Tuesday, 7 May 2013

Retail stores step up loyalty war with own brands

A shop attendant at an Uchumi Supermarket branch shows a branded loaf of bread. FILE
A shop attendant at an Uchumi Supermarket branch shows a branded loaf of bread. FILE 

Posted  Monday, May 6  2013 at  18:23
Supermarkets are exploiting a new window in what is coming out as another phase of loyalty war and competition to get the attention of the customer.
Customers’ taste buds and preferences are increasingly getting sharper and more complex, giving manufacturers and stockists a big challenge.
Marketers increasingly put a premium on branding, design and presentation or packaging. Supermarkets are now flexing muscles on the latter to grow market share.
A few years ago, Mumias Sugar Company started packaging its sugar in its own colours, which made it easier to order and recognise. Competitors followed suit.
This is the picture supermarkets seem to have read and are now giving the customer a choice through ‘store branding’.
“Today’s buyer is sensitive to price as well as the quality of whatever they put in their shopping baskets,” said Willy Kimani, the business development and marketing manager of Naivas Supermarkets.
The retailers are packaging own sugar, tissue paper, rice, and tea leaves as they compete for the attention of the customer.
Draw attention
Under this concept, the retailers contract manufacturers to produce consumer goods that are packaged in individual retail stores’ logos and taglines.
So far, major players in the industry like Naivas, Tuskys and Nakumatt have embraced the trend, which a spot-check shows has higher sales thanks to pricing and quality of goods.
Store brands, the supermarkets told Business Daily, are two to three per cent cheaper, helping to draw the attention of consumers and increase sales.
Branding goods in own colours is not a cut-and-paste job, says Mr Kimani of Naivas. It is a rigorous market research tied to consumer demographics including level of income, education and social class.
Naivas is probably the supermarket with the largest corner where it stocks its brands known as ‘Naivas Farm.’
Varied needs
Nakumatt has the Blue label, a mark on almost oil products. Consumer preferences have kept the retailers on their toes, testing and trying many strategies to not only retain but also expand their market share.
Peter Mbatia, the marketing manager of Tuskys Supermarkets, says the strategy is both for building loyalty and a survival tactic.
“The clients’ needs are as varied as the stores that are willing to do all in their power, to get and keep him to our financial advantage as well as the customer’s satisfaction,” Mr Mbatia said.
“We are heavily focused on meeting customer needs as much as we are making profit,” he added.
The customer and the retailer have benefited from the shift in terms of volumes and loyalty.
A spot-check at the Naivas Kubwa Branch in Naivasha, Tuskys Highway Branch in Nakuru, Tuskys at OTC in Nairobi, showed the store brands are preferred.
Mr Kimani of Naivas explained that most retailers have had to come up with products that are “different but sociable because most of the clients want to spend less without compromising on quality.”
The store-branded products must meet the demands of manufacturing and regulatory approvals.
Before the entrepreneurs are allowed to use own names for product differentiation, they have to meet standards set by watchdogs like the Kenya Bureau of Standards, during manufacturing and packaging.
“We scrutinise the manufacturer’s every step to ensure that the process is not only hygienic but also has the manufacturing ingredients just like the products we are competing against,” Mr Kimani said.
Additionally, Mr Kimani explained, part of the research is probing the environmental impact of the process as well as the sustainability of the strategy.
The plastic papers, though non-biodegradable, meet the thickness threshold that is set by the environmental body — National Environment Management Authority (Nema).
This concept also gave the retail chains the opportunity to implement their own marketing plans as well as to reduce the cost of advertising.
Mr Mbatia said: “Our taglines and logos are easily recognised by our clients so we do not need to spend money on advertising the products as long as they are placed on the right shelf.’
Kenya, being an import-driven economy, has not had the opportunity to be in control of most of the products that are in her shops and this trend might make the initial steps to its independence.
However, critics warn of the “herd implementation” of the concept where other supermarkets will embrace the strategy just because rivals have it without understanding how to implement it.

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