Kmart marketing boss: price is more important than brand
The marketing director of Kmart has said that price is more important than brand names for its customers.
“The thing we’ve learned over the last 12 months is that if you can get the product and the price right, the brand becomes less important,” the discount retailer’s head of marketing, Ian Bailey, told Mumbrella.
According to Bailey, Kmart’s home label products are rapidly outselling better known brand names – a trend boosted by the retail squeeze.
“If you put our own labels next to branded products, ours outsell them massively – to the extent that we’re no longer carrying branded products in many areas of the store,” he said.
OK. Ill go first.
So when everyone hits the same super low prices, and price becomes irrelevant (see Wal Mart now desperately searching for growth after devaluing their brand for 20 years).
This type of statement comoditises the brand, and then when we are all shopping online, gives no point of difference for actually want to go there.
It took Mr Bailey 12 months to figure out that price is the most important factor for K-mart customers? Credit to the K-mart team in reducing the SKUs, opening up the stores and focussing on customer service but with insight like this it’s no wonder K-mart has under performed up until very recently.
I can’t help but wonder what happens to sales of underwear, glasses and anything else where the market size is finite. Once you’ve discounted the product down to its cheapest possible price what do you do when you can’t take marketshare from competiors or grow the market?
If you lead on price you better be damn sure you are going to do so for a very long time because once you aren’t the cheapest anymore you have nothing left to leverage.
Shock! Horror! Discount retailer has price-sensitive customers!
All well and good to be the lowest price on no branded product but what keeps the customer coming back? If there isn’t constant innovation from an experience or product point of view there is no reason to keep going back?
Hard to believe that this opinion has taken this person to a top job, even at K mart. The list of factors that are important and their relative ranking varies depending on many factors.
And to say that because K mart’s undies are made in the same place as Bonds and Calvin Klein they use the same fabrics and assembly protocols is just plain stupid. The man may need big undies, but he surely needs only a small hat.
When “you put them next to branded products” and make them look and act exactly like the branded products (quality excepted, in many cases), but at a much cheaper price, of course its going to work. For now.
Don’t forget Mr Bailey, your strategy really only works as long as you have those famous brands as reference points for people.
The branded and unbranded items are probably made in the same or similar factories in China in any case.
Anon, are we still talking about buying undies and microwaves? What kind of experience and product point of view are you looking for?
UNDIES – they fit, are comfortable and cheap
MICROWAVE – it heats up my food and is cheap
KMART – I can get undies and microwaves that do what I want and are cheap
Not too complicated…
I ain’t wearing no K-Mart undies I can assure you. But for someone who doesn’t care or has given up on sex, I can understand the attraction to “Alpha” undies. 🙂
Of course their private label stuff is flying off the shelves, you can’t bloody buy anything else! I went to buy a microwave the other day from K-Mart – 1 Sharp unit, hundreds of Homemaker units at half the price.
I bought the Sharp, because I was replacing a Homemaker unit which blew up after 12 mths :).
Bought one of their cheapo $50 suitcases recently, filled it to legal 23Kg – the top handle fell off at the airport on the first trip.
Brand is indeed relevant – perhaps not for the average K-Mart shopper though. Price is compelling but there’s more to it – you get what you pay for I’m afraid.
K-Mart Marketing Director works out what a price-sensitive retail customer wants – commoditised basics.
Fuck me dead.
All he needs to do now is grasp the difference between price and value and he’ll be a fully fledged marketer.
Pay money, takes choice.
hook, line, sinker
nice trolling Kmart
It’s a race to the bottom and they are leading the way….what else is he going to say.
I she wearing a Homemaker shirt and $10 K-Mart jeans in that pic? 🙂
The brand is only important to me, unless a competitive product is 5 cents cheaper
(please excuse the misquote)
What a great long term vision, I hope Bailey doesn’t get a nose bleed from the winning the race to the bottom.
Buying on price is the most simplistic consideration. What about considering the conditions that the people making the items work under, the impact on the environment, the long term damage it does for the local industries, the quality of the products, private label quality is inconsistent because they are always looking for the cheapest source. ” What you buy TODAY will determine the Australia we live in TOMORROW”
You can’t buy Bonds in Kmart anymore. Not sure who threw what toys out of whose pram there, but I suspect Bonds.
Yes, you can buy stuff cheap in Kmart (shock!) but the design is crap too. Look at Primark in the UK etc, they sell cheap, but their design is spot on. Get some decent designers in (would you really be seen dead in their $49 jeans?) and people might think again. While we’re on the topic of $49 jeans. How about a pair of $58 dollar jeans from… Levis. http://us.levi.com/product/ind.....4&
I bet I could find them cheaper if I shopped around too! Or 28 different (actually half decent) pairs for under $50 from ASOS, including free shipping, where I wouldn’t have to be wandering around in Kmart. http://www.asos.com/au/Men/Jea.....38;sort=-1
Don’t go congratulating your self too hard just yet, sunshine.
Have discovered this large organisation doesn’t assist in the online (international) purchase of Gift Cards to be also and especially delivered within Australia.
Gary Watts.
Christchurch
New Zealand