The Calculus of Loyalty

Many consumers, including me, have a tall stack of cards from the various loyalty programs they belong to. Between the cards for hotels, airlines, and car rental companies, I got so tired of the bulge they caused in my wallet that I bought a separate zippered pouch to carry them all. The one card that I still keep in my wallet is my grocery store loyalty card because I use it so often.

Loyalty programs aim to get consumers to buy one brand instead of another, or shop at one store instead of another, not just once, but over and over. They are one input into the price-quality-value calculus that consumers do in their heads every time they decide where to shop or what to buy. Different customers do the math differently, and even now, price alone does not always win, even in low-involvement categories.

In recent research with consumers about their preferred brand of canned goods, we saw the price-quality-value equation at work. Canned goods are far from the most innovative or exciting part of a grocery store’s offering. They pretty much define low-involvement in groceries. That said, consumers told us that the graphics on the can, the logo, the colors, all set quality expectations about the product inside and the experience of using or consuming it. Our research showed that the brand they preferred was the one they perceived as most expensive and highest quality. Why? They saw it as the best value.

Our findings are consistent with the just-released 2009 Brand Key Customer Loyalty Engagement Index. Based on research conducted earlier this year, they found that “consumers are not buying based on price alone. Instead, they are relying more on their perception of value when deciding which brands to stay loyal to during the recession.”

Despite the current economy, or because of it, some consumers still prefer (and pay more for) brand-name canned goods and other seemingly low involvement categories. Their loyalty stems from their own sense of what’s the best value for the money.

Store brands compete with branded goods manufacturers for consumers’ attention. Recently, Walmart announced plans to up its game, aggressively expanding and enhancing its own brands in quality and appeal. ALDI did, too.

Retailers have store loyalty programs to help with customer retention. Manufacturers have to find ways to engage customers and make them feel a connection to their brands and products – their own form of loyalty programs. Tools like social media offer an unparalleled platform on which to build customer connections that build loyalty.

Who do you think is doing a good job creating loyalty, and how are they doing it?

Going Beyond Value

Late last year, I wrote about value becoming tablestakes. The upshot was that consumers were about to be bombarded with promotions screaming value, putting retailers in most categories at a disadvantage relative to Walmart.

Some value retailers have been caught flat-footed, like Sears, whose Q4 2008 profits were down 55% from their 2007 levels and whose comps dropped 8% for the year. As Fortune reported late last month, “analysts are predicting profits will fall even further in 2009, and one even suggests Sears may disappear altogether.”

Meanwhile, Family Dollar has been busy adjusting its assortment and promotions strategy to better fit the times. CEO Howard Levine told attendees at a February Deutsche Bank Small and Mid Cap Conference that the 6,600-plus unit neighborhood discount chain is “working to increase relevancy to the customer by reinforcing more promotionally priced offerings and expanding the assortment of key consumables, such as food.”

What exactly have they been doing? The company added sales generating SKUs of food, health and beauty aids, and laundry and cleaners – all items that people buy regularly and frequently, so they come into the store more often. In addition, the company directly confronted the downturn in the home category by launching a Home Remodel event featuring inexpensive home décor ideas. And it took a page from Merchandise Optimization 101, promoting average ticket-increasing merchandise in in-store circulars and end-aisle displays. In another smart merchandising move, the company is using seasonal buys to freshen the selection.

The strategy appears to be working. According to a Dow Jones Newswire from March 5, Family Dollar’s second quarter comps store sales were up over 6%, and the company raised its earnings guidance ten cents to $0.61 a share. And the stock is up 60% vs. year ago levels.

From all appearances, Family Dollar seems to be getting back to retailing basics in ways that consumers, as well as shareholders, clearly approve of.

Discounters Winning Our Wallets – Will Hearts & Minds Follow?

These days, consumers are more reluctant than ever to part with their hard-earned cash, and virtually every store is offering deals and discounts to entice them to spend. As USA Today reported last week, the stores with the sharpest pencils and price points are clearly winning the battle to draw in new customers. Walmart, TJX and Dollar General beat analyst expectations and are reporting decent performance while the competition misses badly. But who are they attracting, and are they building customer loyalty that will prove enduring?

The data suggest upscale consumers are shopping these discounters big time, and while they may be enjoying the savings, they’re not loving the experience. That’s the interpretation of the latest retail data from the American Customer Satisfaction Index. The just-reported 2008 rankings for Department and Discount Stores show Nordstrom and Kohl’s tied for first place in customer satisfaction (at 80). Dollar General declined more than any other Department or Discount Store (to 75). While Walmart’s score increased last year, consumers still rated it the worst of the lot. (70). Among Specialty Stores, Barnes & Noble and Costco came out on top (at 83). TJX scored third from the bottom (73), with only Circuit City (72) and Home Depot (70) scoring worse.

What’s a discounter to do? Hire more sale associates or improve training in customer service? Clean the stores more often or improve store lighting? No! They should trust what people are doing more than what they are saying. Consumers vote with their pocketbooks every day, and the discounters are winning.

There must be a way for Walmart to use its commitment to packaging and energy efficiency to help upscale consumers appreciate the store experience more. Shopping at Ross and Marshalls stores is all about the thrill of finding amazing deals on brand name merchandise. And at Dollar General, it’s all about what a buck will buy. In a classic judo move, discounters might creatively turn a no-frills store experience into a badge of shopper frugality. Aldi and Costco both do this well. What could Dollar General, TJX and Walmart do?

Most pundits are projecting that the new behaviors being formed in this economy will have staying power. So, upscale consumers may learn to hold their noses while shopping the discounters. Just maybe, a few innovative discounters will find ways to make them happy to come back again and again.

Why “Buy Local” Should Replace “Buy American”

In the ‘80s, I knew a lot of people who insisted on only buying American-made cars. Nowadays, though, it’s tricky to figure out what qualifies as “Made in America.” Honda, Toyota, and Nissan all have US-based plants. Nike, Patagonia, Gap and Wal-mart, are just a few of the brands that have most of their merchandise made offshore. We import food from all over the world, and sell most of it in US-owned stores staffed with US employees.

With jobs being slashed in industry after industry, people are increasingly aware of the connection between what they buy and where that money goes. The House-passed fiscal stimulus bill makes it clear that protectionism is on the rise - not out of patriotism, but out of economic self-interest.

Can consumers hoping to support their domestic economy buy Nike, Wal-mart, Toyota or the others and stay true to their conscience? Should we consider the “domestic content” of what we consume, and assume the higher the better? How would consumers figure it out? It’s time to let go old notions of protectionism and adopt a “Buy Local” mindset.

Just what does “Local” mean? Local stores can be part of a chain. They can sell merchandise from elsewhere (including other countries). And they can hire or be owned by people from elsewhere, too. What makes stores local is that they’re nearby - they’re in the neighborhood.

My Top 5 reasons for supporting local businesses are that they:

1. Provide jobs for the people who live nearby
   
   
2. Contribute to the tax base of their communities, which makes better schools, roads, police, fire, sewage and other services available to residents
   
   
3. Also contribute to a vibrant sense of community by supporting local charities and events
   
   
4. Can best fulfill local preferences and needs because they know us better through interacting with us day in-day out
   
   
5. Demonstrate that people we all know work hard and give back
   

It’s not realistic to think we can buy everything we need in our neighborhoods – stores in most residential neighborhoods simply don’t offer the selection or the pricing. And change is an incremental process, anyway. It starts by buying more locally than we have historically, making the 10+ mile trip to the mall a little less often and spending a little less at those stores when we do go.

Many retailers have deepened their connection to the local communities they serve lately. While some people don’t view chain stores as part of the local retail scene, I disagree. Here are a few examples that illustrate why:

• Macy’s – is rolling out its successful MyMacys program across the chain to return merchandise decision making to local stores

• Origins - has tailored some products for specific geographies, like its High Elevation Hydration Cream sold in the Denver-area stores.

• Starbucks – their support and call to action for customers to volunteer in their communities is a great example of getting local

I’m going to try the “Buy Local” argument the next time I’m with people who spout off about protectionism and buying American. Wish me luck!

Beware the Customer Empathy Gap!

Back in the ‘80s, my husband and I did a lot of outdoors stuff – we went trekking in Bhutan, kayaking in Alaska. We wore Patagonia gear because it was the best, and we knew it would help us do better or more safely whatever it was that we set out to do.

After being a fan, I became an employee. I worked at Patagonia in Ventura in the early ‘90s. It was a company full of true believers who didn’t need to do customer research because they were the customer. They called themselves “dirtbags” – people who couldn’t afford to pay retail and were totally accomplished in the sport, whether it was fly fishing or surfing or mountain climbing. Dirtbags were the opinion leaders who set the tone for what was cool in their sport.

All that’s to say that a recent Saturday interview in the NY Times called "Companies from Mars, Customers from Venus" rang totally true for me. The interview with Dev Patnaik, CEO and Founder of Jump Associates in San Mateo, describes the Empathy Gap –the chasm between employees in organizations and the people they serve.

In my experience, the empathy gap is real. Many companies began as Patagonia did, with its employees' finger on the pulse of its customers, which ensured alignment between company and customer. However, as companies grow, the demands for staff often results in hiring smart, capable employees who may not be or understand users. If they’re not careful, these companies can easily fall into the Empathy Gap.

All of us can name brands that don’t “eat the dog food.” Here are four on my list:

1. Stub Hub – this internet business has a lousy user interface and my own poor sell through experience suggests that though these guys may indeed be sports fans, they have never tried to sell anything on theirs vs. competing sites. I’ve never managed to sell ANYthing on Stub Hub!
   
   
2. QVC – useless junk hawked by a few earnest people and a bunch of smarmy ones
   
   
3. The Yankees – overpaid, cocky cry-baby players, overpriced tickets, nothing for regular folks who actually love the game and want to root for players they can call heroes.
   
   
4. Wells Fargo – nickel and diming, tell you with a straight face that they have to charge you for having a savings account. Does anyone who works for Wells Fargo actually pay these fees? Doubtful. Most likely, they have special accounts and get special treatment.

Large companies aren't automatically in the Empathy Gap. Even though I’m not a fan of the world’s largest retailer, I have to admit Wal-Mart walks the talk. To my surprise, the company ditched its efforts to move up market, which risked alienating its core audience. And CEO Lee Scott has publicly committed the company that democratized consumption in the United States — enabling working-class families to buy former luxuries like inexpensive flat-screen televisions, down comforters and porterhouse steaks — to democratize environmental sustainability. Wal-mart knows that efficient operations use less energy and produce less waste, and they're going to get the rest of us to make similar changes - helping us align our own priorities and actions. Kudos to them.

For brand managers where the empathy gap exists, here’s a flash: Get to know your customers…fast. While you’re taking them for granted, someone else is trying to take them from you!

Buying Clothes is Out - Making them is In

Guess I got the three elements of Maslow’s hierarchy out of order. Instead of shelter, this installation is about clothing – food, then clothing, and shelter is last, I’m told. So, Part 1 was about food. This is Part 2 – and I’m talking clothing.

This holiday was one of the toughest ever. Apparel retailing is awash in red ink. The biggest losers overall were high-end stores – Saks and Neiman Marcus saw the biggest declines, but sales slumped at all department stores - and Womens' Wear Daily reported this week that "an epidemic of closings and downsizing has hit high-profile specialty boutiques." Most clothing retailers are down. Even Wal-Mart, who did well in other categories, saw declines in apparel.

Although parents reported they planned to cut spending on themselves before they would cut spending on their kids this holiday, teen brands got hammered in Q4. This may be the clearest indication of the power of teen demand – in good times, they have allowances and part time jobs that put cash in their pockets. In the second half, jobs were harder to come by, gas was more expensive, and allowances may have tightened along with family budgets. Not coincidentally, Abercrombie, PacSun, American Eagle were all big losers this holiday.

Thanks to Project Runway, interest in sewing is booming. The owner of Cutting Line Designs pattern company told the Minneapolis-St. Paul Star Tribune in March last year “"Without a doubt, 'Project Runway' has been a shot in the arm. The audience watches the contestants sewing, and suddenly everyone wants to sew."

The sewing business represents over half of Jo-Ann Stores’ sales and while the rest of the market swooned in Q3, Jo-Ann’s sewing-related sales grew over 1% on a same-store-sales basis. As with home improvement, the influx of newbies into the market means increased interest in sewing classes, too. On CBS.com in October, Liz Keptner reported that “that sewing class that lots of us suffered through in high school is now the latest trend in hand-made crafts.“

I haven't seen anyone link the DIY clothing trend to the drop in apparel store sales directly. But it could further fuel the move away from pretention and conspicuous consumption.

Blurry Assortments – Convenient or Confusing?

I was in Bed, Bath & Beyond this weekend to pick up a new shower curtain liner for the kids’ bathroom. It had been a while since I’d been in the store. At first, everything looked familiar, but as I rounded the first corner, I had an eerie feeling that I had somehow ended up in the wrong store.

There were shelves full of…toothpaste, toothbrushes, shampoo, conditioners, hair care products. In other words, it looked like I was in the drugstore. What’s going on?

Earlier this year, we did research with homeowners to find out where they go to buy products across a whole bunch of home improvement, repair and care categories – from plumbing supplies to paint to live plants to home cleaning supplies. We found that Lowe’s appeals most across more categories than hardware stores or Home Depot and saw that these types of stores do well in several categories of “consumables”. Like Bed Bath & Beyond, they use these faster turning and impulse categories to get people in the store more often, and also use these items to increase the average ticket.

Clearly, BBB and stores like it are looking for ways to be useful for more occasions than the rare times we are shopping for linens or furnishings for bedrooms, bathrooms or kitchens. BBB's move into home cleaning products was probably an attempt at increasing shopper frequency. Based on this last visit, I’d guess the move flopped since that department is now shoved in a corner and dramatically smaller than it used to be.

So, we have BBB, Lowe’s, Home Depot and Ace Hardware stores (and probably others!) offering and adding consumables typically found at drug and grocery stores. Meanwhile drugstores like Walgreens and CVS continue to offer and add small appliances and other small durable goods often found at home stores. Best Buy just started selling iPhones and Wal-Mart is rumored to start later this month. Wal-mart already offers a broader assortment than any of the stores I’ve mentioned. More category killers are running into the Wal-mart juggernaut.

All this got me thinking about how retailers should approach extending into new product categories and about who has done it well.

To extend into new product categories effectively, a retailer has to address unmet or under-met needs of current customers with products and services they can credibly offer to meet those needs. Amazon and Zappos come to mind as interesting examples. Both started out selling a single category of merchandise – Amazon started with books and Zappos started out selling shoes. What they really sold was a great customer experience. This platform has allowed both online retailers to move into new categories. Amazon now rivals Wal-mart for assortment breadth. And Zappos has moved into clothing, handbags and accessories.

For the offline world, I have to think harder. Stay tuned for my POV. Which store-based retailer do you think has extended into new product categories well?

A Lump of Coal?

I’m a December baby, and growing up, I always felt gypped at the holidays. Looks like I’ll have company this year. Consumer confidence suffered its steepest monthly drop on record in October according to the Index of Consumer Confidence, as the worst financial crisis in generations continued to take its toll. That can’t be good news for anyone looking forward to presents in December.

This time of year, lots of studies are being released about what holiday sales will be like. Here are the answers to five questions on the minds of gift givers, recipients, and retailers.

Who’s still on the list? The Marketing to Moms Coalition reported this week that 62% of women are asking friends and family to forgo buying them a gift this year due to the economy. And while they plan to cut back on gifts to colleagues and neighbors:

• 96% said they won't let a bad economy stand in the way of giving gifts to their kids
  
  
• 86% will give gifts to their parents
  
  
• 85% will give gifts to their spouse or partner (Stay out of the dog house, guys!)
  

I haven’t seen any reports on men’s holiday shopping plans.

How much will we spend? Late last month, Deloitte Consulting released the 2008 findings from its 23rd Annual Holiday Survey. It showed that almost six in 10 consumers (59%) expect to reduce their spending this holiday season. Higher food and energy prices were the top two reasons for spending less, outpacing the economy and job uncertainty. Consumers expect to spend an average of $24/gift, slightly less than last year, and a total of $532 on gifts this year, down from $569 last year.

What gifts will we buy? For the fifth straight year, gift cards are expected to be the top gift purchase. Nearly 2/3 of consumers plan to give them. Over half of all consumers plan to give clothing and almost 40% plan to give CDs or DVDs.

Where will we buy them? According to the Deloitte Survey, with economic concerns high, the survey showed that value-oriented stores are at the top of the consumers’ list of shopping destinations. More consumers say they will shop at discount/value department stores, warehouse clubs, dollar stores, outlet stores, and off-prices stores. That means stores like Walmart, Costco, Kohl’s, Ross, Dollar Stores, Big Lots are likely winners. No surprise there.

What will the experience be like? With company budgets tighter than ever, expect to find fewer salespeople and helpers in the store or on the phone. Online customer support may be better than usual as multichannel retailers make choices about which channels to support, and online is arguably more cost effective for them. In an effort to manage costs, most retailers have been fairly conservative about inventory so out-of-stocks are more likely. That means it will be more risky than usual to wait for price reductions. Retailers are anxious to get shoppers to show up and will be relying on coupons and store circulars more than ever. Redemptions will be high as consumers are eager to save wherever they can. And in-store lines to check out may be longer than usual as people are shunning credit cards and paying with cash, which can take more time to handle than a credit or debit transaction these days.

All in all, it looks like consumers are still planning to spend - and spend smarter - on gifts this holiday. The trick for retailers, online and off, will be to make it easy and affordable for them to buy.

When Good Enough Will Do

We’ve always told our kids to do their best, no matter what. When they were younger, they actually listened and tried. Now that they’re teenagers, they laugh at the suggestion. They know that they can do well by doing far less than their best much of the time.

Like parents everywhere, marketers are into superlatives. We typically use lots of them in positioning products and companies – “brand (name) is the best at (benefit) because it is the only brand with (3-5 proof points) to deliver on that promise.” Whether it’s the fastest, the best, the biggest, the safest, the easiest, or the most comprehensive – marketers are always trying to convince customers that the superlatives apply to their product uniquely.

But these times are not typical. And most of those superlatives do not fit customers' current reality. In a Nov. 6 article in Business Week, Ben Steverman reports that “as the U.S. faces a serious economic downturn, many Americans are seeking out the cheapest possible option when buying necessities.” The article features four stores that are thriving in this economy: ultra-discounters like Dollar Tree (DLTR), 99 Cents Only (NDN), and Family Dollar Stores (FDO), and Wal-Mart.

I wrote earlier this year about value becoming tablestakes as the economy softens. That got me to rethinking the conventional wisdom that customers actually would always prefer the best if they could afford it. I’m pretty sure that’s not uniformly true across all categories – now, or ever.

Private label goods are the classic example where good enough will do. Private labels succeed by sitting on the shelf beside the more expensive brand name products they copy. In countless categories including office supplies, breakfast cereal, over-the-counter cold and pain medicines, diapers and other paper products, private label has captured significant market share. Those share gains were made in better economic times than we’re currently experiencing. No wonder Ad Age recently proclaimed in an October 29 story that “it’s going to be a private label Christmas.”

In microeconomics, we learn that the marginal cost of going from 80% accuracy to 100% accuracy is often greater than the cost of getting to the 80% solution in the first place. Is the additional 20% accuracy worth the required expense? Often, customers are not willing to pay the price. Even when the economy is not in the dumps. Why?

Software and systems design have a concept called the Principle Of Good Enough (POGE). We lay people call it “quick and dirty” design. The basic idea is to put a partially complete solution or product in the market rapidly, gauge the response, and tweak it based on actual feedback from users. I guess it’s the “dirty” part that implies something less than perfect. POGE is the logical foundation on which most software and web development is based. The principle seems to apply to a temporary stage in product development whose end goal is the continuous improvement of the product.

Similarly, there are circumstances where good enough is all that’s required and no further quality improvement is expected or necessary. Non life-threatening conditions – the types that retail walk-in clinics are designed to treat – are a perfect example. These clinics typically provide a limited range of "get well" medical services, such as allergy or flu relief, and also treat uncomplicated minor conditions, such as bronchitis and ear, urinary tract, or sinus infections. The success of urgicenters and retail walk-in health clinics are proof positive that in some situations, some customers do not feel they need the Mayo Clinic – they simply require prompt treatment by a competent practitioner.

These examples show that in some contexts, customers appreciate good enough as an intermediate stage to progress through. In others, they value it as an end-state. The lesson here: efficient design is smart design – smart retailers start by getting to good enough, taking their customers’ temperature, and deciding whether and where to go from there.

Is Local Better?

We live in Mill Valley, CA, four miles north of San Francisco in Marin County. In our town, there’s a definite bias toward supporting local merchants and products. Smith & Hawken got its start here, and so did Banana Republic. At the holidays, even the parking meters take a vacation so shoppers can park free like they do at the mall up the highway. In terms of store names and ownership, Mill Valley commerce is diverse, and that adds to our town's character and personality.

But Ad Age got my attention when they reported yesterday that "it’s going to be a private label Christmas." Most private label merchandise is sold in chain stores – near us, that includes Safeway, Whole Foods, Molly Stone’s, Target, and Costco (no Wal-Mart nearby). In general, people buy private label goods because of the savings relative to branded goods. Consumers typically don’t know where private label products come from – part of their lower cost stems from avoiding the expense of telling the story of the individual products.

Based on its research, IRI predicts that big-box stores like Wal-Mart and Costco could be the big winners this holiday, possibly drawing shoppers from department and specialty stores by convincing consumers they can save enough on food to cross the aisle and shop for gifts, as well. Guess that makes the local specialty stores downtown more vulnerable than usual this holiday season, and the local grocery stores, too. Besides free parking, I’m guessing there will be more holiday festivities this year to draw people to the local shopping district.

But what does local really mean? Does it refer to the store’s ownership structure? Or its involvement in the community? Can a big box store be local? Is there a distance that defines what’s local? Is it the distance from the customer’s home to the store, or from the source of the products to the shelf, or both?

In the fresh food category, Wal-mart defines local as grown in the same state as it's sold. Whole Foods considers local to be anything produced within seven hours of one of its stores, and says that most of its local producers are within 200 miles of a store. For Seattle's PCC Natural Markets, local is anything from Washington, Oregon or southern British Columbia. Frankly, of the three, I think Whole Foods gets it closest to right.

According to a story this week by Julie Schmit for USA Today, “the ‘locally grown’ label is part of retailers' push to tap into consumer desires for fresh and safe products that support small, local farmers and help the environment because they're not trucked so far.” And for some consumers, being locally grown is now more important than being organic.

Farmers' markets are seen a source of local fresh produce, meats and cheeses, and they're on the increase. Last month UDSA reported that the number of farmers markets in the United States has nearly tripled over the past 15 years to 4,385. We have seven a week just in Southern Marin County.

USDA and others are careful to point out that locally grown food is not necessarily safer than food from farther away. But it seems consumers are not satisfied with government assurances about the safety of the food supply, and they like the greater ripeness that sourcing locally affords. In some respects, “Organic” and “Green” have become short-hand for “Safer” and "Better." Sounds like “Local” is the newest addition to that list of reassuring words.

Look for a push for standard definitions and certification of “locally grown,” and a move to track and report on the handling of fresh food from source to shelf as people increasingly think about what’s on their plate and how it got there.

And back in Mill Valley, I expect merchants large and small to continue trying to figure out how to capitalize on our passion for all things local.

Manufacturers Can Help Build Retail Brands

This week’s AdAge CMO Strategy article boldly announced the coming of retail branding, suggesting that retailers have been mere distribution points for their branded goods manufacturers’ wares up till now. Hogwash.

Sam Walton knew about branding. Every day low pricing, store greeters, tough vendor negotiations, early morning employee Rah Rah sessions, and the company travel policy are all examples of a clear and powerful Wal-Mart brand. Howard Schultz knows about branding, too. And like it or not, Starbucks delivers a powerful brand experience – who hasn’t met up with friends or held an entire meeting at a Starbucks while sipping overpriced but consistently prepared hot and cold drinks? Cheers, the bar where “everyone knows your name,” was a brand, too.

The balance of power in the retail value chain shifted a long time ago to the retailer. Sam Walton knew it, and so do other shrewd retailers: "He who controls the customer experience also controls the customer relationship."

Now, the customer experience occurs at multiple touchpoints, not the least of which is the use or consumption of the product. It just so happens that many (though not all) of the touchpoints leading up to and following product use are controlled by the retailer.

Part of the “news” the AdAge story covers seems to be the increasing number of retailers developing and offering the own branded assortment. But this isn’t news, at all. Gap started out selling Levi jeans. Safeway and Whole Foods have had store brands for years.

Another part of the story is about retailers recognizing the importance of customer loyalty and creating innovative loyalty programs. No news here, either. Heck, when I was a cashier at AlRose in Century City, our store layaway program served as a powerful loyalty program - credit for people who didn't have access to credit cards. That was in the ‘70s!

So, what is the real point here? Branded manufacturers have a role to play in partnering to innovate across the value chain. An example of a brand that recently did this is Coca Cola. Last week’s Business Week article attributed much of the design team’s success to their prioritizing innovations that worked within the constraints of Coca-Cola's complex partner relationships.

No doubt, manufacturers can help retailers build stronger, more differentiated brands. Doing so will help them secure their own brands, too.

Flip Flops at the Grocery Store

Wnbc.com reported today on a company that wants to “be able to tell its customers the stories behind the products, of how they came to be and how sustainable they are.” Another story about Whole Foods? Nope - try Wal-Mart!

Whole Foods is busy trying to overcome its “Whole Paycheck” image. People used to use the nickname after shopping at Whole Foods, as if it were a badge of their own economic status. Now that whole paychecks are going to pay for the mortgage and gas, and with food prices sky high, people are shopping at Whole Foods less often and spending less when they do shop there. Whole Foods’ response? Introduce more lower-priced, store-branded merchandise and do more in-store promotions.

Meanwhile, Wal-Mart is moving to a more aspirational messaging platform. For years, Wal-Mart has focused on fuel savings, less waste, more efficient packaging and reduced electricity, all in pursuit of cost savings. Turns out that all that resource efficiency is also very green. The article points out that the company is now striving to extend its success with resource efficiency to the products on its shelves. The good folks in Bentonville know that the cost savings across the value chain from greater resource efficiency are substantial. In today’s tough economic environment, the master of EDLP is embracing green-ness as goodness.

However, finding the great deals is what people brag about now. Whole Foods may intentionally or unwittingly be reintroducing Hi-Low pricing and convincing consumers that there are still bargains to be had. What's old is new again, in green cred and in retail strategy!