The easier it gets for shoppers to see all the prices available to them in the marketplace, the harder it gets for retailers to compete on price. Now that price transparency has eroded the effectiveness of this once-reliable tactic for building traffic and moving product, they’ll need to find other ways to get their customers to buy. Investing in your stores’ brand equity is one answer.
Share of wallet
The importance of brand strength has been recognized for a long time, but until now there’s been no hard evidence on how it directly impacts retailer sales. Now we have some hard numbers. Nielsen developed the Nielsen Store Equity Index (NSES), and a study released in October 2014 reports that there’s a pretty high correlation between brand equity and share of wallet. This holds true for smaller retail chains like Mariano’s and Woodman’s as well as larger ones like Wegmans and King Sooper.
The study calculated equity scores using 10 factors across five different retail channels. The one that moved the needle most was “trustworthiness” in three of the five (grocery, mass and dollar), and it was important in the others as well. No surprise, in grocery, Wegmans had the highest equity score.
As more retailers realize they can’t compete broadly on price (thanks to the digital dimension of retail today), I think we’ll see a lot more investment in retailer brand equity. Look at what Price Chopper is doing with its rebranding to Market 32 and what Lowes Foods is doing with its reinvention in North Carolina.
Watch for more efforts like these in the coming year.
What are you doing to improve your brand equity?