Posted: August 25, 2010
We all like a bargain and, as always when the squeeze is on, there has been a surge in the fortunes of retailers who can pander to that need over the last few years. TK Maxx built their UK reputation on the mountains of liquidated stock, over-orders and manufacturers over-production that were accumulating across Europe, but these days we are all more frugal and surplus stock is a rare sight. Walk around you local TK Maxx these days and you’ll see stuff that is clearly straight out of the factory and looking suspiciously like re-specd versions of mainstream branded products. It’s a bit of a let-down by the retailer, but what is this doing for the brands?
It’s understandable that, faced with a shortage of supply in certain categories, retailers like TK Maxx would go looking for alternative sources to support their “Designer labels for less” claim, but for me, at least in some departments, they are failing. They’ve never been too strong in the footwear department for instance, but, I guess, having staked out their shoe pitch they probably feel its incumbant on them to protect their claim. Unfortunately that seems to mean introducing minority brands or “brands” that nobody has heard of (because they are just labels that manufacturers slap on to inferior product to help them hood-wink the odd independent retailer into a purchase and not real consumer brands) and it seems to me, even ordering production runs in inferior materials to get the price down. This might keep their shoe racks full, but it’s not even close to where TK Maxx have in the past tried to persuade me they stood. It won’t be long before this development is acknowledged by enough consumers to represent a concern to the people running the business. Somebody said to me only the other day that TK Maxx was a con, but this practice won’t only damage their business, it will reflect on the brands that have stooped to re-engineering their products to meet the retailer’s demands and even those legitimate brands that have constituted the genuine bargains that TK Maxx was built on.
Of course, there are a lot of brands with equity earned in the past that hasn’t been leveraged in recent years, often because the organisations that own them have abandoned them or shut up shop themselves. SportsDirect is a retailer that has been quick to realise this and have built a very successful business on rebadging inferior Asian-made sportswear and equipment with famous labels from the past like Lonsdale, Kangol, Dunlop and Slazenger. Don’t get me wrong, I’m all in favor of people being able to buy a pair of sports shorts for £5, but by sewing a Slazenger label onto them Sports Direct have surely done irreparable damage to this old brand. Before long, consumers who have been reassured by the label will realise that all they have is a pair of shorts from a Vietnamese sweat shop and henceforth that’s the association Slazenger will have with everybody.
When its a case of retailers buying from independent manufacturers I expect they’ll excuse the practice with the claim that it’s at least keeping the a consenting manufacturer in business and I’m sure there are many willing victims, but when the retailer is buying the brands with the sole purpose of abusing them, it raises a whole new bunch of issues. Sports Direct own Dunlop in the UK and you can buy Dunlop squash rackets for £30 in their stores that look very much like those used by the world’s top players who they sponsor. However, the shop versions are just mass-produced rackets from an Asian factory and the similarity to the pro gear ends with the badge, as anybody gullible enough to buy one will soon discover.
It’s a neat route to a quick-buck for Sports Direct, but in the long-term, what they are doing is burning brands – squeezing the life out of them, discarding them and moving on to their nerxt victim. I guess they have concluded that there are enough old brands with decent equity around to earn their founders the retirement they have their hearts set on and they’ll no doubt go on buying brands and squeezing the life out of them all the way to Dorset’s Sandbanks real estate, but I’m not so sure and anyway, I hate waste as much as I despise abuse and this practice smacks of large helpings of both.
Posted: August 18, 2010
Developing a business has never been easy, but until relatively recently you could “get by” while being half-arsed. The trouble with that reality is that it has bred a generation of managers who aren’t that creative when it comes to taking on a real challenge.
These days, only those on top of their game will survive and you simply have to be innovatve in opening up and leveraging opportunities. Business is a battle so maybe we should be taking lessons from some of the old generals. For example, a strategist once told me that only three percent of battles in history have ever been won with a head-on attack. Being a strategist he was probably making that fact up, but its an unbeliveable thought. Be creative in your strategy and you could out flank your competition. In the Czech mobile market the third operator, who wasn’t given a hope in a population of just 12million people, became the world’s most successful third operator and the fastest growing mobile operator ever, by taking a different approach. While everyone else was building networks from the population centres out into the rural areas Oskar started in remote spots and headed the other way, becoming “liberators of the common people” who didn’t have fixed lines worth a fig and badly wanted to gain access to the rest of the world! Oskar’s success was well documented.
Think about it. Most of our best new businesses, brands and products are successful because they are different. Anything “me too” is usually consigned to obscurity and probably ridicule forever. As I keep telling my audiences – You are only as good as your NEXT big idea, and being different is a large ingredient in a successful formula!
Today I’ve been talking about the benefit that communities of interest and strategic partnerships can bring to a business with great ideas and limited resource. I’ve taken particular pleasure over the years in helping business form and leverage relationships like these. There’s no better way for an entrepreneurial concern to make it to the big time than by piggy-backing someone else’s sales network or manufacturing capability, but look for your own solutions, be creative! There are many ways to forge and benefit from links to other business and however small you are, there’s a likelihood that you have skills, expertise or other resources that you can barter. The entrepreneurialism of a small business is often a sttrength in these situations and an SME can easily find itself in the driving seat of a partnership with a cotrporate. In fact, I advise all my clients to devise a strategy for seeking out partners and forging alliances. If you approach another organisation with a partnership proposal you are by that very fact already controlling the agenda. Keep it that way.
Throughout history, conquering armies have created alliances that swelled their numbers and added to their resources. Your partners don’t even have to like the idea of sharing with you, but they’ll warm to the notion of being on the winning side.
Posted: August 17, 2010
The pundit that I heard made a very interesting point. Well, I found it interesting because it was a reality that I find myself highlighting all the time. She said that printed guides would always be relevent because they do something that an on-line equivalent could never do. Her point was that a traveller sitting on a train with a Lonely Planet guide (for example) instantly becomes a member of a community of Lonely Planet travellers. The guide itself is a badge of belonging in a way that a computer or even a hand-held device could never be and in an alien environment, however fascinating and enjoyable that might be, the reassurance of belonging is even more attractive.
As someone who has travelled a bit I have first-hand experience of this. Just carrying a guide-book in an exotic place is a license for other travellers to strike up a conversation. Even the different publishers of the guides represent sub-communities – you can find that you become either a Lonely Planet or a Rough Guide member according to the guide-book that you carry and I guess there is even a hierarchy.
I’ve recently been involved in a debate over whether being a member of a LinkedIn group is an excuse for other members, whatever their reason for belonging, to send you unsolicited e-mail. This is an off-line equivalent. I even had a friend who, years ago, followed a girl who took his eye into a bookshop on Charing Cross Road (They’d call it stalking these days!). She made for the travel section and after a little browsing bought a guide to Thailand. He did the same and then followed her to the cash desk where he engineered one of those “fancy that” moments. To cut a long story short, they ended up going to Thailand together, although, as many partners who go on holiday together, they came back with a mutual loathing! Personally I have never been put-out by the unsolicited approaches of strange travellers on public transport, although I could imagine, in certain circumstances that I might be, but I am annoyed by e-mail spammers disguised as fellow network members. Now I think about it a woman on the London to Warwick train a few months ago struck up a conversation with me on the basis of a Lee Child book I was reading. She presented herself as a fellow Jack Reacher fan, which seems to have become another brand community in recent years. I suppose there could me a moral there – if you want to date buy a book!
Back to the guide books though, the badge thing definitely doesn’t only work while you are travelling. How often have you turned up at someone’s home and found a bookshelf full of matching guidebooks? OK, so maybe its just the company I keep. We’ve also seen the guide-book brands being leveraged to create TV travel programmes, luggage and travel accessories. Yes, every brand is a community and this guide-book thing has taken my interest. I must add it to my presentations on brand development in the future, as an example of a brand type, alongside religion, football teams and pop groups.
We all know that music influences our actions. There is endless research on the way music is used in sports psychology and there can’t be any fitness centres of gyms where music isn’t a constant feature. There are also reams of papers by retailers revealing the impact that in-store radio has had on their business.
Retailers are old hands at this and apart from the in-store radio and TV of the larger multiples, retailers of all types and sizes have used music, in it’s simplest form, for many years to create atmosphere that entices customers to a store and creates an atmosphere where shoppers will linger longer, and we all know the longer people stay in a store the more they spend.
However, anybody who has worked in the in-store music arena will also be familiar with the complaints of shop workers who have to listen to it for the entire day, not just a few minutes that a customer spends in a store. This is where the error of buying into cheap in-store music. with its loops, repeats and sound-alike bands, is highlighted, but it’s also an indicator of how music can be applied in other situations to`improve employee performance.
Because I have spent so many years advising retailers around the world I’m at home with the role of in-store music, ratio and TV, but I’ve also worked with businesses in corporate TV and spent time in offices like that of Sky TV in London, where music is a constant factor of office life so I have first-hand experience of the motivating power of workplace music. Like anything else, there’s good and bad in this field and while the muzac that so many stores and hotels opt for can ruin a business by frightening customers away and making an employees day a real drag, great music can make retail tills ring and boost energy levels. However, this music thing isn’t as simple as a lot of people think. Anybody who really knows the subject will appreciate the psychology that goes into matching music types to audiences, moods and brand character.
In retailing there are both customer and employee profiles to consider, regional differences, business types and the variety of day-part patterns to be accommodated in any music strategy. Fail to do this and your workplace music could literally be doing more harm than good. There are three ways in which workplace broadcasting of one type or another can increase the profitability of a business.
In its simplest form music will create or enhance an atmosphere that strengthens a brand, provides an inviting atmosphere or increases productivity by motivating staff. Get it right and even om this most basic level any business can achieve all three.
On the next level up, music, even by itself, can be used to prompt retail sales. A UK supermarket played Spanish music in its wine department and significantly increased sales of Spanish wine. However, with announcements or commercials that effect can be massively increased. Another specialist UK retailer I know of achieved a 600% uplift in sales of one line in tests.
On the third level, in-store radio is already being used by many businesses not only to motivate employees, but to train them with product information, procedural updates and training modules transmitted out of retail opening or during office hours.
No business can afford to ignore or take this music thing lightly. It’s a legitimate business tool and increasingly scientific in its approach. You are unlikely to get it right without help. On the most basic level there are business out there playing radios, CDs and MP3s, oblivious to the fact that to do so in the UK requires licenses that costs upwards of £350 every year. Avoidance could cost a whole lot more – I saw a post on a forum last week by a Chinese restaurant owner who was facing a bill for thousands of pounds! My advice, don’t risk it and don’t try to avoid the fees by using non-licensed music – everyone hates it so it won’t bring any benefits. Bring in experts instead and profit from a well, thought out and executed workplace music strategy.