Brand repositioning: Colorshop case

by: Adriana Kalekin and Miriam Simcovich*

The main characteristic of the Argentine paint market is the strong presence of the paint shop channel -stores specializing in decorative paints- within the global industry (see graph 1). The strong development of this channel and the clear specialization of these points of sale, transform the painting industry into the medium chosen by the private and professional public to make their purchases.

Within this channel there is an important participation of retail chains that, with a modern retail development, are increasing their participation in it.

Since the beginning of the 80's the chains of paintings Del Centro and Prestigio were leading the way in the development of the paint channel, which was later joined by the Rex chain in the 90's. Towards the end of that decade and with the consolidation of the first large surface in the country, Easy, manufacturing companies began to see the need to develop the channel by supporting their traditional customers, who began to relegate their position in the hands of the development of chains and large supermarkets.

The Argentine company Sinteplast was the pioneer among the factories in implementing the franchise concept for its customers through the Colorshop brand. Subsequently, the Alba (ICI) brands followed suit, acquiring Pinturerías del Centro, and Sherwin Williams, developing the concept of Sherwin.com and its Concept Stores. In this way, the three most important companies in Argentina have, with different formats, direct participation in the channel.

History
Sinteplast is an Argentine family business that leads, together with large international corporations, the local market. It has factories in the province of San Luis and in Buenos Aires, the latter, a model plant inaugurated two years ago, with an area of 110,000 meters² and an installed capacity of 80 million liters per year.

Towards the end of the 90's the company began to develop its own store brand, Colorshop, with the aim of turning traditional paint stores into a modern retail format with self-service. This style of business was born as a clear partnership between factory and customer, which today has taken the form of a franchise.

At that time the projection for traditional paint shops-hardware stores was not the best, the growth of chains and large stores increasingly concentrated the sale of paint in the retail channel, making traditional stores lose share that could not or did not know how to generate a change.

This situation represented an opportunity for Sinteplast: the possibility of increasing the link with its traditional customers through the development of the Colorshop brand. The main objective of this development was to give the client tools to compete in the current scenario.

* Give the traditional channel the possibility to compete in the current retail market.
* Identify and create value with the Colorshop brand.
* Give the chain the support of Sinteplast.
* Provide the consumer and the professional with the possibility of accessing the widest line of products on the market
* Achieve a strong bond with associated customers.

Developing strategies
The first step for the implementation of the project was to generate the interest of customers to transform their traditional premises, with their own brand, into Colorshop branches. From the change that the most important customers were giving and a significant investment in communication, the brand grew significantly to reach the current 138 points of sale throughout the country.

Why the change of the brand?
The head of the Colorshop business at Sinteplast, Ezequiel Reilly, commented that the brand has been in the market for more than ten years and a comprehensive adjustment was necessary, both of its isologo and its applications, fundamentally with a focus on retail and communication. "For some time we began to notice that the brand did not represent the progress that the chain had had, when we launched the Colorshop brand project, it was based on the strength of the Sinteplast brand and that of its flagship product Recuplast; over time, the Colorshop brand took on an important role as a retail brand and we understood that it was the ideal time to make the change."

To articulate it, the company carried out internal developments, hired services from architecture companies and since March 2009 works together with Venmark, a consultant specialized in the painting market, to strengthen the issue of image, communication and development of points of sale.

Communication: vital aspects
One of the main aspects that was taken care of in this new stage was to give the brand a new personality, which speaks as a retail company that provides solutions for the activity of painting. That Colorshop becomes a reference where the consumer can be advised, informed, buy and have differential services. In addition to being able to find in a single space the greatest variety of paints, because one of the characteristics of Sinteplast is to have a wide line of architectural, automotive and industrial paint, and a wide line of accessories.

As for promotions, Colorshop has made agreements with the most important banks in the country to grant special benefits through purchases with credit cards of these entities.

Looking to the future
Reilly commented that the objectives set for the future include the reconversion of the current points of sale, and estimates to finish this process in June 2010, with growth in points of sale. In that sense, he pointed out that 2009 will end with 13 new openings, which are expected to 22 new points of sale for 2010, aiming to reach 200 points by the end of 2012. "We understand that the development of the brand image and the transformation of the point of sale represent important actions, but they are not the only actions planned," says Reilly.

In this regard, the director of Venmark, Claudio Fazzone, commented that work is currently being done, and towards the future, on the development of marketing actions that generate value to the chain: "Having a modern and unified brand image that represents a leading chain like Colorshop is fundamental, but that alone is not enough to be able to compete in the current market". Reilly agrees with the assessment and adds that "the objectives set are ambitious and cover a wide range of actions that make it possible to retain customers / franchisees, improve the level of attention and knowledge of the products of the sellers, and achieve the recognition and preference of the final customers".

Colorshop Business Numbers
Start of Operations: Year 2001
Premises at the end of 2008: 125
Planned openings 2009: 13
Total estimated premises 2009 (in Argentina): 138
Point of sale projections (in Argentina):
2010: 160
2011:  180
2012:  200
Business Format: Franchise

Billing estimate (from the chain, to the public):
Estimated end of 2009: US$ 30 million.
Estimated growth: 2009 vs. 2008: 8%
Estimated participation of the chain: 9% nationwide.
Current Coverage
Argentina: Presence throughout the country.
International: Presence in Uruguay (9 points of sale) and Bolivia (8 points of sale).

Developing the retail channel
The Argentine consultancy, Venmark, which has been collaborating with Sinteplast in the change of Colorshop, has extensive experience in the development of marketing actions in the paint market. Its director, Claudio Fazzone, led the successful repositioning of the Pinturerías Prestigio chain in Argentina and during 2007 and 2008 developed the retail channel for Industrias Vencedor, a leading company in Peru, through the launch of the Brands Color Centro and Red Color.

Fazzone comments that there are many opportunities to develop new businesses in Latin America, "The retail format of a paint specialist is the right channel to develop marketing actions, which in other types of channel is difficult", and points out that "in this sense the strategies to be implemented in these points of sale have to aim to improve the company-customer relationship through the development of actions that constantly generate value for both parties." He also adds that "if we see how the way of selling and providing services, the consumer, new products and technology have evolved, we will understand that we cannot delay the changes in the channel if we aspire to grow in the market."

* [email protected]
www.venmark.com.