Last week, we had Clive Humby here from Dunn Humby and Tesco, the guys that are capturing all of the data, and doing all that sort of thing in the U.K., and actually around the world now. They are the ones that did, or do, all of the analytics for Tesco in the U.K. And, they are doing the same thing now for Kroger -- setting the same system up. And they are also doing the same thing for Best Buy, up in Minneapolis.
Berens: What are they seeing?
Schultz: What they are arguing is that, by and large, it is the behaviors. And, that is really what they are all focused on: what the customers do, which has a big impact when you start talking about our traditional ways of using a lot of the big, big money media, which essentially are attitude, and awareness, and impressions -- that sort of thing. And, all of those sort of go out the window when you can actually track consumers and customers over time and see what they are doing.
I think it has a lot to do with brands and branding. We have to rethink what brands are all about, because what we start to see with this kind of data is what the value of the brand really is: how much of that value is being created, how much of it is being captured and how much of it is being returned back to the organization.
Berens: Yeah.
Schultz: Increasingly, what we are going to see is that a retailer is going to come to the brands, rather than the manufacturers.
Berens: Oh, that is very interesting.
Schultz: In essence, what I do when I go to Safeway, or Kroger, or Albertson's, is this: I say, "You guys have made some choices, and I will pick from what you have already selected. And, if you don't have the national brand, I will buy something else. I am not going to go across the street for it." Now, by the same token, what you see happening is a huge growth in private label, but the private label is not necessarily all low price stuff.
Berens: No, not at all.
Schultz: And, in fact, in the U.K., Tesco has created a thing where they have a premium price product under their name. They have the basic, generic low price stuff at the bottom, and then they put the national brands in the middle. And they just squeeze them from both ends. But, I think what you are going to see is that the retailer brand is the next big thing.
Berens: Here in L.A., there was a conference last month, that was put on by the E-Voter Institute, on democracy and the internet, and I had the privilege of speaking there. And, one of the other speakers was talking about what in the retail sector we call e-fluentials, or influentials, that increasingly that is going to become the case, where there are representative voters -- people who actually track what the issues are -- and you find the person who kind of agrees with you, and then you follow that person. And, it sounds to me like you are suggesting that retail establishments are going to become that kind of opinion leader, by virtue of what is in stock.
Schultz: I think they already have. If you look at what is being done now, the manufacturer has very little influence, particularly in things like supermarkets and Best Buys and those kinds of stores because, in essence, what happens is the retailer says, "If you want to run that kind of promotion in my store, here is what you have to do." And so, the retailer dictates to the manufacturer what kind of promotion has to be done, because they know so much more about what consumers do than the manufacturers do. So, they control the system, and the manufacturer then gets pushed to the side. The retailer then looks at "How do I build sales in a category," rather than "How do I build sales for Tide, or Cheer, or Crest," or whatever it happens to be.
Berens: And that also means that they are in a position to pump their private label.
Schultz: Oh, absolutely. What they can do then is use the national brand as a comparison. This is what they are doing in the U.K.: the national brand now is the fighting brand to the comparison brand. And I, the retailer, can say, "Oh, look how much better this product is. It is my private label, and so much better than the national brands, but it only costs you a few cents more." Or, "Here is my cheapo, generic, private label, and it is almost as good as the national brand, but it didn't cost as much."
Berens: In fact, I just experienced this very late last night. My four-year old was the purveyor of snack today at her school.
Schultz: Okay. (Laughs.)
Berens: And, I went out in the middle of the night to get juice, and the private label juice at our local Ralph's was the only juice that wasn't from concentrate.
Schultz: Uh-huh.
Berens: And that is what I wound up buying. It was ten cents more. So just in the last few hours, I have lived what you are talking about.
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