Lessons from the Big Retailer Collapse
Imagine you’re a part of a meeting that, unfortunately like so many, is playing out across America. As you take your seat at the table in the board room of one of the largest retailers, the feeling of dread hangs like a heavy cloud. The silence is deafening. The challenge today is to decide how many stores you’re going to scuttle to remain financially afloat, at least for a little while longer.
In between the hand-wringing and the shaking heads in disbelief that something so catastrophic like this could happen, a few ideas are tossed about. But it’s hard to turn a big ship around. The creative engines of change turn slowly and so even if there was a definitive answer as to what was plaguing your company, would it be too late? So, it’s on to the task at hand – the decision to close 15% of your retail outlets.
What has happened to America’s biggest retailers? How, within less than a short decade, did they go from famous brands to falling stars?
It Doesn’t Matter What Happened to Big Retail. This is About to Hit You.
Now, in case you’re thinking this is only about big retail markets, it’s not. This is about you and the lessons we all can learn from the fallen giants. Consider just some of the facts which, to date, have only plagued the big retailers but which will – within a few years – affect almost all businesses, whether B2C or B2B.
- Millennials are now the biggest buying group. Contrary to the stereotype, they are a growing power. They are in the workforce, making money and making buying decisions. Unlike their parents, they have kicked the big brands to the curb in search of something that speaks to their generation. They don’t mind paying a bit more for their purchases. In fact, it is somewhat a badge of honor if they go against big names no matter the cost.
- To date, the millennial impact has only changed the fortunes of the big retailers because that is where millennials are in life; buying clothes, turning to neighborhood shops instead of malls and remaining steadfastly loyal to new, smaller brands that can match their likes. But look around at that imaginary board room once again. Within a few years most of the older faces will be replaced by millennials who bring to the table their thoughts and preferences. Those millennials that are changing the face of malls will become buyers in all sorts of industries. They will have seats of power. Are you ready for the change they’ll bring about?
- And then there’s the online phenomenon. Blah, blah, blah…it’s been blamed before for the downfall of the big box retailers because online shopping can fill a need for convenience, selection and time savings. But that’s only part of the story.
Mistake #1: Believing the Talking Heads Whose Job is to Simply Make News – Sorry, the downfall of retail can’t fully be blamed on online shopping. The numbers don’t add up. Do your own analysis when confronted with storms.
Mistake #2: Coming up With an Ill-Conceived Plan Out of Desperation – The “buy online…ship to the store” model that retailers think is going to save their tails is one of the most expensive exploits seen so far. Don’t act out of last minute desperation.
So, question: Why is it that the likes of Amazon are racing in while Hollister, American Eagle, Aeropostale and others are dropping out? Why is it that Amazon’s wizards behind the curtain think it’s a good idea to test the waters of brick and mortar retail locations?
Look at the forecast for the perfect storm on your horizon.
You have a new buyer coming up. That new buyer will be the purchaser of whatever you are selling within a few years. Those new decision makers will be as fiercely loyal to brands when they’re making larger scale B2B or B2C purchases as they are now with their shirts, jeans and coffee shops. (That will potentially be good for you if they like your brand.) Amazon knows that. That’s why they are rushing into retail. What made Amazon the go-to resource for soccer moms and dads wanting convenience will give way to brands millennials like. Amazon is simply betting on its name and the chance to be the new brand on the corner offering everything anyone needs.
The True Lesson from Big Retail
And here is where we get to the crux of what we can learn from the big retailer mistakes. Your perceived brand will mean everything in the very near future, even more than it does today. Your fortunes will rise or fall based on what those new buyers perceive as meaningful and valuable. JC Penny started in 1902 as a department store. It never changed that perception. Dozens of others followed the same path and soon the differentiation between retailers was drowned out. Brand identity became blurred. Now they’re all are going down together.
Millennial buyers coming up won’t stand for brands that are unclear or outdated. They want a clean, modern and value-enhancing brand image from whoever they buy from, whether for personal or business use. Your odds of future success are going to be greater if your company can get ahead of the curve with branding that is ready for the coming revolution.
Points to Seriously Ponder
As you think about your brand and what it means for your future, here are some things you’ll want to cover:
- What is your value proposition – your claim to fame that sets you apart from the competition – and how can you make it resonate with the new generation of buyers? If it doesn’t stand out, it doesn’t stand a chance.
- Has your brand image been updated recently with a modern message – and does it permeate everything from the tag line on your website to the way a receptionist answers the phone? Be genuine; be clear; be consistent or buyers will see right through you.
- What infrastructure, financial and otherwise, will you need to put into place that which will carry you through the coming changes? This is a good time to conduct a SWOT analysis and put together a strategic plan with financial forecast. Steering your ship on a new course can be challenging, but the flipside is that if you don’t do this you could lose everything.
Foresight CFO’s experts have watched and analyzed the importance of branding for countless businesses in light of the big retail collapse. We see this new buyer as possibly the next monumental shift in business and the need for a clear brand image as the way forward. Those we have helped walk through the change process are now prepared with a roadmap for the future, a clear brand, marketing, design and an investment strategy for financial success.
But we also know that if you wait too long or fail to prepare for the coming storm, you’ll be next in line to wring your hands and shake your head in disbelief. Yes, your brand image and strategic planning is becoming more important with every flip of the calendar.