Best Buy Develops Private Brands

The Wall Street Journal ran an article this week about Best Buy’s development of two “in-house” electronics brands (Dynex and Insignia). Retail Wire panelists were invited to weigh in on this strategy:

The success of Insignia and Dynex depends on a few key issues, but has a lot of opportunity for Best Buy given its overall credibility in the consumer electronics market:

1. Are the brands being used in categories where they make sense? In a price-competitive, “commodity” business like flat-screen TV’s, there is nothing wrong with these brand names…any more than with names like Vizio or the countless “no-name” brands available at competitors like Walmart and Costco. (Many consumers understand that even the “name brands” are being cranked out in factories doing contract work anyway.) The brands also make sense in computer-peripheral categories like wireless routers, printers, etc…but probably not in desktops and laptops.

2. Do the brands as positioned and priced truly represent a value to the consumer? It’s one thing to develop exclusive brands as a “margin play,” it’s another thing entirely to make sure that the customer is getting national-brand quality at a competitive price.

3. Is Best Buy committed to marketing of these brands? I’m not talking about ad budgets for national media, but instead ensuring that sales associates are trained and incentivized, that the brands gain exposure (and hopefully positive customer reviews) on Best Buy’s website, and that the store uses visual merchandising to highlight the brands.

The Kenmore and Craftsman parallel is a good one: If Best Buy can successfully pull this off, they will have created a long-term legacy of brand equity.

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