The Houston Business Journal has a commentary/editorial in which it says that “the closure of 15 Randalls stores was the culmination of a slow descent of one of Houston's most cherished brands,” but that the problems are not “the result of pressure from Wal-Mart…nor H-E-B, nor Kroger.” The Journal says that “it was the result of mismanagement of the Randalls brand” by Safeway, which bought Randalls in 1998.
The Journal says that Randalls has seen its market share cut in half because 1) the Randalls shopping experience has become more homogenous and less differentiated; 2) its popular President’s Choice private label was replaced by the less distinctive Safeway private label; 3) Safeway never put a premium on innovation, which was a hallmark of the Randalls approach; 4) lost its personality, which used to be personified by Randall Onstead, son of the company founder; and 5) depended on price as a point of difference, which was an unsupportable approach and flew in the face of customer preferences – Randalls shoppers actually were willing to pay more for better products and a better experience.
“To sum up,” the Journal writes, “effective branding is a constant process that doesn't produce immediate results. It is for visionary companies who want to build long-term value. By the same token, ineffective branding erodes customer loyalty -- and ultimately revenue -- over the long run.
“The mis-marketing of Houston's once-premier grocery chain demonstrates that consumers wouldn't pay a premium for a Safeway in Randalls clothing.”
The Journal says that Randalls has seen its market share cut in half because 1) the Randalls shopping experience has become more homogenous and less differentiated; 2) its popular President’s Choice private label was replaced by the less distinctive Safeway private label; 3) Safeway never put a premium on innovation, which was a hallmark of the Randalls approach; 4) lost its personality, which used to be personified by Randall Onstead, son of the company founder; and 5) depended on price as a point of difference, which was an unsupportable approach and flew in the face of customer preferences – Randalls shoppers actually were willing to pay more for better products and a better experience.
“To sum up,” the Journal writes, “effective branding is a constant process that doesn't produce immediate results. It is for visionary companies who want to build long-term value. By the same token, ineffective branding erodes customer loyalty -- and ultimately revenue -- over the long run.
“The mis-marketing of Houston's once-premier grocery chain demonstrates that consumers wouldn't pay a premium for a Safeway in Randalls clothing.”
- KC's View:
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Let’s forget about Safeway for a minute.
Look at those five reasons for Randalls’ decline as listed by the Journal. Then think about many or even most of the supermarket chains operating in this country.
How many are guilty of the same sorts of mistakes and missteps?
Think about it.
A homogenous rather than differentiated shopping experience.
Private label that doesn’t build brand equity.
A lack of innovation. (Every company should have a team of people charged with figuring out how to put it out of business…and then using those conclusions to revolutionize the company structure and shopping experience. But few do.)
Lack of personality.
An unsupportable focus on price.
These aren’t Safeway problems. (In fact, you could argue that with its new focus on Lifestyle stores and health/nutrition marketing, Safeway is trying to change its stripes.)
These are the problems of an industry that is sometimes come perilously close to irrelevance.
