According to Steve Gibson, there are two types of merchants in the world: buyers and sellers. Sellers, he says, need to have a tough skin, a narrow focus with a big pitch, and know that a buyer might take all of that hard work and toss it into the trash. Buyers, on the other hand, work broadly to make decisions for the company and customer by listening to market behaviour and considering the needs of the customer. As the vice president of global sourcing, merchandising, and private brands at The Source, he faces buying and selling every day. But he’s leveraged his skills to make some major restructuring decisions for the electronics retailer, all to better serve the customer.
“You need to separate yourself from what you like and think is cool with what the customer wants and will purchase,” says Gibson. “If I absolutely fall in love with a product, but I know the customer is not going to buy it, then it’s pointless for me to stock it in the stores.”
Gibson has always loved having something tangible to show for his work, and in his first couple years at The Source, he rebuilt the entire department. He initially noticed that some people were in positions that they weren’t qualified for or were unable to adapt.
It was a tough process, but Gibson made some much-needed personnel swaps and divested noncore functions. One such function was an in-house customs brokerage team, which cost a lot to operate. Today, the company outsources that function for a fraction of the cost. “It’s one less thing we have to worry about,” says Gibson. “It’s important to keep your focus on your core activities. If it’s a noncore function and doesn’t differentiate you from your competitors, ask yourself if it’s really necessary to keep in-house.”
“You need to separate yourself from what you like and think is cool with what the customer wants and will purchase.”
Once he reshaped the department, Gibson turned to reshaping The Source’s product line. Gibson came across some speakers in 2014 that he had never seen in Canada before. The speakers have jets of water lit by colored LEDs, and when the listener plays music, the water bounces to the beat. The product intrigued him so much that he wanted to introduce it to the Canadian market—so he got his team to develop it. Before Gibson knew it, the product was flying off the shelves and the company has since gone through hundreds of thousands of the speakers. “It’s just one of those goofy items that you come across as an idea, you put it together, and boom! It worked brilliantly,” says Gibson.
With the major success of the water speaker, Gibson was tasked with rebuilding The Source’s private brand. The initiative started back when Radio Shack owned the company. Back then, The Source only sold private brands, which wasn’t a sustainable strategy because, according to Gibson, customers are brand motivated. “You need to strike a balance and offer the customer a choice,” he says.
But Gibson soon found that rebuilding a private brand comes with its own set of challenges. When he started with the company, The Source had two private brands that consisted of products that left a lot to be desired. The company also had quality issues and a high rate of product return. On top of all of that, its positioning was skewed: one brand was meant for inexpensive price points, while the other was meant as more high-end. Neither brand proved stable. At a marketing level, the two brands weren’t developed with distinct imagery.
In the end, Gibson and The Source felt they could reinvigorate one of the brands and let the other go. Gibson used an opening price point brand across most commodities and developed some niche brands in specific categories. Take The Source’s headphone brand, HeadRush. Gibson introduced opening price point earbuds and headphones for $9.99. Today, the brand has such a high acceptance rate, that the company’s launching $99 earbuds in its stores in 2016. “If you would have told me two years ago that we’d be launching $99 earbuds, I would have laughed, but it’s just been so successful for us that we’re able to migrate into those higher price points,” says Gibson.
Private Brands, We’re Building You
When it comes to building brands, Gibson has four key tips for success:
• Provide quality—and don’t cut corners at the expense of quality
• Always ask what the customer wants—“Because doing anything outside that is pointless”
• Ask the customer why they want the product and how they feel about it or the brand
• Consider price positioning and value—How does the above relate to an affordable price point that can also make a profit?
Ultimately, it all circles back to the customer’s wants and needs, Gibson says, and the results speak for themselves. By focusing on price points, quality, and customer needs, Gibson improved the private brand blend using the brand sales divided by the total company sales. The higher that percentage climbs, the more successful Gibson considers the private brand program. Not all customers want stripped-down versions of a product, and they’d rather pay a little more for all the features, so Gibson has had to keep that in mind. He also values the feedback he gets from the stores and customers. Negative feedback fosters constructive changes. Positive feedback equates to validation.
In 2014, the company got further validation by receiving the Silver Vertex Award for packaging. It was a very powerful morale booster for everyone involved. The competition was open to brands that recently had a packaging redesign within the last twelve months, and The Source just went through that with its second generation of HeadRush. It’s just one way that helped the company look to its future.
“I like to be involved in a project from start to finish,” says Gibson. His future holds launching a new headphone program and getting The Source’s private brand products into noncompetitor establishments, such as drugstores. His end goal is to elevate the brand and evolve alongside technology.