Retail management principles and practices

Retail Management

Private Labels

The importance of the private label has grown significantly during the past recent years mostly due to the benefits it offers the manufacturing and selling companies. Most large corporations use private labels as part of their marketing strategies to improve their reputation and to better familiarize the customers with the items produced. Foremost, private labels make a clear statement and help with the formation of a corporate brand. Then, studies have also shown that the usage of private labels increases the audience's trust in the manufacturer and makes them more loyal to the brand. "Store brands are the new brands in food retailing today. Consumers have shown more than a willingness to buy. They are proving loyal to retailers' store brands as never before - the result of premium private label lines that have spread across the market and impressed shoppers."

All these beneficial results have convinced other companies of the importance and role played by private labels. In other words, the main reason why more and more companies chose to privately label their products is given by a combination of the theoretical evidence in support of these types of labels and the practical good results achieved by other companies that have already chosen to implement such a strategy in regard to the labeling of their items.

But the strategy of private labeling took once step ahead and introduced the premium private labels into the marketing equation. "The move toward premium private label programs - content and packaging - has given retailers the ammunition they need to create stronger store identities in a crowded marketplace and to return more dollars to the bottom line." Then, another major role is that they address a clearly established target market and do not waste resources on identifying the audience.

2. Loyalty Programs

In order for a retail loyalty program to meet its established desiderates, it must be developed and implemented by a highly skilled team of marketing specialists who have full access to the latest technologies and also full access to market resources, namely the audience. The loyalty program will only be successful if those implementing it are best able to communicate with the customers, identify their needs and satisfy them. A most recent development in this sense is given by the identification and satisfaction of customers' needs even before they know these needs exist. Then, the actual implementation of the program is crucial for its success in the meaning that the customer must feel rewarded for shopping in a particular store. For instance, he could receive a gift certificate or a free product - anything that rewards him. Also, attention must be paid to the diversification of the reward systems as no customer is likely to happily return to a store after having received five identical key chains.

The number of companies which have managed to successfully implement loyalty strategies is endless and could include companies such as CVS. The pharmacy issued loyalty cards and the owners of these cards would purchase at lower prices. Another example is that of JM&a Group, an automobile seller who offers complementary services, such as car insurance. Airlines also implemented loyalty programs in the form of offering high quality services and even complementary services, such as car rentals.

Interestingly enough, Wal-Mart is not one of the companies which implemented loyalty programs. The basic explanation for this is that they rely on always offering the lowest prices, which makes them cut back on other costs. However, the future might bring about more pretentious and harder to satisfy customers and strategies will then have to be developed.

3. Internet Retailing

The best selling strategy is that of combining multiple channels. This is similar to the financial sector, where the investor is advised to diversify his portfolio in order to reduce risks and maximize its chances of income. In the retailing business therefore, the company should use multiple channels to get their product to the end consumer. A basic explanation as to why numerous internet only purchase stores have failed where multi-channel companies have succeeded could reside in that the multiple-channel companies offer the audience the chance to directly see the product before buying it. In other words, an interested potential buyer can go to the store or the showroom, depending on the business, and directly look at the desired item and even discuss its features with a specialized retail consultant. He can then go home and use the information acquired to finalize the purchase online and avoid the crowd and long lines in the stores.

In the case of an online only system of purchase, the company does not have a showroom where the customer can get the desired information on the product nor see it in its real size, colour and other features he might be interested in. The product characteristics available online can sometimes be misleading (not with the intent of the company but through various mistakes or misinterpretations) and fail to convince the customer to make the purchase. Also, the customer is unable to directly speak to a specialized retail consultant, who generally offers reassurance, increases the trust in the company and helps finalize the transaction. All in all, the main reason why internet only purchase stores fail is that they only address a narrow palette of customers and that they do not combine and diversify their services.