Why every western retailer brand should be visiting China now!

Posted on Posted in Beloved Brands in the Market

As retailers struggle, we keep hearing about the battle between traditional and online retail, but not enough talk about consumer-centric retail. China is moving ahead, starting with the consumer. They are mapping out how they want to shop, providing smart, creative solutions so retailers show up completely different. Brands like Alibaba are leading the way, with consumer centricity.

When I grew up cartoons were only on Saturday morning, which was the same time my mom went to do groceries. Now, cartoons are on whenever, wherever and however kids want. Pause, switch devices and keep watching.

Somehow North American retailers seem stuck debating offline versus online. And, many stores still fumbling around on the transition from old to new.

A few months ago, we purchased a beautiful desk, and the experience was laughably horrendous. Honestly, we saw carbon copies. The glass top for the desk was out of stock, and they would call us when it was available, two months from now. Then, we were given the number to call for a third party delivery company. The delivery company said they could get the desk to us in two weeks time. I felt like I was being transported back to 1977.  This is a big name retailer, in 2018!

Toys-R-Us is gone.

Sears is dead.

Macy’s has no clue if there will ever be another parade.

Even Sam’s Club is closing stores.

It is not just that these stores using old world retail thinking. They are barely thinking about the consumer, which results in a very boring and frustrating consumer experience.

Meanwhile, the Alibaba stock price has doubled in the past year.

China is moving beyond online, into a world of consumer centricity. 

Shop how you want, order how you want, deliver how you want and prepare how you want. You can order ahead and have it cooked for you in one of the store’s restaurants. You can browse fresh fish or vegetables, have it cooked the way you want, and then delivered to your home within 30 minutes.

Below is a video by Alibaba about their view on “New Retail.” This will give you a feel for the smart and creative areas where retail can go.

 

Hema stores from Alibaba

Hema supermarkets are the central retail choice to Alibaba’s push for “new retail,” that blends online and offline experiences. They have in-store restaurants so shoppers can select live seafood and eat on the spot. Shoppers, whether online or in the store, can receive free delivery within 30 minutes. No more carrying bags home, and if you get the food cooked by the store, you don’t even have to cook it.  Rather than loading up your grocery cart, then lining up at a cash register, shoppers can browse and pay as they shop.

Consumers are instantly provided information about brands through their smartphones. And once you want it, you can pay instantly with Alipay, the payment app used by over 500 million people in China.

Payment apps have become so common. On my last trip to China, the taxi didn’t take Visa, and one of the cabs didn’t even take cash. Just the payment app.

Old-school marketing no longer works, but the fundamentals of brand management matter more now than ever

The old logical ways of marketing no longer work in today’s world. These brands feel stuck in the past talking about gadgets, features, and promotions. They will be ‘friend-zoned’ by consumers and purchased only when the brand is on sale. The best brands of the previous century were little product inventions that solved small problems consumers did not even realize they had until the product came along. Old-school marketing was about bold logos, catchy jingles, memorable slogans, side-by-side demonstrations, repetitive TV ads, product superiority claims and expensive battles for shelf space at retail stores. Every marketer focused on how to enter the consumer’s mind.

Old-school marketers learned the 4Ps of product, place, price, and promotion. It is a useful start, but too product-focused and it misses out on consumer insights, emotional benefits, and consumer experiences.

Brands need to build a passionate and lasting love for their consumers   

How can brand leaders replicate Apple’s brand lovers who line up in the rain to buy the latest iPhone before they even know the phone’s features?  I see Ferrari fans who paint their faces red every weekend, knowing they will likely never drive a Ferrari in their lifetime. There are the ‘Little Monsters’ who believe they are nearly best friends with Lady Gaga.

It was amazing to witness 400,000 outspoken Tesla brand advocates who put $1,000 down for a car that did not even exist yet. I love the devoted fans of In-N-Out Burger who order animal-style burgers off the secret menu. Every brand should want this type of passion and power with their consumers.

Smart strategic thinking

A smart strategy turns an early breakthrough win into a shift in momentum, positional power or tipping point where you begin to achieve more in the marketplace than the resources you put in.

Many underestimate the need for an early win. I see this as a crucial breakthrough point where you start to look at a small shift in momentum towards your vision. While there will always be doubters to every strategy, the results of the early win provide compelling proof to show everyone the plan will work. You can change the minds of the doubters—or at least keep them quiet—so everyone can stay focused on the breakthrough point.

The magic of strategy happens through leverage, where you can use the early win as an opening or a tipping point where you start to see a transformational power that allows you to make an impact and achieve results in the marketplace. A smart strategy should trigger the consumer to move along the bug journey from awareness to buy and onto loyalty, or it can help tighten the consumer’s bond with the brand. 

Every retailer should be booking flights to China to explore what retail of the future will look like. And soon.

My new book, Beloved Brands, coming this spring.

How this Beloved Brands playbook can work for you. The purpose of this book is to make you a smarter brand leader so your brand can win in the market. You will learn how to think strategically, define your brand with a positioning statement and a brand idea, write a brand plan everyone can follow, inspire smart and creative marketing execution, and be able to analyze the performance of your brand through a deep-dive business review.

 

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth, and profitability you will realize in the future.

The best solutions are likely inside you already, but struggle to come out. Our unique engagement tools are the backbone of our strategy workshops. These tools will force you to think differently so you can freely generate many new ideas. At Beloved Brands, we bring our challenging voice to help you make decisions and refine every potential idea.

We help brands find growth

We start by defining a brand positioning statement, outlining the desired target, consumer benefits and support points the brand will stand behind. And then, we build a big idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand. Finally, the big idea must influence employees to personally deliver an outstanding consumer experience, to help move consumers along the journey to loving your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources. We work with your team to build out project plans, creative briefs and provide advice on marketing execution.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

We make Brand Leaders smarter

We believe that investing in your marketing people will pay off. With smarter people behind your brands will drive higher revenue growth and profits. With our brand management training program, you will see smarter strategic thinking, more focused brand plans, brand positioning, better creative briefs that steer your agencies, improved decision-making on marketing execution, smarter analytical skills to assess your brand’s performance and a better management of the profitability of the brand.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Graham Robertson bio

 

 

 

 

 

Retailers are destroying Black Friday

Posted on Posted in Beloved Brands in the Market

Black-Friday-LineFor the past 20 years, it has been a tradition for american families to plan out their friday after US Thanksgiving by hitting the malls as the kickoff to Christmas season. For us too lazy to get up at 5am, it has been fun to watch on TV, seeing doors flung open with screaming people trampling each other trying to get to those door crasher specials. Whether you like the idea of “Black Friday” or not, retailers are doing what they do best:  taking a good thing and messing it up.  

Last year, we saw “Black Friday” ads on the Monday of Thanksgiving. This year, we saw them the week before. The problem when you mess with Black Friday is that you lose the buzz and excitement. You also lose the irrational consumer behavior brought about by the energy of the moment. So Black Friday used to mean getting up at 5am, running through the store to grab that Samsung TV for $179 by 6:15am and then adding a TV stand and gold-plated cables at full price on the way out of the store. Just like any emotion, causing consumers to feel more and think less puts the power into the hands of the brand. Retailers were winning this transaction. That’s gone if you do your sale over 10 days. You are just giving consumers time to think, search other websites and come to a rational decision. Now with time on their side, consumers can shop around for a week, review the specs on the TV and figure out that it has been down-graded with a lack of features, determine the gold-plated cables are a waste of money and just go to IKEA for the TV stand. Maybe they can even talk themselves out of the TV!!!  Why? Because now they can use their brain. After all, that buzz is gone.

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Another crazy trend is the idea that retailers open on Thanksgiving evening. Retailers are always trying to get a leg up, so they are now all trying to open when no one else is open. And yet with a low barrier to copy, they all just follow each other and negate any advantage. Last year the trend started where major retailers including Wal-Mart, Target, Best Buy and Sears opened on Thanksgiving Day–the night before Black Friday. This won’t mean a jump in revenues it just means revenues will be brought forward one day. Yes, retailers have this belief that it’s a constant dog-fight for sales, and if one my competitor gets a leg-up, that means a loss to me. Retailers are facing such pressure during these economic times so I’m somewhat sympathetic. Margins are shrinking and many retailers basically make or break their year during Thanksgiving and New Years. So I can understand the temptation. Before we get into the ethical part of opening, let’s look logically at the 8 ways a brand can make more profit: 1) increasing prices 2) getting consumers to trade up 3) lowering your cost of goods 4) lowering your marketing costs 5) stealing other users 6) getting users to use more 7) entering new categories and 8) getting new users. I realize it’s all about stealing other users. But if both competitors blink and open at 8pm on Thanksgiving, no one really wins over the consumer. The only thing I see here is a slight increase in the costs of increased wages and store opening costs. Net net, no one really wins.Slide1

So at the year end, no retailer will really be saying “we had a great year because we opened on Thanksgiving Day”. But come on guys, while your press releases are saying that you’re really just “catering to consumer demand”, we business people know that’s BS. I’d rather see all Americans sitting around the dinner table and watching football (go Patriots) with family and friends. If families are your main target market, you should be making a big deal out of the fact that you are closed so that all employees can spend time with their families. That’s a great way to establish love for your brand. My Hope is the Retailers Announcer Early that they will be closed on Thanksgiving 2015!!!

To all our American Friends, I want to wish you and your families a Happy Thanksgiving

At Beloved Brands, we run a Brand Leadership Center to train marketers in all aspects of marketing from strategic thinking, analysis, writing brand plans, creative briefs and reports, judging advertising and media. To read more on strategy, here is a workshop on HOW TO CREATE A BELOVED BRAND, click on the powerpoint presentation below:

We make brands better.

We make brand leaders better.™

We offer brand coaching, where we promise to make your brand better by listening to the issues, providing advice that challenges you, and coaching you along a strategic pathway to reaching your brand’s full potential. For our brand leader training, we promise to make your team of brand leaders better, by teaching sound marketing fundamentals and challenging to push for greatness so that they can unleash their full potential. Feel free to add me on Linked In, or follow me on Twitter at @belovedbrands If you need to contact me, email me at graham@beloved-brands.com or phone me at 416 885 3911

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8 necessary leadership behaviors to being a great Brand Leader

Posted on Posted in How to Guide for Marketers

No matter what stage you are in your marketing career, here are eight behaviours that may challenge you to be a great marketer.  Whether you’re in a junior or senior role, my challenge for you is to find more balances within your leadership style.  Avoid getting stuck into a rut by saying “this is how I do it, like me or hate me, but I can’t really change who I am”.   You have to be constantly changing and evolving.   Find your balance of strategy and execution, being analytical versus being creative.  Try to be both.  Bring in your instincts to your well thought plans and don’t always opt for the usual answers but sometimes choose the path that may feel a bit of riskier move.  Revel in ambiguity for a bit longer and see the answer comes to you.  Putting the consumer first allows you to meet their needs and find ways to create a tighter bond with them which will set you up to win in the market.  Listen first, talk second.  Leadership implies follower-ship and if you’re always talking first, I’d challenge you to look behind and see if anyone is following you.

The 8 Behaviors of a Great Brand Leader

  1. Be Consumer Focused:  Everything Starts and Ends With the Consumer in Mind.  Put yourself in the shoes of the consumer and think like them.  Steve Jobs said he never needed research, but he must have been amazing at listening, observing and anticipating how the consumer would react.  I’d still recommend you do research, but go beyond the statistics of the research and learn how your consumer thinks.  Whenever I go to focus groups, I watch their faces.  And when the research results come back you always have to ask “so now what do we do”.  The research helps you, but never gives you the exact answer.  Match up the needs of the consumer to your brand assets to figure out your ideal brand positioning.  The best marketers represent the consumer to the brand, NOT the brand to the consumer.  I always believe that consumers are selfish and deservedly so because they have money to spend.  As a consumer, I don’t care what you do until you care about what I need.  Focus on them, not on you.
  2. Follow Your Instincts:  Gut Feel of Marketing:  Listen to your inner thoughts, they are in there.   Too many times people fail because “they went along with it even though they didn’t like it”.  The problem is that sometimes your instincts are hidden away.  You get confused, you feel the pressure to get things done and you’ve got everyone telling you to go for it.  You get scared because you’re worried about getting promoted and want to do the ‘right thing’.  But your gut is telling you it’s just not right.  My rule is simple:  if you don’t love the work, how do you expect the consumer to love your brand.  The worst type of marketer is someone who says “I never liked the brief” or “I never liked the ad”.  If you blame your agency or team after the fact, I have a word for people like you:  “useless”.
  3. Revel in Ambiguity:  Be Patient with Ideas.  Never be afraid of an idea and never kill it quickly.  Watch the signals you send that may suck the creativity out of your team.   If you become too predictable to your team, then your work in the market will also become predictable.  Ambiguity and time pressure usually work against each other.  Don’t ever settle for “ok” just because of a deadline.  Always push for great.  What I have found is the longer I can stay comfortable in the “ambiguity zone” the better the ideas get whether it’s the time pressure that forces our thinking to be simpler or whether it’s the performance pressure forces us to push for our best idea, I always say, the longer I can hold my breath, the better the work gets.
  4. Be Organized:  You Run the Brand, Don’t Let the Brand Run You: Be thoroughly organized, well planned and know the pulse of your business.  Every six months, I would find a quiet time to answer five key questions that would help me stay aware: 1) Where are we? 2) Why are we here? 3) Where could we be?  4) How can we get there? and 5) What do we have to do to get started?   In an odd way, the more planning you do, the more agile you’ll be, because you’ll know when it’s ok to “go off plan”  Stay in Control:  Hit the Deadlines, don’t give the appearance that you’re not in control. We have enough to do, that things will just stockpile on each other.  Know Your Business and don’t get caught off-guard.  Make sure you are asking the questions and carrying forward the knowledge.  Enjoy doing the monthly report because it makes you the most knowledgeable about the brand.   Stay conceptual; avoid getting stuck in the pennies or decimals.Process should enable us, not hinder us:  A good process can force your thinking towards a solution.  If it restricts your thinking, it’s not a good process.  But if it means, you free up your time for strategic thinking, instead of format thinking, we’ll move much faster.
  5. Manage your Boss:  Be the Brand Leader not the Follower The more you keep your boss informed the more rope they may give you.   If they don’t know what you’re doing, they may clamp down and micro-manage you. . Ensure a policy of open communication with no surprises:  Make sure you keep your team informed and involved.  Keep senior management informed.  You must be the champion of the brand.  The best ideas are those that erupt out from the brand team–not from a top down perspective.  You have to be a self-starter that pushes your idea through the system, in the face of resistance or doubt.  And you will meet resistance from so many people in the system.  All the best work I ever did met a large degree of resistance.  You have to anticipate this and work through it.  One subtlety to ownership is your tone. When you don’t know something, speak in an “asking way” and openly seek out the wisdom and advice of your agency, your manager or your peers.  Put your ego aside and listen.  But equally, when you do know the answer, speak in a “telling way” that gets others to follow you, including senior management.
  6. Speed, Simplicity and Self Confidence:  a) Speed:  We don’t do things fast for the sake of it; we do things fast so we can take advantage of opportunities that have a window.  If you recognize an opportunity, realize that others are also recognizing the same opportunity.  So speed to market can enable you to win before they get there.  Also, doing things fast does not mean sloppy.  b) Simplicity: I’ve always said, “If you have a complex answer to something, odds are you are wrong”.  Keep it simple enough to explain, and so that the people who need to execute our ideas can really execute them.  c) Self Confidence:  As the brand leader, speak your mind.  After all, we are all just walking opinions.  Find a way within your leadership style to engage your team, agency or your boss in a debate to get to better answers.
  7. Actively Listen: As a brand leader, you should be constantly listening, not trying to be the smartest person in the room.  When you tell an agency or employee what to do, there is only one answer you’ll hear:  YES and the conversation is over.  But when you ask an agency or employee, you might hear YES, NO or MAYBE and the conversation is just beginning.   You’ll also find that by listening, you can learn from all the other disciplines–finance, sales, production, R&D and HR.
  8. Focus on the People and the Results will come: The formula is simple:  the better the people, the better the work and in turn the better the results.  You should have a regular review of the talent with your directors.  I’d encourage you to ensure there’s a systemic way to get feedback to everyone on the team, preferably on a quarterly basis.  Waiting for the annual review is way too late and almost negligent as a leader.  Your people have the potential to grow with feedback.   But without feedback, they’ll be confused and even frustrated.  You should invest in training and development.  Marketing Training is not just on the job, but also in the classroom to challenge their thinking and give them added skills to be better in their jobs.  Marketing fundamentals matter.  And the classic fundamentals are falling, whether it is strategic thinking, writing a brand plan, writing a creative brief or judging great advertising.  People are NOT getting the same development they did in prior generations.  Investing in training, not only makes them better, but it is also motivating for them to know that you are investing in them.  And that helps drive retention and commitment into producing great work and driving results.  Use every moment as a potential teaching moment for helping your team get better.

Everyone has a gap against one or more of these leadership areas.  No one is perfect.  The real question is what are you willing to do to counter that gap.  

To read more about how you can manage your career, follow the story below (which can be downloaded and printed)

 

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Apple is Facing Major Declines…

Posted on Posted in Beloved Brands in the Market

Those are fighting words for most Mac, Iphone or Ipad users. If you are in the Apple tribe, that headline probably gets your blood boiling, ready to call me an idiot and tear into this blog. But, I don’t really mean it. I hope that you’re totally upset, so I can prove a point, as to how loyal Apple users are. So relax and enjoy the article. It’s all about how great Apple is. In fact, I’m typing on my Mac as I speak, with my Ipad charging away about a foot away. I could not live without my Ipad–stylus and all.

A few weeks ago, someone asked for a good marketing book to read. I said “Have you read the Steve Jobs biography, because that would be a great starting point.”  I do believe that aside from his craziness, Steve Jobs is the best marketer of our generation. Everything he did was about the consumer, not just in taking their feedback but in guessing what they might want next. He was committed to the art of marketing, from the design in the product and software right down to some of the best advertising of our generation whether it’s “1984” or “I’m a Mac”.  He was obsessive in his commitment. He had to love the work or he’d reject it.  His bar was exceptionally high.

For Apple to this point, it has all been about Steve Jobs and thinking differently.  With his own voice, here is what makes Apple great.

 

Brands travel along the Love Curve, going from Indifferent to Like It, to Love It and finally become a Brand For Life.  When you achieve the ultimate status as a Beloved Brand, demand becomes desire, needs become craving and thinking is replaced by feelings. And, Apple is the most loved of all Brands. When you love a brand like Apple, you are loyal, unrelenting and outspoken. Try saying something negative about Mac to someone in the tribe and watch out. That’s like knocking their favourite sports team. To Apple users, it’s very personal: you are possessive of your Apple brands you own. It’s extremely emotional for you, certainly not rational.

Nothing comes close to what Apple has done over the past 10 years, whether it’s in desktop computers, laptops, mp3 players, smart phones, tablets and even the retail space. Three times this year, I’ve walked past an Apple store before the mall opens, and there are usually 10-15 people waiting for the doors to open up. I’m sure every retailer would love that.

Samsung and Microsoft are strong brands, but stuck at the Like It stage.  While consumers gladly buy their products, no one is going to stand up and defend them. People are indifferent about Brands like Dell and HP who have commoditized laptops, charging a slight premium, but barely.  Even Sony has fallen from grace, recently announcing billions in losses.  If you are born before 1975, and rarely buy electronics, you still think “wow, that’s a great price on a Sony”.   But that group gets smaller every year.  The HTC brand only wins from carrying Android, but no one really cares they have an HTC phone.

Apple has an amazing brand following.  It’s like a tribe of loyalists ready to speak out and defend the brand.   How have they done this?

1.  Products that the consumer doesn’t even know they want yet:  While in the technology field, Apple has never done the better mousetrap. Apple is all about the consumer. Apple has an invention mindset.  It’s more than just making money. They want to make a dent in the universe.  It’s about thinking different and delivering something the consumer could never have imagined. Apple carefully considers what consumers are looking for. They are completely meticulous in the planning and design stage. They keep things plain, simple and so easy-to-use products not only to make the consumers happy, but also make them want to buy more products in the future. Apple is an idea connected to simplicity, not just a series of products.

“You’ve got to start with the consumer experience & work backwards to the technology.  You can’t start with the technology & try to figure out where you’re going to sell it”

Steve p. Jobs

2.  Are You a Mac?: Let’s face it, Apple is a cool, hip brand. It pushes a strong identification with everything young, up-to-the-minute and smart. The “I’m a Mac Campaign” was brilliant in not only defining the Mac brand as smooth, confident and cool, but defining the PC brand as old, uptight and awkward. At the height of this campaign I was in a crowded bar that went immediately silent when one of the “I’m a Mac” TV ads came on. Also, many of the Apple products have separated themselves from the competitor, whether it’s the white headphones on the iPod, the number of apps for Iphone and Ipad or the cool sleek designs of the Mac.  Not only that, the Apple store is a store just for Apple users.  My mom, who is 77 and a recent ipad user has been to the Apple Store numerous times, taking some of the courses or just asking for help.

For fans of the “I’m a Mac” campaign, here are 15 ads.

3.  An Obsessive Commitment to the Consumer and the Apple Brand.  Stemming from Steve Jobs, the entire company is committed to simplicity in design and functionality. Whether it’s the rounded edges, colour choices for product or the Glass on the Apple stores, there is a certain obsessive behavior. Sometimes you wonder if it’s worth it, but would Apple be Apple if it wasn’t for these obsessions?

Apple leverages this obsession to create consumer loyalty. Looking at the phone industry loyalty data, Apple has by far the highest loyalty of any brand:  over 90% of their consumers love the Iphone. Brands like HTC, Blackberry and Sony have scores in mid 60s while Samsung has only 57% prefer the Samsung. Creating the tribe is great, but Apple delivers satisfaction to their consumers.

To be a Beloved Brand, you must love the work you do. If you don’t love the work you do, how do you expect your consumer to fall in love with your brand?   Brands that are stuck at the like stage settle for ok. Beloved Brands like Apple start at great and still push to make it even better. They are never satisfied.

The more loved the brand, the more valuable the brand. The tight emotional connection with the consumer becomes a source of power it can leverage whether that’s with consumers themselves to pay more, stay loyal or buy more products.   Plus, that power can be leveraged with retail partners, suppliers or competitors.  

In 1976, early in the life of Apple, Ronald Wayne decided to cash in his 10% of Apple for around $800. If he held onto it, that 10% would be worth $56 Billion. Mind you, we have all missed out on quite a few investment windows over the years. If you had put $100K into Apple in 2003, you would have around $10 Million!!! You wouldn’t be complaining about the economy, wondering who to vote for in the fall. But unfortunately, I didn’t know Apple would do so well.  Has the Apple brand peaked? Hardly: Apple has gained 81% in market cap the past 12 months. I missed that window as well.   

My hope is that momentum can continue. Not because I have invested money, but because I’m emotionally invested. I crave what’s next, even though I can’t even imagine where they will go.

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A Beloved Christmas Ad that Will Bring a Tear to Your Eye….and a lift in your bonus.

Posted on Posted in Beloved Brands in the Market

At this time of year, we see so many Christmas ads on TV.   In fact, we are bombarded.   Like my local radio station that plays non-stop Christmas music, I’ve come to realize there are only 3-4 great Christmas songs and lots and lots of crap all day long.   It’s the same thing with Christmas ads.  Lots of call to action “start your shopping” crap on TV.

The best Christmas ads I’ve ever seen are from John Lewis, the department store in the UK.  They use beautiful music, a movie-like storyline that demonstrates the beauty of gift giving, stretched out over 90 seconds.    No words are needed to tell the story.  They are not loaded with so much branding that they would turn you off before inviting you in.  They tug at the heart and bring a reminder of what the season is all about:  the gift of Giving. 

Every marketer asks their ad agency “I want a big idea”, but no one really has the patience to build one.   It can take years of continually layering on the creative idea for consumers to know that it’s you.   John Lewis has been doing this same type of ads for years, helping to move the brand from indifferent to liked and to loved.

With deeply emotional ads, John Lewis is able to move the consumers from the Liked to Loved stage. Result is 10% growth in a tough economy.

Consistency in ad technique is a great device for driving brand link.   With each year of the campaign, consumers are now starting to look forward to the latest John Lewis ad.  They don’t need to load the screen with excessive branding, because they now own the idea.

For all those concerned that advertising has to drive hard against short term sales, these softer more emotional ads connect deeply, and live the idea that “if you build it, they will come”.   In fact, John Lewis sales for 2011 are up 10%, and have doubled in the past 10 years.   Contrast that to the dismal sales at other stores in the UK and around the world.  Here’s the last two years of John Lewis Ads, 2010 and 2009, and you’ll see the consistency of the idea building over time.

It’s not just about advertising with John Lewis, it’s about employee commitment.  One very interesting aspect of John Lewis is the culture of the company, which is 100% employee owned.  Every employee is a partner and can influence the business through branch forums, which discuss local issues at every store.   All employees are on a bonus plan, with cheques at the end of the year tied to results.  Happy employees work harder to drive the brand.

This is what employees look like when they make their bonus in the midst of the Great Recession of 2009.

The partnership also has numerous social activities for partners including large country estates, golf clubs, sailing clubs and two hotels that offer holiday accommodations.  They have great pension plans, insurance coverage and generous holidays.   Upon completing 25 years of service, employees are given 6 months off with pay

Happy holidays to all and here’s to a prosperous 2012 for all brands daring to strive for Beloved Status.

Holt Renfrew: a beloved luxury brand trying to be liked by the masses

Posted on Posted in Beloved Brands in the Market

“No one goes there anymore because it’s too crowded”  – Yogi Berra quote

The never-ending recession has every brand agonizing over decisions on a daily basis. The biggest decision is around Price, and the need for volume balanced off against the perceptions of Brand Equity.

This past week, I was at Holt Renfrew, Canada’s answer to Barneys, Saks Fifth Avenue and Selfridges. I’m not a big fan of Holts. I wish I was a fan, but my Scottish blood makes me way too cheap to ever find something within a reasonable price range. Well, guess what people? Holt’s is now filled with items you can afford, and the place is packed.

At first glance, it appears as though Holt Renfrew is immune to the recession.  So I decided to join the crowd and look around.   I saw a Holt Renfrew branded travel beauty bag, which was a $100 value, but for sale at a price of only $25–and it even included a $10 bounce back coupon off my next purchase. Perfect gift for my daughter. Next, I walked past ladies winter hats, saw the perfect gift for my mom.  I flipped over the tag:  $25.  I even got the nice pink box to the put the hat in, which I think the box has even more prestige value than the money I paid.  I walked out with the nice big pink Holts bag, proudly walking along Bloor Street, knowing that everyone must have thought “wow, that guy has money”.   If only they knew, I spent 56 bucks, including GST.  It just seems wrong.

For those who want the $25 Make Up Bag, here’s the link and you better move fast: 

http://www.holtrenfrew.com/holts/pages/articles/article.dot?url=103272&language_id=1 

Did I mistakenly walk into the Bay, instead of Holts?  No, there’s no way the Bay would be dumb enough to sell a Travel Bag or a winter hat for only $25. This is like getting a Mercedes for around $15,000 or staying at the Four Seasons Hotel for $59 a night.  It gives the masses a piece of luxury, but at a cost.

The short term attempt at sales gains is off-set by the longer term sales decline when your core customer stops coming.  For Holts, they’d have to sell 100 make up bags to the masses just to make up for the revenue lost from one $2500 dress from a core consumer. And in terms of profitability, if we assume the dress has 40% margins and the make up bag only 10% margins, Holts would have to sell 400 make up bags to make up for that one dress. And it gets even worse when the masses realize they still can’t afford to buy anything beyond these cheap and cheerful items.

Famous little blue box from Birks.

But we’ve seen this story before, in Birks. Through the 1980s, Birks had grown to 225 stores, and was trying to be all things to all people.  You could walk into a Birks in Mississauga, put down $125 for some nice pearls and walk out with the little blue box, guaranteed to make any woman drool when she sees that box.  But in 1992, Birks declared bankruptcy–they went back to what made them famous and who they were. They re-trenched so that all Birks locations were in special locations.  And you needed to save up so you could afford something to go in the pretty blue box.  They figured out that it’s ok if the masses drool, but can’t afford.

Holt Renfrew Pink bag carried with pride around Toronto.

As we’re in the midst of the debate around 99% vs 1%, Holts has to realize who they are and who they cater to. Every time they dip into the 99%, they lose a consumer in the 1%.   There has to be some reverence the masses have when they walk past the windows at Holts.   They have to feel a bit scared when they look at the price tags. They have to be worried they are out of their element. If that Pink Holts bag I so proudly displayed quickly becomes a commodity, then the core audience–the one percenters–will find somewhere else to shop.

As Holt’s looks to see if they can see the end in sight to the recession, they might not realize that they are already seeing the beginning of the end in sight of their status as a Beloved Brand. The lesson: trying to be liked by everyone might mean you end up loved by no one.