Branded outlets vs. Multi‐brand Stores

Branded outlets and Multi brand stores are just not about the preference of the company. There is a lot more to it like availability of financial resources, the customers, the brand itself and of course the overall marketing strategy adopted by the company among others. The authors have identified a few parameters and compared the two formats on these parameters.

Financial Resources: Multi brand store format is always a relatively cheaper and a less risky option than the branded outlet. This is because the owner of the store is able to leverage his costs among many brands, thus reducing the overall risk on his investments. The break even is achieved faster in multi brand stores due to more public coming to store.

Brand: The single branded outlets contribute dedicatedly to the perceived value; the exclusivity factor helps a premium brand command a separate image in the minds of the consumer. The brand image can be reinforced easily in a branded outlet with the outlet complimenting the brand personality, communicating brand identity to the customer. This also helps brand create strong position in the minds of the consumer.

On the other hand, in a multi-brand store there are a lot of brands, the exclusivity of the brand is lost in such a scenario. However, this is an ideal condition for me-too products and value-for-money brands as consumer can compare the products before making a final decision. Multi brand store can come up with its own private labels, thus cannibalizing the brands.

Consumer: A consumer usually has a few brands in his/her consideration set when he goes to shopping. A multi-brand store gives the customer an opportunity to compare the brands in the consideration set on the parameters important for him/her. This helps in making better choices, as a customer may perceive all the brands in his consideration set to be at par in terms of the quality and performance, thus the decision making criteria is value.

On the other hand, a single brand store may not help a consumer compare different brands. But at the same time, consumer will not defect to other brands. Brands which follow imagery approach to differentiate their product from others may benefit from single brand store. Also, single brand store helps a company to cross sell and up sell.

Experience: When the products do not have much difference in their physical attributes, the services associated with the product helps in differentiating the product. A company may be able to give a better experience in a single brand store than in a multi brand store. It makes it easy for the consumer to take decisions. The experience in the store helps in creating brand association with the customer which contributes to the brand equity. The company can get personal feedback from the customer who comes to store, also a relationship with the customer helps in increasing lifetime value of the customer to the company.

On the other hand, in a multi brand store, personal attention does not contribute to the brand, in fact it adds to the equity of the store. Also, it is very difficult to give the same experience due to large number of customers in the store at a given time.

Communication and Promotion: Communicating to customer and brand promotion in a single brand store is relatively cheap option for the brand. However, it is more effective in multi store brand. With multiple brands, timely communication and promotion helps a brand to differentiate itself, thus gaining more number of trails. However in a single brand store the return may be less than other format.

The authors feel that there is no one best format, the companies follow combination of both the formats, Levi’s jeans came up with a cheap range of product line under a new brand for Wal-Mart, after it realized that it is losing on a big market. Therefore, the premium products are still catered to in single brand store, whereas cheap product is sold in the multi brand outlets. This approach helps a company to maintain its exclusive position while successfully stretching down the product line.

In India, Tier II and Tier III cities may not still afford single brand stores catering high cost, high value products, in these cases multi branded stores will be success. However, in Tier I and Tier II cities, both formats are effective catering to two different segments of consumers.

Special Mention: Sippu Rout co authored this blog.