The Supply Side: More supplier brands dabbling in retail ventures

story by Kim Souza
ksouza@thecitywire.com

Editor’s note: The Supply Side section of The City Wire focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by The City Wire and sponsored by Propak Logistics.

The lines between supplier and retailer are becoming more blurred in a world in which technology blends the various ways – aka, omni-channels – in which consumers and retailers interact.

Jim Tompkins, CEO of Tompkins International, has said the blurring will increase as suppliers delve into retail ventures of their own, whether online or with limited brick and mortar sites.

Ken Nisch, chairman of JGA, shared recently during his talk at the SHOP Conference at the University of Arkansas that more consumer product brands are dabbling in retail store ventures to build loyalty and connect with consumers one-to-one. He said perhaps Apple does it better than anyone, but McCormick, Hershey, Jockey & Choboni are among supplier brands gleaning new insights through retail ventures.

SPICE IT UP 
The McCormick World of Flavor retail venue opened in August 2012 in Baltimore’s Inner Harbor. McCormick executives pondered the idea for more than 25 years, and finally built the story to help share the company’s 125-year-old story, said Jim Lynn, McCormick spokesman.

Nisch, whose firm designs retail stores, said the McCormick venture blends history, culinary and cultural aspects in a way that is resonating with consumers. While the product company has no plans for any other outlets, it notes that the insights it gets from this one venue have been well worth the effort.

Experts said product suppliers and/or manufacturers don’t go into their own retail venture for the sake of just adding sales. Carol Spieckerman, CEO of NewMarketBuilders, said it’s more about giving suppliers an outlet to tell their brand story in a cohesive and compelling way rather than relying solely on the merchandising whims of their retail partners.

“Many companies are still referred to as ‘manufacturers’ or ‘retailers’ when in fact, an increasing number of them operate multiple business models and no longer have a single identity. Going forward, multi-model companies that operate wholesale, owned retail and direct-to-consumer businesses will be the rule rather than the exception,” Spieckerman said.

She adds that suppliers like Chobani are leveraging spin-off concepts to showcase usage occasions for their products. The showcasing also reinforces a company or product culture.

SHARED CULTURE
Nestled in the heart of Soho, New York, Choboni Soho operates a Mediterranean yogurt bar that allows its signature Greek yogurt to take center stage. The yogurt is prepared fresh daily in-house and then paired with hand selected ingredients like pistachio and chocolate or cucumber and olive oil.

“It’s not just the creations that are unique. The retail concept’s design reflects the pure quality of Chobani Greek Yogurt and our Mediterranean roots,” said Peter McGuinness chief marketing and brand officer.

“When we first opened Chobani SoHo in 2012, we pushed the boundaries of what Greek Yogurt could be, and our expanded menu continues that journey with the addition of sandwiches, soups, desserts and more," Hamdi Ulukaya, CEO and founder of Chobani, said recently when the venue was expanded. 

The new menu developed by Ulukaya features sweet and savory Chobani Greek Yogurt creations, plus a series of inventive items for any time of day, including soups, sandwiches and desserts.

CATEGORY INNOVATION
Spieckerman said other manufacturers like Jockey are involved in their own retail venture to create impact around an important category.

The Jockey Bra store in Schaumburg, Ill., is a manufacturer’s  innovative approach to help woman find bras that fit properly. Nisch said this retail store is more like a showroom with various experience zones within it.

He said Jockey focuses on the everyday bra, with just three colors and five styles that come in 55 sizesbased on their own standard fitting guidelines. Shoppers can get the sizing kit and fit themselves at home with online assistance or come into the store for a personal fitting. But the store itself is designed like a showroom, with a spa feel. 

Jockey’s objective with their physical store was to create an innovative new bra shopping experience store. They accomplished this through direct consumer contact, online and brick & mortar. The store design allowed for individualized consultations and retail. It also provided a solution to the frustration associated with traditional bra shopping.

Nisch said Jockey’s willingness to move toward to the edge with its store concept helped it create a “breakthrough moment” for the consumer. He said Jockey is able to expand its reach with a hub-and-spoke concept with pop-up stores that facilitate the one flagship store.

One observation by Jockey after opening the store last summer, was that many woman want to do the fitting in the privacy of their home, but then they talk a friend into coming to the store for a fitting and they tag along providing opportunities for another sale.

HERSHEY EXPERIENCE
Hershey has been involved in retail and experience branding for years creating a chocolate wonderland its home base in Hershey, Penn. The chocolate maker opened its seventh retail experience outlet last year in Las Vegas adding its global presence with other locations in Hershey, Penn., New York, Chicago, Niagara Falls, Canada, Shanghai and Dubai.

Nische said the latest Hershey Chocolate World store in Las Vegas inside the New York-New York Hotel and Casino aims to link consumers to the brand experience, going way beyond the typical candy store. The guests will enter an engaging and interactive space where they can taste new treats, personalize sweet gifts and create keepsake photo. The venue will open this summer.

The venue offers guests the change to create their own Hershey happiness through a variety of interactive experiences such as customized candy wrapper and personalizing Hershey Kisses plumes, according to a corporate statement.

RETAILER ACCEPTANCE
In the past, Spieckerman said retailers were hostile toward wholesale partners that attempted to create an owned retail presence, and particularly those that ventured into direct-to-consumer businesses. Things have changed.

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“As I tell my brand marketing clients on a regular basis, brand ubiquity is the new exclusivity as media fragmentation and shoppers’ short attention spans favor omnipresence over limited distribution, Spieckerman said.

She adds that retailers have become “much more open to this concept, if only because they are embracing it themselves by making their private brands available to other retailers.”

“Retailers too, have evolved into multi-model companies and they understand the importance of wide brand presence. These days, exclusivity is a ticket to obscurity,” Spieckerman said.

She said now that “owned retail” is no longer an unmentionable with retailers, suppliers have an opportunity to share insights from their owned retail operations – and smart suppliers will do that. 

“Unfortunately, many companies operate their wholesale and retail divisions in silos, with wholesale teams not made privy to owned retail insights. Operating this way prevents preventing them from fully leveraging their multi-model assets,” Spieckerman added.

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