As the U.S. private brands industry collectively cranes its neck across the pond with an envious smile at the U.K. private brand share success (approximately 47 percent in dollar share), I question how we’ll ever achieve this level of penetration with our current strategies. Instead, rather than wringing our hands about U.S. dollar share, we should respect our cultural challenges, acknowledge our U.S. heritage in retail, and evolve our approach accordingly.
Did it start with the Founding Fathers? Or was it The Beatles? The U.S. remains a bit obsessed with England, and the private brand industry is no different. Is that why we are compelled to compare their 47 percent share and question if it’s a result of the U.K. being that much better than us? Or is it simply a difference of country maturation? We want the U.K. and U.S. to be similar, but the reality is we’re quite different.
Here’s why. Behavio(u)r. We even spell it differently. And if we spell it differently, how can we expect people to act the same? When it comes to behavioral data, retailers, through their loyalty card programs, have plenitude. We know what she’s buying, whether it was at a promotional or regular price, how many times a year she’s buying it, in how many trips per year, the total of her annual spend, and her average basket size. What we don’t know is why. Why does she choose our brand only some of the time? In only some of the categories? On only some of her trips? And collectively, why do our U.S. private brands hover at only 18 percent share? What retailers often need to better consider and prioritize are the unconscious motivations that drive that behavior.
U.S. private brands purchasing behavior is influenced by two critical components: the impact of our culture on private brands as a concept, and America’s heritage of retail. By placing a lens over these two drivers we are better equipped to understand her private brand perception, and therefore begin to answer the “why”-especially as it relates to share comparison with the U.K.
In The Culture Code, Clotaire Rapaille defines the very term Culture Code as “the unconscious meaning we apply to any given thing: a car, a type of food, a relationship, even a country, via the culture in which we are raised.” When asking Americans what they think of America, the author deduced, from their stories, that the Code for America is “DREAM.”
That should come as no surprise to Americans. It makes perfect sense. We are a country built on the visions of dreamers. America’s Founding Fathers dreamt of big ideals like the separation of church and state. Our ancestors emigrated through Ellis Island in pursuit of their dreams for a better life. And people still emigrate to this country today to fulfill their dreams. Without a doubt, the “American Dream” is our Culture Code.
Let’s examine the other driver of purchasing behavior: the role of retail in the United States and its unique heritage. To understand where we are today we must understand where we were yesterday; this holds true for all types of relationships. Therefore, we must remind ourselves of how retail, and private brands, have developed in this country to ensure a realistic assessment of how consumers perceive those brands today.
In the United States, real estate is vast. Our large geographic footprint not only enabled expansion, but also encouraged our desire to expand, to fulfill the American Dream. In any country, retail is a derivative of real estate, and as retail developed across the U.S. it was very regional. Even today, we have limitations with grandfathered, regional store banner brands. To the consumer, this is a highly fragmented influencer hong kong experience. In consumers’ minds, retail became a transaction. Also-and it should come as no surprise-the concept of the supersized grocer or “supermarket” was first developed here in the U.S. Correlating to our geographic footprint, retail became a very big transaction. And it’s getting bigger; reports show a 15-20 percent increase in SKUs over the past decade. Essentially, retailers believed that the way to win, in executing on a satisfying transaction for customers, was to provide more variety and increased choices (through the expansion of the store and additional SKUs).
Because we are a nation of expansionists and dreamers, we are constantly looking at the horizon and asking, “What’s next?” Dreamers inherently question boundaries, seeking out new possibilities, and in turn, new opportunities. As Americans explore and pursue new things we, on some unconscious level, need guideposts to remind us we are not lost-a source of comfort, if you will. As marketers, we know that brands can provide that source of comfort. Beyond providing a solution, brands bring us a sense of belonging and an intimate relationship that is built on trust. Unfortunately for private brands, because of our regional retailer fragmentation across our vast geographic footprint, the only guideposts from one coast to the other to provide our consumers that comfort have historically been national brands.