getting it right in retail, engage with retailers to ensure your brand image is a priority in retail, build your D2C capability, invest in and value your data.  

Above all remember the one thing you do control is your brand and don’t compromise for the sake of retail power play.  

 

 

Tags: retail, Nike, brand strategy, direct to consumer

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