Big, bad box retailers or thoughtful local suppliers?

The October 30 issue of Brandweek had an interesting Top of Mind column from Bain & Co. partners, Darrell Rigby and Vijay Vishwanath.

In the column, the authors describe a relatively new strategy employed by large retailers known as localization. Localization is the use of sophisticated data collection and analysis to determine what consumers in local markets want.

Large box retailers like Wal-Mart and Lowes are using customer data to analyze local demands and preferences and then tailoring their store shelves at the local level to supply products based on the local area’s unique characteristics such as ethnicity, wealth and lifestyle.

Localization is an offshoot from standardization where large box retailers have offered the same products in every store nationally. Oddly enough, it was the size and power of these large stores and their ability to gather enough data from consumers over time that now allows them to be in a position to offer products that appeal to local preferences.

We can learn lessons from localization.

Brands can no longer rely on standardization of products to appeal to large, vast audiences. Not only has media fragmented to the point where customer niches are increasingly more difficult to reach while at the same time becoming smaller and smaller, but consumers demand products and services that cater to their unique preferences.

Is there really even such a thing as mass media anymore that reaches the majority of people? For years huge, national brands have been able to rely on saturating a few mass media outlets with advertising so much that simply getting a name to stick in our minds worked. Those days are over.

Offering a one-size-fits-all widget to ‘the masses’ will only lead to commoditization of your product. Once your brand has been commoditized, your selling advantage will disappear as soon as a supplier with a lower cost structure comes along.

Big, powerful brands in the future will be those that appeal to individual preferences and prove that they uniquely satisfy consumers’ wants and desires.

Strange, isn’t it, that the big, faceless retailers seem to be leading the movement?