Retailers Are Brands, Not Boxes. The Core is No More!
“We decided that we are a retailer and we can sell anything.”
That seemingly straightforward statement by Andrew Higginson, Tesco’s Chief Executive of Retailing Services and Group Strategy, seemed to raise few eyebrows among attendees at this month’s “Big Show” staged by the National Retail Federation (NRF), but it grabbed my attention because it perfectly describes a mind shift that is transforming retail as we know it.
Mr. Higginson’s comment came while he was discussing Tesco’s ever-expanding portfolio of products and services across a dizzying array of formats and platforms, including banking (one in nine transactions in the UK is completed with a Tesco card) and mobile broadband (the company is also the UK’s sixth-largest mobile network operator). Tesco might be a pioneer, but a host of global retailers is now boldly pursuing non-core opportunities at a breakneck pace.
Category stretches, once fodder for skeptics and naysayers, are becoming downright commonplace, whether they are Walgreen’s forays into food sales, Kroger’s boosting beauty or Best Buy’s selling fitness equipment and electric vehicles. While I was at the Consumer Electronics Show (CES), the rollout of Best Buy’s “On” network was causing quite a bit of buzz. “On” fulfills a promise that Best Buy has been alluding to for months: all of those in-store screens, both big and small, will be for rent, not only to consumer electronics brands, but also to any other marketers who want to seize the opportunity to get in front of Best Buy’s shoppers with original content. Best Buy is becoming an ad agency and publisher.
Throughout the NRF show, retailer after retailer talked about participating actively in an exploding number of consumer touch points; and the recent race away from the core might seem to be a natural outcome of that determination. I actually see this movement as going back a bit farther, to a principle we devoted quite a bit of discussion to at last year’s Licensing Expo: Retailer as brand. Not long ago, retailers operated as “stores that had brands” – they defined their vision through the brands that others provided in closely defined categories and they counted on suppliers to drive marketing direction so they could focus on price optimization, logistics, and building stores. Over the past few years, the situation has completely reversed: retailers, almost without exception, see themselves as brands. Operating as brands instead of boxes enables them to draw connections between various new initiatives across multiple platforms – branding is the difference between fumbling around and fulfilling a high purpose and vision.
As retailers test their brands’ elasticity, traditional retail tier and category definitions will cease to accurately describe each retailer’s vision. At NRF, James Damian, SVP of Best Buy’s Experience Development group, stated that Best Buy sees itself not as a consumer electronics retailer, but as an “entertainment and media” company that speaks with “one brand voice.”
Retailers have decided that they are brands. And that decision changes everything.
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