Special Report: Brand Stores

Middle-of-nowhere outlet stores, mall stores, flagship Michigan Avenue entertainment-driven stores, temporary pop-up sampling stores: There are many incarnations of brand stores, but with the recent growth and sophistication of in-store marketing, they have changed. In a nutshell, consumers expect more.With new technology on hand and constantly changing, consumers expect brand stores to be brand playgrounds in some respects. Brand stores need to entertain and educate.Retail industry veteran Frank Jones, a director of the retail consulting team at AlixPartners in Southfield, MI, says it's important to educate consumers on the brand value proposition and do it in a way that delights consumers and enhances their connection to the brand, not to mention provide an opportunity to gauge consumers' reactions to a new concept and refine accordingly. Do it right, and you also create buzz and pick up free media coverage."There are few limits to the type of consumer packaged goods you can push in this format," according to Jones. It's certainly an evolution of marketing, says Tim Ross, a principal at brand development firm Kendall Ross in Seattle. After all, anchor stores also disappear from the shopping mall landscape. "Our society is more experiential, so if we can create an event or presence or destination, we are mimicking what people are asking for," he explains. "Maybe it's all leading to this idea that a Crate & Barrel doesn't have to be embedded into a mall for 10 years. Maybe they are now a two-year store and then go elsewhere. It's that change and variety that has to happen to keep people interested."It's My MessageBottom line, brand stores allow manufacturers to put their product at America's feet in an unfiltered fashion. "At wholesale accounts, the brand is always from their point of view, in their format," says Tom Ulrich, senior vice president of retail for PUMA North America, Westford, MA. "But at the PUMA brand store, you only get one point of view and that's ours." In fact, the shoe and apparel giant recently revamped its stores to strengthen that point."When we first started retail, it was all about the product. Today the store is all about how the brand and product speak to the consumer," he adds. Nokia, White Plains, NY, opted for what it dubs "globally high street retail exposure" when it sprang for brand stores in Chicago and New York. Internally, the marketing team saw the stores as a learning lab -- a way to hear directly what the consumer has to say about its phones. "We love for our guests to come in and say, 'Wouldn't it be cool if the phone could do this?'" says Winston Wright, head of flagships for Nokia in the Americas. But don't confuse the stores with testing laboratories -- Nokia refuses to display something in this space that someone can't purchase on the spot. "Five or 10 years ago to think that a mobile phone store would be on Fifth Avenue and the Magnificent Mile -- people would have said you'd lost your mind. Those are fashion streets," Wright says. "The fact that we're there says we are a fashion brand, a hip, cool brand."In Nokia's stores, all phones are fully functional. The sales floor is walled with interactive display screens featuring constantly changing imagery synched to music playing in the store. In the front section of the rectangular showroom, Nokia mounts its newest and most popular products along the screens, which feature information about each product as a consumer picks up the phone. A miniature LCD below each product announces its price. In the experience section -- purposely placed in the middle of the store -- Nokia products team up with hi-tech accessories to show how a handset with MP3 capabilities works with a Harmon-Kardon speaker. Visitors can take photos of each other with a camera phone and print out copies on a Hewlett-Packard printer. Rival Motorola, Schaumburg, IL, opted to steer clear of channel conflicts with its partners in the Americas, so consumers have to fly to Moscow or Shanghai to indulge in what global director of marketing Sean Ludick considers his playgrounds. Shoppers here can stand in a digital shower and listen to music. The windows whisper as folks stroll past them. Tennis pro Maria Sharapova serves a tennis ball at passers by in a holographic video.Too much excitement for the old ticker? Then drop by an area to personalize your new phone with etchings, downloads and tattoos. Approximately 70% of all purchase decisions are made in the store, Ludick says, and he's determined to see everyone having too much fun to consider saying no.Mars Retail Group, based in Hackettstown, NJ, introduced its M&M stores on the Las Vegas strip, at the Florida Mall in Orlando and in Times Square as a way to add more depth to its candy characters' personalities. That translates to a wide selection of merchandise no mass retailer has space to stock. Shoppers can get their fill of everything from shirts to plush toys, beach towels and flip-flops featuring the roly-poly M&M characters. It's no accident the candy stores, like their electronics colleagues, chose to set up shop in tourist destinations."We're not looking to be on every corner by any means," assures Lanita Isler, M&M's world marketing director. "If we wanted to extend in every state, we'd more or less develop a larger product line in other stores rather than our own." She especially enjoys the point-of-purchase freedom these locations offer her team. "We can really bring everything to life," she says. "More 3-D, in-your-face involvement with our products rather than just a sign." Best of all, the resulting talking signs and pop-out posters are exclusive property of the brand stores, although Isler has no problem if the Targets and Wal-Marts of the world want in on the action, too. "My job is to make the customers feel more excited and involved when they walk in," she says.PUMA recently revamped its flagship store blueprint at Union Square in New York City to make sure its quirky image takes center stage. "We don't want to take ourselves too seriously as a brand," Ulrich says. "The way we talk to consumers supports an invitation for everyone to have a good time in this store."Expect posters of peace signs that look like rabbits and silly advice like "Wash when dirty" to appear at any point in the journey. In the Mongolian Shoe BBQ section, customers design their own sneakers by selecting material choices from a refrigerator display case and a component buffet.Much of the redesign hinges on innovative P-O-P twists. Hangers become the ideal backdrop for such logos and slogans, which also appear on the shoeboxes and shelf tags. "The thought behind the P-O-P was if there were no salespeople in the store, how could we still talk to the consumer?" he explains. Thus the footwear section has sliding wall panels with icons, or "stories" as he calls them, on each. The elements come on a lightweight magnet skin to cover the metal merchandising fixtures. When a section of the store moves, employees simply peel off the skin and change the environment in minutes. Even the walls feature this system, so they can be easily rotated to showcase different collections. The concept was developed specifically and exclusively for PUMA stores. But even when the brand marketing teams share with other retailers, PUMA usually ends up with the lion's share.For instance, the flagship stores currently display a large poster advertising the French 77 Collection behind the cash registers. Wholesale accounts that also carry that line are more likely to reduce the message and image to a counter card, he reports. "Because our retail stores have more of an opportunity for point-of-purchase materials, it will look more dynamic here," Ulrich adds. Brand Stores WarningsThe challenge for brand stores, according to Ross at Kendall Ross, is creating an experience that is appropriate for every location and channel while still putting out a consistent message before the consumer. Creating miniature versions of popular brand store P-O-P images and copy helps, but there's a line to avoid crossing there, too."If you were to do the same packaging that sells in retail stores, you may start cannibalizing your project there," Ross notes. That's one reason behind Nokia's decision not to bring a new product to its flagship stores before the partner carriers also stock that model. At the same time, the partners' goal is to push phone service, not handsets per se, so the two stores are co-dependent rather than combative. But Motorola wasn't taking any chances. It headed off conflict by steering clear of the brand store strategy altogether in the U.S. "Our partners prefer us not to, and that's more important to us. We only do this where it makes sense," Ludick says.The second pressure Ross sees is the growing need for these stores to make a buck as well as a splash. Yes, there are exceptions to that rule, like Ralph Lauren's New York store with its imported wood interiors, he says, but Wright puts Nokia's flagships firmly in that category. "Right now, these stores are purely focused on the brand so the consumer has the opportunity to come in and fall in love with the device," he says. PUMA, however, isn't running a non-profit. "We never enter any kind of business with the intention of losing money. It's brand enhancing and there has to be a bottom-line contribution in order for these stores to exist," Ulrich says. M&Ms marches to that same drummer, with Isler responsible for staying within a budget for the merchandising wonders that she needs to pull off to complete her characters' fantasy world."When I say 3-D, of course I don't get life-sized models of something," she laughs. "But we have a lot more leeway in the budget because our P-O-P isn't mass produced."Now You See It ...In the past, retailers went all out to create unique booths at the county fair in an attempt to help consumers interact with their products. Today, that old-fashioned spirit is new again as pop-up stores become the buzzword on Madison Avenue. John Palumbo, founder and CEO of BigHeads Network in Hoboken, NJ, says he stumbled onto the idea while strolling a trade convention. His ad agency had just landed the Nintendo account to promote its GameCube at the turn of the millennium. Its 43,000- square-foot booth at the show proved the product was a smash hit as consumers gravitated to the space just to try their luck with it. "I don't know why it hit me, but suddenly I was thinking about how H&R Block pops up to do your taxes at the perfect time and then disappears," he recalls. "Wouldn't it be cool if we could bring the show excitement to people the same way?" They did -- and Nintendo saw the value in increasing its $800,000 promotion budget to $4 million to handle the 15-city tour. The concept captures marketers' and merchandisers' imaginations because there are fewer limits. As with the brand stores, companies aren't fighting for shelf space. Nor are the clients who seek out Matthew Glass, owner and CEO of Grand Central Marketing in New York, driven by a need to test brand store acceptance or float a marketing idea. They want a quick burst of glory to launch a product or shore up a brand's relevance with retailers through the buzz, he says.He delivered just that for Meow Mix with a restaurant for cats. He's currently working with Warner Brothers to cook up that same magic for its Tweety character. L'Oreal set up a temporary hair salon -- plumbing and all -- to introduce the public to its cut and color product.Altoids saw the pop-up phenomenon as the vehicle to sample its new chocolate mint. Seizing the brand's reputation for creating mischief, Palumbo created the anti-chocolate shop for broken-hearted and black-hearted people on Valentine's Day. Visual merchandising included cupids hanging from nooses. Kraft Foods took a more family-friendly approach this spring to preview the new DiGiorno Ultimate Pizza, opening a cozy pizzeria on Chicago's Michigan Avenue to serve nearly 25,000 slices over three days -- a slice every five seconds. A pop-up store allowed Norwalk, CT-based Johnnie Walker to provide a luxurious experience for its Blue Label whiskey, a message most supermarkets and liquor stores are hard-pressed to convey. (Additionally, some states preclude spirits from providing value to any one account -- singling someone out for such attention violates those laws.) The temporary six-week holiday stores offering free engraving on any Johnnie Walker Blue Label bottle filled in the gap nicely.Johnnie Walker distributed postcards, posters and banners with every one of its outlets in New York advertising the free engraving. As a result, brand director Bill Topf estimates 90% of the pop-up store's traffic came from local liquor stores. Sales of Blue Label were up 49% in New York City from the previous 2005 season during the time the pop-up was open in Time Warner Center; overall sales volume for the brand in December showed a 30% jump from 2005's stats. The secret to a successful pop-up, experts agree, lies heavily in the P-O-P. "You don't want the store to look cheap," Palumbo says. After all, even temporary stores subtly convey a level of comfort and community involvement that a roving tour can't pull off.That's why DiGiorno went to such pains with its build-out; folks approached the work crew to ask about job openings at what they assumed was the city's newest restaurant. And although a commercial kitchen obviously produced the hot slices, from the consumer's viewpoint it appeared as though employees whisked the pizza from an oven found in anyone's home. They kept signage to a bare minimum, only announcing the pizza varieties available and offering retail coupons, as a way to reproduce this homey ambiance, says Lisa Gibbons, the spokesperson for Kraft Foods, Northfield, IL But the atmosphere has legs, as DiGiorno is now using the pizzeria theme in its national television spots and packaging. "Certainly there is a cost to doing a pop-up, but we felt like it was a great way to get a good story out. It was worth the investment," Gibbons adds.When the Teletubbies wanted to leverage their 10th anniversary celebration to show licensees and retailers their adult appeal, Grand Central Marketing's Glass opened a 10-day pop-up store on Bleaker Street in New York City's West Village. DJs taught visitors how to spin and create custom music tracks, and a Rolling Stone photographer mingled with the crowd. "It wasn't driven by strict retail sales display terms," Glass says. "We had complete freedom to create a fantasy environment."He ordered custom chairs shaped like the characters' antennas, each built from scratch and now residing in Teletubbies' producer Ragdoll's corporate offices. The T-shirts stretched over a frame to look like canvas drawings will make an excellent addition to trade show booths in the future. Computers throughout invited consumers to take the Teletubbies test or videotape themselves playing in the store. Even with such reuses, however, Ross questions whether the pop-up store concept can survive its steep costs in the future. Short-term leases in highly desirable locations are only the first bill in a long line of vendor invoices. The compact timetables can require overtime labor charges, and the P-O-P orders lack mass production runs to drive down their prices. But it's still cheaper than ads on national television, argues AlixPartner's Jones. Palumbo splits the difference by incorporating existing P-O-P strategies. He sees nothing wrong with taking Nintendo's interactive displays created for Circuit City, for instance, and weaving that into a pop-up setting. Or vice versa: Taking the beautiful, old-school displays created specifically for the Altoids store and recreating them in the retailer program. "The first thing we always ask is, 'What do you have?' There are a lot of cost efficiencies, so the visual merchandising team should be very involved with the pop-up store," he adds.Insiders today tend to fret more about reigning in product managers' enthusiasm for the pop-up concept. Just because any product can find an application in this marketing channel doesn't mean they should, as Palumbo puts it. "Sure, it gives you freedom, but the guidelines are to be true to the brand," Glass agrees. "The beauty is that an event can bring the brand to life in a way it's not used to. But in terms of designing these spaces, you really have to look into the heart and soul of the brand and ask, 'What is this really about and how can we communicate it into retail space?'"

Special Report: Brand Stores

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