Branding Strategy Insider

The Future Of The Sears Brand Lies in Reinvention

With 120 Sears and Kmart stores about to be shuttered, the future looks uncertain for yet another iconic US retail brand. Here’s our view on what it might take for Sears Holdings to create a brighter future.

It’s an understatement to say the retail environment has become a slush pile in the past decade. Once a dominant presence in every major mall across the US, Sears is now a relic from the past, struggling to find its way in a culture that no longer seems to care.

Same goes for Kmart – these iconic and once beloved brands (like Kodak) appear beyond transforming themselves into something that people will love again.

I remember growing up in the 60’s and shopping at Sears and Kmart with my Mother. She loved shopping in both those stores. Dad too. It seemed to me both these brands represented the idea that the good life was accessible to just about everyone everywhere. My family was no exception. My parents made all their major purchases at a Sears or Kmart store. They wouldn’t consider alternatives. I grew up with a deep belief that these stores were somehow sacred places for a thriving middle class living the American dream.

Times change, Sears and Kmart didn’t.

Now Edward Lampert and the executives at Sears Holdings find themselves in a scramble to figure out what to do with brands that have become dinosaurs from a lost world – relics from a time when things were simple and uncomplicated. Retail knowledge is not the core problem for Sears – it’s the investment banker management culture that has over time sucked the value out of these brands. Profit has been placed above serving people with experiences they care about.

Now is the time for the folks at Sears Holdings to think about transforming the brand into something worthy of its heritage. 

Marketing And The Occupy Movement Brand

The paradox of the Occupy movement is that it is good news, not bad, for brands. Occupy was begun by Adbusters, an anti-consumerism organization and magazine founded in 1989 and headquartered in Vancouver. During the Arab Spring protests this year, Adbusters felt the time was ripe for some similar agitation in the U.S., tapping into the frustration and anger simmering here just as the Arab Spring tapped into the frustration and anger simmering there. Adbusters created the #occupywallstreet hash tag and suggested a peaceful occupation of Wall Street in a July 13 blog post. This suggestion caught fire with other activist groups, culminating in the September 17 occupation of Zucotti Park in New York as well as thousands of sympathetic occupations in cities around the world.

What vexes many people about the Occupy movement is that it has not articulated a specific set of grievances or proposals. To a large extent, this is because many Occupy participants feel that a single voice hewing closely to a small number of talking points would misrepresent a movement that has gathered together people with a variety of perspectives and opinions. This is implicit in the movement’s tagline, “We are the 99%.”

Yet, this tagline has also had the effect of focusing coverage and perceptions of the movement on one message, that of income inequality. Comparing the 1 to the 99 puts inequality front and center, well above any other ideas or messages. Dylan Byers at Politico.com tracked a quintupling of mentions of this phrase in print, broadcast and Web media from the start of the occupation to the end of October.

Brand Management: The Last Kodak Moment?

Let’s pay respects to Eastman Kodak which appears to be rapidly fading into black, the victim of it’s own arrogance and the forces of creative destruction raging in our digital age. 

Once the bluest of blue chip brands, Kodak is eminently about to enter some form of bankruptcy protection. Of course, no surprise there, but as the Holiday Season draws near, I am nostalgically reminded of Kodak’s “open-me-first” dominance of the season and all the special “Kodak moments” that were the foundation of its dominant position in our culture for over a century. 

This is a dramatic ending to a brand that was once as globally recognized as Coca-Cola.

With $800 million in cash on hand and a monthly burn rate of $70 million, it’ll take less than a year for Kodak (like Polaroid) to become a history lesson for marketing MBA’s to ponder in business schools. Kodak is now frantically trying to stay afloat by selling their intellectual property. Buggy whips anyone? 

Brand Arrogance: The Threat Within

 
Consumers don’t value brands; they value the idea the brand represents to them. This idea will always be worth more than the product, or the actual bricks and mortar of the business enterprise. When marketers behave arrogantly, the value of the idea people care about is instantly diminished. And once this happens, the road to redemption is long, difficult and expensive. 

A recent example of a marketer’s arrogance towards its customers is NetFlix.

The story is classic, almost cliché. In Netflix’s case, an innovative technology quickly ramps into an innovative business model with rapid customer acceptance and advocacy, and then inexplicably breaks its trust bond with the very people who were making it great. Other brands have done this as well. New Coke comes to mind.

Of course, much of the hubris and arrogance was initiated by Netflix’s CEO, Reed Hastings.  When the decision was made to raise prices and change how customers receive value without any consideration to the value of the brand’s “reason for being” and what it represents to people, the value of the Netflix brand was instantly diminished. Not even a gracious mea culpa from the CEO or promotional incentives will undo the damage done.

The Netflix brand paid an incalculable and heavy price.

The lesson for brand managers is clear:

For President Obama, A lesson In Brand Building

The campaign that won Barack Obama the Presidency is often likened to a 'master class' in brand and marketing strategy.  There were logos, slogans, ads, and emotions, all in service of an overarching promise of hope and change.  But lately, Obama's brand has taken a major hit.  From his detractors, we hear familiar accusations of socialism and choruses of "I told you so."  And from his supporters, we hear pangs of regret and disappointment.  Somehow, a focused campaign that inspired millions has given birth to a brand that is unclear, unpopular, and ineffective. 

Just as the best brands in the world gain inspiration from categories far removed from their own (Method co-founder Eric Ryan visits furniture trade shows in Paris and Tokyo for design inspiration), President Obama should step outside the boundaries of politics and look to businesses to understand how to resuscitate his brand.

In this weekend's New York Times, neuroscientist and political consultant Drew Westen diagnoses several potential causes of Obama's decline.  One shift Westen points out is the President’s lack of passionate storytelling.  Instead of using the universal language of story to simplify complex issues and reframe endless political bickering into clear moral and ethical narratives, the President continues to speak in dry, character-less platitudes.  Here, Obama can learn from brands as diverse as Jack Daniels and Chanel.  These brands were, from the start, grounded in rich myths and stories that link intangible entities to tangible eras, people, and places, be they rebels in the deep South or fashionistas in turn-of-the-century Paris.  Through stories, people - be they 'consumers' or 'voters' - are able to connect to abstract concepts, but also to other people with whom the stories resonate.  From shared stories spring tight-knit communities (think Harley Davidson), but as this Presidency has shown us, story-less leadership can just as quickly dilute and disintegrate the inspired communities that brands (and nations) need to survive.

Brand Loyalty And The Fall Of Borders Books

It's been said that a good book tells the truth about its hero and a bad book tells the truth about its author. But the liquidation of a 40 year-old bookstore chain ultimately tells the truth about the brand and how it was managed.

Last Friday Borders bookstores began liquidation sales at their remaining 399 retail stores. Former Borders VP and Chief Merchandising Officer and current interim CEO, Mike Edwards, sent out an email to Borders Rewards customers, which was an interesting spin on events. But to paraphrase Oscar Wilde, a thing is not necessarily true because a brand dies for it, so here are some portions of his letter and some of our observations from a loyalty and engagement perspective.

"I want to personally thank you for your loyalty and support. . . "

Observation: What loyalty? It's been more than half a decade since Borders declared an actual profit, and has lost a billion + dollars since. That's occasional shopping, not the loyalty that drives profitability.

"You might be asking yourself what happened?"

Observation: Not really. Borders was egregiously bad at identifying consumer product and lifestyle trends, introducing candles and stationary, CDs and DVDs at a time when consumers were moving in other directions. The chain was late to the e-book movement, but more about that later. We don't know what they relied upon for insights, but we're sure they weren't real loyalty measures. Actual loyalty measures identify consumer behavior trends 12 to 18 months before they show - or in the case of Borders -- do not show up at the register.

How Brand Marketing Is Destroying J&J

Johnson & Johnson is in deep trouble.  As explained in a recent article in the New York Times, the company has gotten caught distributing medicine that’s gotten moldy, has bits of metal in it, or was made in facilities that government inspectors found to be unsanitary.  They’ve been forced to recall so many products that some consumers are finding it difficult to locate J&J products.

If they’re still looking for them, that is.  There’s been a steady erosion of J&J’s market share in favor of generics, partly because people no longer believe that a product with the J&J label on it (or one of its 92 product brands) is of higher quality. That’s very bad news for a company whose market strategy assumes that people will pay more for a branded product.

J&J’s management seems helpless to fix the company’s manufacturing problems.  But that’s not surprising, because J&J is a perfect example of a company where top management didn’t just drink the brand marketing kool-aid, but poured it down their gullets, with a kool-aid chaser.

Silencing The Critics: 10 Years Of Apple Retail Success

The last thing we need is another sermon on Apple’s success.  It is the most valuable brand in the world according to WPP’s BrandZ ranking, climbed 21 spots to #35 on the Fortune 500, and has now usurped Microsoft on every conceivable metric of financial performance.  But on the 10-year anniversary of the opening of Apple’s first two stores in Tysons Corner, Virginia and Glendale, California, I thought it would be worthwhile to explore the often-overlooked role of Apple’s pioneering retail experience in the brand’s resurgence and sustained momentum.

Legend has it that at the turn of the century, Steve Jobs hired McKinsey & Company – knowing full well they’d tell him retail stores were a terrible idea – just so he could prove them wrong.  Whether or not it was intentional, he did.  Apple now operates 324 stores in 11 countries, and in the 2010 holiday quarter alone, retail stores brought in 75 million visitors, nearly $4 billion in sales, and a $1 billion retail margin.  Apple’s stores consistently account for 15-20% of the company’s total revenue, in effect writing the business case for their own existence.

Yet as marketers we know that more often than not, it is a great brand that lies at the core of a thriving business, and so it is also important to understand Apple’s stores from a brand-building perspective.

Coffee Category Sees Evolution And Rivalry

A word that comes up fairly regularly when we are talking with brands is “evolution,” as it is an inescapable reality of doing business with changing consumers at the other end of the transaction.

Brands must continually examine how to stay relevant and grow if they are to stay profitable, or even be around to complain about profits. In a recent Time Magazine article on the changing role of Ronald McDonald the clown, this point was emphasized, symbolic of the change in a brand once centered on children that has fundamentally widened its focus. As Ronald is given an office in the brand basement, McDonald’s continues its march into a more mature market, one not all that in love with clowns.

McDonald’s entry into the coffee category has caught serious traction with adults. Though late to the coffee table, an incredible distribution network and getting to a good strategy has to be giving Starbuck’s the jitters, as the McCafes sent revenue growth records in six out of the past seven quarters to a high of $24 billion in sales last year.

However, Starbucks same store sales are up 7% for end of fiscal year 2010, as it continues its bounce back from a tough 2009 when the chain was down 6%. As Starbucks CEO Howard Schultz said to the brand’s employees in a year-end message, “We must continue to earn our success every day.”

Brand Disasters of 2010

We are unfailing in our belief that brands should be the beneficiaries of their branding and marketing efforts, and see positive consumer behavior in the marketplace: Sales; Profitability - things like that.

Happily, we have metrics that provide a consumer's eye view of the categories in which brands compete and because those metrics are emotionally-based they are predictive of what will happen, good or bad, in the months ahead.

When it came to 2010's brand and marketing disasters, we reviewed the balance sheet and offer the following: 

1. BP

The brand fell from 1st to 7th (of 7) on the Brand Keys Customer Loyalty Index when the well exploded. UK's YouGov polls indicated no negative affects to the brand, while the financials suggest the brand has lost all of its value in one year. 

2. Toyota

The recalls - and attendant negative PR allegations that top execs knew, but failed to do anything - and liability suits resulted in a loss of nearly one quarter of the brand's value. 

3. Johnson & Johnson

Recalls can kill a brand, especially when you're talking about medicine for infants and children, having to shut down plants, and stop distribution of your biggest names. Harder to swallow is a brand hit of nearly 30%.