Understanding the Retail Battlefield
Every year companies across the globe pour millions of dollars into defining and developing brand equity in the minds of consumers. All these efforts can be undone, and the brand equity diluted, with something as simple as the touch of a button. Brand warfare no longer takes place just on the retail battlefield, but now regularly takes place in cyberspace.
The Threat to Retailers
Retailers who fail to take an aggressive stand with their vendors regarding online brand exposure run the risk of displaying product at retail that will never sell. In the near term they will be seen as “retail showrooms” playing the role of mid-wife to online sales. In the longer term, these same retailers will cease to exist.
For those retailers who have made significant investments in developing a dot.com arm of their, they will not see the anticipated sales growth. Instead, sales are siphoned off by search engines that drive consumers to the lowest-price online websites.
Retailers must research online exposure by category, by brand, and by vendor to ensure that the goods in the retail stores are not being so significantly discounted online as to render themselves obsolete.
The Threat to Licensees
Licensees who fail to control their product flow to the online marketplace run the risk of alienating their retail accounts. While these new online sales may seem incremental, these sales are in fact, transitional sales from traditional retailers. While some estimates have placed internet sales as high as $135 billion last year, this only represents 8% of all retail sales. No licensee can afford to risk alienating their retail partners.
The Threat to Brand Owners
Brand Owners have the most to lose from diluted brand equity on-line. End consumers make no distinction from brand dilution regardless of whether it occurs online or in a retail setting. Without consumers craving the branded product, and making the appropriate brand-value association, a brand loses its equity. It dies. Brand Owners who fail to police their licensees not only risk brand equity erosion, but run the risk of substantial loss of royalty income should the brand no longer be seen as “sellable” in the retail market place. A single licensee, in a given category, could if unsupervised, conceivably singlehandedly torpedo a brand, as other licensees under the brand as well as retailers walk away.