31 Mar Brands, Don’t Forget to Own the Consumer.
According to Recode.net , “Amazon and Walmart are in an all-out price war that is terrifying America’s biggest brands.” There is a battle going on between big retailers and big brands. This is not a new war, far from it. It’s been fought for decades.
The article states:
“Walmart wants to have the lowest price on 80 percent of its sales…To accomplish that, the brands that sell their goods through Walmart would have to cut their wholesale prices or make other cost adjustments to shave at least 15 percent off. In some cases, vendors say they would lose money on each sale if they met Walmart’s demands.”
Walmart has threatened to create its own branded products if big brands don’t comply.
A wise friend of mine, Jacob Levy, once used the vision of a wheel rolling on a road to convey the concept of this retailer/brand war. Picture two opposite sides on the wheel, with the retailer on one side, and the brand on the other. Over time, the wheel rotates. Sometimes, the retailer be on the top, while the brand is on the bottom, and vice versa. The entity on top applies heavy pressure on the one at the bottom. Since the wheels are always turning throughout this constant fight of opposite sides, there will be no lasting winner. It is an ongoing fight to leverage each company’s market power.
I have two thoughts regarding this conflict:
- This war isn’t new. It’s always gone on. The fight will always happen, but the threat of permanent banishment through the creation of house brands is a real threat. So, if the brand wants to survive, it must invest in itself and build brand stories with consumers. Any brand not driving brand awareness, engagement and loyalty will ultimately lose to house brands.
- Brand engagement must be implemented at every touchpoint – especially at the point of sale (regardless of whether it’s on Walmart, Amazon, BestBuy, their own website, or any other point of digital engagement). If these brands become distracted and get swallowed by this battle with retailers and neglect to fight for their ‘share of mind’ with the consumers, they are not going to be pleased with the outcome. Laser focus should be placed on the shopper, the one who holds the reins on what they buy and from where.
Retailers will always strive to assert power and pressure. In order for brands to defend their place and not get eliminated, they need to stay relevant by investing in their brand and engaging their customers at every digital touchpoint.