Brand equity vital to retailers

28 October 2014

NEW YORK: US stores need to focus on increasing the equity of their brand if they are to prosper, according to a new study which demonstrates a strong correlation between this metric and retailer success.

A Nielsen study covering the grocery, mass merchandise, club, dollar, drug and convenience channels connected consumer responses to some 130 retailers to nine key factors to derive the Nielsen Store Equity Index (NSEI). When this was in turn analysed in connection with Nielsen's Homescan data, it found that a retailer's NSEI score had a 68% correlation with a retailer's shopper's share of wallet.

Further, each point of equity within the NSEI resulted in 8.3 percentage points of market share.

With equity being based on factors such as familiarity, connection and loyalty, Nielsen observed that retailers were developing outlets that would resonate at a local level. When it asked respondents to assess this aspect of brand equity it discovered that the list of the top ten retailers included a mix of both large and small operators, some, such as Wisconsin-based Woodman's, having as few as 15 outlets.

These might not be well known at the national level, Nielsen noted, "but are truly loved by the consumers that visit them".

Retailers were also rated on a number of attributes which drive people to stores, enabling Nielsen to determine those which that had the strongest impact on the retailer's NSEI score in any particular category.

Thus, for example, prepared foods were critical to the equity of convenience stores, while club stores needed to have fresh meat and seafood.

Linked to this development was a convergence towards a new size of store in order to meet consumer's changing shopping habits, as they now make more trips to fulfil short-term requirements.

Most obviously, big box retailers are investing in smaller outlets to address this need. But for drug and dollar retailers, Nielsen found that a larger one-stop shop contributed heavily to their equity as they were able to serve both stock-up trips as well as the routine, larger-basket trips.

Data sourced from Nielsen; additional content by Warc staff