Marketing Private Brands

Private brands--also known as private-label--are created or owned by retailers and other channel intermediaries.

Supermarkets are heavily into private brands, as are many general merchandise retailers like JC Penney (which owns Arizona, shown at right). Why? Because these are exclusive to the store and, just as important, they have higher profit margins.

Twenty years ago, an article in the Harvard Business Review said:

... private-label strength generally varies with economic conditions. That is, private-label market share generally goes up when the economy is suffering and down in stronger economic periods.

Today, however, the economy is strengthening and so are private brands. For example:

• Kohl's is seeking a turnaround based on private brands such as Sonoma, Croft & Barrow, and others that are or have been mainstays of its revenue base. However, how will this resonate with shoppers seeking well-known national brands?
• JC Penney is also putting more emphasis on private brands such as St. John's Bay and Arizona as it seeks a turnaround. In 2015, private brands accounted for 52% of Penney's sales--but by 2019, the marketing goal is to have private brands contribute 70% of Penney's sales.
• Target wants shoppers to prefer its private-label food products, marketed under brands such as Market Pantry and Simply Balanced.

Private brands are here to stay. The question is, how much emphasis is too much emphasis?

Joe Fresh Leaves America

When the Canadian-based clothing brand Joe Fresh first came to America in 2011, it introduced itself with a hip, fashion-oriented ad campaign. By 2014, the nationwide distribution deal through JC Penney--which gave Joe Fresh prominent positioning in stores from coast to coast--was a challenge because of Penney's troubles, but Joe Fresh was still pursuing international marketing.

By 2015, Joe Fresh was in only 200 Penney stores but pushing multichannel marketing for US customers. Now Joe Fresh is closing its flagship US stores and its US deal with JC Penney is over.

Will the brand try America again? US customers can still shop online or cross the border to a freestanding Joe Fresh store or a store inside/next to a Loblaw's across Canada. 

The brand, owned by Loblaw's, uses social and digital media to reach fans of cheap chic fashion. Its FB page has 266,000 likes, its Twitter feed has 94,000 followers, its Snapchat account is @JoeFreshSnaps, and its Pinterest boards have 14,000 followers. It has an app with special deals and a blog for content marketing.

Studying Marketing? Use The Internet Archive's Wayback Machine

Are you researching the history of a particular company or a marketing technique? For example, what if you want to see just how far online retailing has come since the days of dial-up Internet service?

You can use the Internet Archive's Wayback Machine to research a specific website at particular points in its history.

At left, for example, is the way the JC Penney retail website looked in December, 1996. This is online retailing in its youngest days. Compared with today's whiz-bang sites, there's no animation, no audio, no social media links.

Yet the merchandise photos add interest. Also note how the company explains the process of "secure online shopping."

By 2002, JC Penney was making graphics the star of the show for Christmas (at right). The site isn't as busy looking and the logo is prominent and recognizable.

By 2012, the short-lived "square deal" JC Penney logo was in place (see below) and the retailer was promoting its social responsibility connections as well as its merchandise.

Today's 2015 JC Penney site is shown at bottom. The logo is nearly the same as it was in the 1996 screen capture by the Wayback Machine.

This home page echoes the look of the JC Penney ad flyers. Labor Day sales are the main focus, discounting is the message of the day.

Not shown here are the 5 social media links at the lower edge of the page.

Go ahead--follow a different marketer back through the years to see how its online look, logo, and messages have changed.

Pennies for Social Responsibility

Do pennies count?

Marketers sometimes ask customers to "round up" or donate a few pennies each time they make a purchase, and the proceeds benefit a worthy cause.

Such microdonations tap into an aspect of consumer behavior where each consumer, giving a little, can feel good about doing his or her part in what becomes a significant donation.

Here are a few examples of making pennies count for social responsibility:

• JC Penney's "Pennies from Heaven" - Shoppers round up and donate the extra pennies to the retailer's backpack purchase program. This is only one of the JCP Cares community programs.
• Coinstar asks consumers to donate some of the change they count to designated charities. Different Coinstar units send the money to different charities (World Wildlife Fund, Unicef, etc).
• Pennies is a UK charity that supports dozens of charities with pennies rounded up from purchases at Domino's, Cellar & Kitchen stores, and other participating marketers.
• Penny Harvest is a NY charitable program that supports local causes with pennies collected and donated by students.

Disney's Next Princess Blockbuster: Cinderella

The Disney princess juggernaut has a new blockbuster due out on March 13: Cinderella, a live-action retelling (with updates) of the traditional glass-slipper story.

Some of the pre-release publicity centers on the Downton Abbey stars who star in Cinderella. Lily James, who plays "Lady Rose" on the posh PBS drama, plays "Ella" (aka Cinderella) who waits on her ugly stepsister Drizella, played by Sophie McShera, the actress who is "Daisy the kitchen assistant" at Downton. A nice promotional twist to draw in adult viewers.

After the incredible global success of the animated movie Frozen and the ongoing interest in all things princess, Disney anticipates a big opening weekend for Cinderella--more than $60 million at the box office. Of course, it won't hurt Cinderella's appeal to have a new Frozen featurette debut before the movie is shown.

Needless to say, Disney sees lots of cross-marketing opportunities, including a souvenir popcorn bucket featuring Cinderella to be sold at Disney theme parks.

JC Penney is one of the retailers with merchandise tie-ins (see photo above). This week, the retailer is running a mobile marketing campaign with rewards and sweepstakes for shoppers who scan the glass slipper signs in stores that feature the special Disney displays.

Even before Cinderella debuts, its Facebook page has more than 13 million likes.

UPDATE: Cinderella's first weekend was a major hit, with $70 million in box office receipts.

Multichannel Marketing for Joe Fresh

Joe Fresh, the Canadian fashion brand owned by Loblaw's, began a promising distribution deal with US-based J.C. Penney in 2011.

Unfortunately, Penney has had difficulties in this challenging retail environment.

At its height, Joe Fresh was featured in nearly 700 Penney stores across the shopping centers of America. Today, the fashion brand is being sold in only 200 Penney stores.

Still, Joe Fresh has number of proprietary stores in the US, and it's expanding 50 Joe Fresh stores in Canada, where the brand is well-known and popular. It's also bringing its brand directly to US consumers via a new app, shown above, available for iPhones and iPads and promoted on the brand's Facebook page (224,000 likes). Multichannel marketing is a must to reach Millennials, as Joe Fresh is well aware.

Joe Fresh is highly social, with 10,000 followers for its Pinterest page, 49,000 Instagram followers, and 76,000 Twitter followers.

Joe Fresh Goes Abroad

In September, 2011, Canadian-based affordable fashion brand Joe Fresh, owned by Loblaw and popular in its home country, launched itself in New York and New Jersey. Initially, Joe Fresh was marketed in standalone U.S. flagship stores. Soon after, it arranged to put the Joe Fresh brand in hundreds of J.C. Penney's U.S. stores.

Given J.C. Penney's ongoing problems, it's not surprising that Loblaw's executive chairman recently had this to say about the relationship: "It obviously hasn’t gone like we hoped that it would." He remains optimistic, given Penney's commitment to Joe Fresh and the level of its merchandise purchases.

Now Joe Fresh is moving outward from its base by partnering with companies that will showcase it in the Middle East, Europe, Africa, and South Korea. By the end of 2018, these partnerships will result in 120 new Joe Fresh stores spread across 23 nations. Joe Fresh is also in talks with Selfridges, with the aim of having a branded store or space within the London retailer's store.  

The target market is young, style-conscious, budget-conscious consumers. These are social-media-savvy buyers, which is why Joe Fresh keeps its Facebook page fresh (with 188,000 likes) and updates its Twitter feed regularly.

JC Penney's Search for a New Strategy

Ron Johnson was named CEO of JC Penney late in 2011, fresh from high-profile marketing triumphs at the Apple Store and Target. Just days ago, he was removed and succeeded by the CEO he had replaced.

What happened? Johnson's bold idea, implemented early in 2012, was to restore trust by relying on a pricing strategy that's become tarnished in recent years--EDLP, short for everyday low prices. Penney's prices were shown in full dollars, not the usual odd-ending figures like $12.99, to subtly signal an upscale move away from discount perceptions.

And, instead of running sale after sale and printing coupon after coupon, Johnson wanted Penney's to offer the same "fair and square" prices every day. This, he hoped, would reassure shoppers that they could buy at any time without fear that they were missing some fantastic deal. The new strategy was so risky that Penney's listed it as a risk factor in its regulatory filings, noting that shoppers might not respond for many months.

In fact, after years of recession and budget-conscious shopping, many customers have become conditioned to waiting for sales and hunting for bargains. Regular prices just aren't as appealing, in this economic environment, as the thrill or satisfaction of finding something at a big discount. Johnson has been criticized for not taking this type of customer behavior into account.

Yet Johnson did a great job of updating the stores, trimming and updating merchandise lines, and establishing price points that were surprisingly reasonable--very close to the lowest effective price a customer might pay on sale or with a coupon. Walking into JC Penney stores during the past year, I was impressed by the more modern look and the slow but deliberate evolution from a "me too" store to something a little more distinctive.

Johnson was also responsible for new "store within a store" boutiques featuring hipper brands like Joe Fresh, with the goal of attracting younger customers (think: Target-type customers). These boutiques are so new that they haven't had time to show what they can do for Penney's revenues, which continue to be well below expectations.

Meanwhile, the retailer has returned to trumpeting sales to drum up shopper traffic and excitement. The new CEO will be evaluating the situation and searching for a new strategy to jump-start JC Penney in the coming months. He's already hinting at coupons and discounts to bring shoppers back into the store by changing the way they view the value offered by JC Penney.

Looking at the retailing industry overall, is EDLP a viable pricing strategy for any major store? 

JCP, the New and Improved JCPenney

JCP, the Texas-based department store formerly known as JCPenney, has a new attitude and look. Its new logo, left, suggests more style, as does its new monthly catalog. The debut issue is titled "March is Madness without JCPenney." (And yes, there's a basketball story in the catalog, along with college hoops team T-shirts.)

The look reminds me a bit of Target, emphasizing personal style without going overboard on fads, and spotlighting a few select items rather than crowding each page with lots of photos and text.

New pricing strategy: Instead of a new sale every week (or more frequently), JCP is promoting "everyday prices" and "month-long values." And it will have "best prices" markdown days twice a month, with blue price tags--hey, remember those old K mart Blue Light Specials? Blue is the new color of savings, apparently.

JCP needs this strategy to succeed: It's expensive to implement, and retailing is more intensely competitive than ever.

Retail Showdown at Herald Square

Once upon a time, NYC's Herald Square was a major retail crossroads in one of the world's best shopping cities. During the past 40 years, too many chains and independents went bankrupt or were merged. Now JCPenney has opened a big new store in Herald Square, across the street from Macy's, in a high-stakes retail showdown that will make NYC shoppers the big winners.

Probably this new rivalry will be lower-key than the great Gimbel's vs. Macy's competition that inspired key elements of the plot in The Miracle on 34th Street. No matter what, both retailers need the increased foot traffic that the new store opening will bring to Herald Square.

JCPenney is no stranger to NYC: It has stores elsewhere, and its pop-up temporary shops have attracted considerable attention in recent years. Macy's, which has outlasted all rivals in Herald Square to this point, has an unusually high public profile at this time of year, thanks to its annual July 4th fireworks extravaganza. Let the shopping begin!

JCPenney's Attitude of Gratitude

JCPenney sent me a postcard today--and (as a customer and a marketer) I was pleased by the retailer's attitude of gratitude.

The copy adjacent to the address part of the card reads:

A Special Message to You:

I'd like to wish a very Happy Mother's Day to all our friends and customers.

During this special time, I want you to know how much we value your business. There are many places you can choose to shop. We are doing our best to make sure that JCPenney meets -- and even exceeds -- your expectations.

We're stepping up our style, with the quality you expect and the prices you love. This is what you've asked for, and I want you to know we're listening.

Sincerely,

Myron E. (Mike) Ullman, III
Chairman of the Board & Chief Executive Officer

Style, quality and price matter
--
Dear Mr. Ullman:

Thanks for your postcard and your company's attitude of gratitude. Thoughtfulness matters too. Even if I don't buy now, JCP is definitely on my list of places to shop. You've earned my respect and I'm glad to know you're listening.

Sincerely,

Marian Wood

PS--Blog readers, what do you think of JCP's attitude of gratitude?