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Changing Channels

Posted: February 20, 2007

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“Retailing has become much more sophisticated due to the high level of competition and the need to differentiate brands on the shelf,” said Laura Setzfand, director of marketing for Jason Natural Products and Zia Natural Skincare.Additionally, consumers have diversified to find the shopping experience that works for them.

Changing Environment
The current retail environment continues to erode the image of prestige products, as mass market products become more luxurious and prestige products become more accessible.

“Packaging has become a key factor in the retail market and often plays a significant role in a consumer’s decision to evaluate a product, especially when product functionality is deemed to be equivalent across multiple brands,” said Setzfand. As a result, manufacturers are turning back to department stores and stand-alone boutiques to boost the prestige image of their products and differentiate them from mass-market variants.

But as department stores and drugstores consolidate, a few buyers control large but finite amounts of retail shelf space. “Consolidation can both enhance and hinder a brand’s distribution. A small brand may obtain additional distribution opportunities, while a larger brand may suffer from a reduction in sales due to the consolidation of store inventories,” said Setzfand.

Consolidation also has given retailers the ability to demand more of a brand, thus shifting the traditional relationship. “Retailers have more power to exercise strength in numbers. They have coast-to-coast coverage and buying power that can support or be devastating for brands,” said Catalano. For brands, this means looking to non-traditional retail opportunities for growth, such as boutiques and brand stores that serve consumers looking for a personal touch.