By Kelly O’Keefe (@kellyokeefe)

It was a rare moment in the history of retail branding. Two giants in the field had come together to forge a new path for a tired old brand. Their approach was well researched and brilliantly executed with flourishes of creative genius. So why has it been such a complete failure?

That’s the question many industry analysts have been asking about the re-launch of the JCPenney brand. On January 26, CEO Ron Johnson, the man behind Apple’s unprecedented retail success, and Michael Francis, the former marketing chief who made Target one of the most valuable brands in retail, stood together onstage to deliver a pitch-perfect presentation on the future of the JCPenney brand.

With a keynote said to channel Steve Jobs, the pair took investors through a case study of their brand re-launch, so well composed that it has already been put to use at graduate marketing programs across the country. Their work was a demonstration that creativity and innovation can be used to remake even the most forgotten brands. But just a few months later, the management team was facing hostile questions from investors, trying to explain one of the biggest declines in sales in the company’s history and a 24 percent drop in the stock’s value in one quarter.

What did these branding giants miss in their blueprint for JCP’s brand revival? The same thing the brand managers at Coca-Cola forgot when they attempted to re-launch their aging brand as “New Coke” in 1985 – that brands are fueled, not only by creativity, but by predictability.

The truth is that for any brand, the most loyal fan is the least likely to appreciate radical change. Logic dictates that after spending hundreds of millions of dollars to encourage shoppers to love the old JCPenney, a wholesale shift might ruffle the feathers of those same shoppers.

But JCP’s makeover was even more jarring than a new look, new merchandise and new advertising. After training the consumer for years to flock to the stores whenever coupons came their way, the company abruptly cut off their coupon program. With the interruption of the coupon’s Pavlovian shopping signals, many shoppers simply stayed home.

Now it’s far from game-over for this intriguing experiment – the company is moving fast to reconnect with loyal fans and clearly communicate its new discount pricing approach – but the lesson remains. Consumers want consistency from their brands and radical change is more likely to destroy brand value than create it.

Coke learned this lesson a long time ago when they changed their formula; Netflix learned it more recently when they attempted to split their company into two, only to do a mea culpa after consumers rebelled and their stock lost half its value. Discount king Walmart learned the same lesson when they scrapped an ill-fated entry into high fashion, their Metro 7 line of clothes that was launched with ads in Vogue magazine. In each case, the company’s changes tampered with the very attributes their consumers had learned to love.

For marketers, the lesson is simple: Evolution works better than revolution when it comes to brands.

Private labels have prospered in the down economy. Store brands are popping up everywhere from drugstores to specialty stores. Most people are surprised to learn that the largest grocery brand in the country is Great Value, Walmart’s store brand. Incidentally, Walmart sells more food than the three largest grocery chains (Kroger, Safeway and Supervalu) combined. Most consumers select store brands for the lower price, however, some retailers like Trader Joe’s have managed to instill loyalty for their brand. For my 22 month old daughter, I can swap Stonyfield’s Banilla for Trader Joe’s Vanana without a blink of the eyes. If I tried to swap her Cheerios for Toasted Oats, we may have problems. Often times, stores don’t want you to know the company making their private label products, as it dilutes the strategy of customer loyalty. They want them to think these are products you can’t find anywhere else.

Big brands are battling for shelf space as room is made for the growing line of private label products. For major retailers like Walmart, it has become an opportunity to leverage improved pricing, expanded advertising support and in some cases, a new manufacturer for its own brand. Expect this to continue as Walmart sales have declined for the past nine quarters. Food, and especially fresh produce, has helped minimize these declines through strong growth. Other retailers have taken notice and turned to private labels to improve diminishing margins.

Most often, when you look beyond price, store brands have little to offer. Walmart has made a conscious effort to distinguish its store brand rather than trying to mimic name brands. When they can instill a belief in quality among consumers, they show shoppers they have nothing to lose and everything to save. What are supermarkets doing to instill this confidence? Here are four successful tactics I have seen:

Exclusive Items—Trader Joe’s has built its business on this, even if they are not the only place they can be found. The Fresh Market has also done a good job of this, by identifying up and coming specialty brands without national awareness or distribution that can help build a sense of premium exclusivity. Other chains like Meijer have established a subset of their private label brand that offers unique quality. Meijer Gold looks to deliver local, family-owned food products that are one-of-a-kind.

Price Specials—Store brands already have an advantage on price, but a modest discount tied into a multi-unit purchase can trigger a trial purchase and help customers get over their attachment to the name brand. This tactic should be used sparingly, so that consumers don’t become trained to only purchase when discounted. On a weekly basis, the store brand will win out on price.

Sampling—If you can’t pull customers from their brands on price alone, sampling product can lower the purchasing hurdle of quality concerns. In a Deloitte report, 80% of consumers believed that private label products were made by the same company as the brand name items. This is generally the case, with some exceptions. The benefit will extend beyond the product being sampled to other store brand products as customers gain confidence in it.

Recipes—Package recipes have been a strategy for the largest brands for decades. It not only provides usage solutions for consumers, but a list of additional purchases. For store brands, this is an even greater advantage, directing them to other items you carry for incremental sales. This can even be utilized outside of store brands. When discounting chicken legs, provide a simple recipe with store brand seasoning, sauces and dressings to add to their list.

Brand loyalty is waning in the recession according to recent reports. Some categories see steeper declines than others. Some brands will do anything to be noticed, like Abercrombie & Fitch’s plea to the Jersey Shore cast to stop wearing its clothes. A successful store brand will offer unique products as well as those that mimic popular brands and offer value to their customers. The Deloitte study also showed that less than 1 in 3 brands are considered “must-haves” in most categories. This helps explain why most product and retail execs are so bullish on private labels even when the recession ends.

For retailers to enjoy this continued growth, store brands need to move out of the value category and be recognized as quality, reliable products. If they don’t work now to build their own brand loyalty, their brand-loving customers may begin to look elsewhere as the economy improves. Moves like the one by Meijer to develop its Gold line can go a long way in building that loyalty and casting a positive glow on its other private label items and the Meijer brand in general. It is a new era for store brands beyond the low cost mimics of crackers and soup, and one that I think is here to stay.

Photo:  StoreBrandsDecisions.com

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