The Brand Man Speaks

What's "out" for 2009; Celebrity apparel, full price retail, the iPhone?

Every year newspapers, magazines and online resources post what's going to be "in" and "out" for the coming year. This year is no different but I found a few items in the Los Angeles Time's 2008 Image Index of "outs" that deserved mention here in this blog.

First and foremost (and an "out" trend The Brand Man Speaks spoke of several times) celebrity branded clothing lines are "out". The celebrity branded perfume business will continue to work (there's a fantasy element here for consumers that keeps this segment alive) but apparel brands where the only raison d'etre is the celebrity name behind them will begin to fade. No loss in my opinion.

Just look at Sarah Jessica Parker's Bitten line which was a conceptual failure from the outset. The luxury fashion persona of character Carrie Fisher was so overwhelming, Ms. Parker's own style of lower end chic never caught on because the brand was meaningless. Bitten was supposed to put now defunct retailer Steve and Barry on the map but they needed more than one lifeboat....they needed a huge Navy.

Rod Stewart and Charlie Sheen put their names on apparel lines as well unsuccessfully and as the LA Times noted with so many celebrities putting their names on fashion (with such poor products and results) it is an insult to talented fashion designers. Actors should keep their focus on a desire to "direct" films not clothing lines. Athletes also put their names on clothing lines beyond sports gear and that too was a mistake. Most think because they have tons of dough to spend on luxury brand name clothes for themselves that that gives them a sense of style and the right to be a fashion designer. Can you say UGGLLLY!

With the recession economy money is tight for most people and even those still with tons of cash (if they weren't hurt by the Madoff scandal) want bargains too. So paying "full-price" for anything is now "out". That means high end retailers like Saks, Neiman-Marcus and Bloomingdales may be in for long term difficulty given historically they like to go back to full-price new seasonal merchandise soon as the Xmas retail season is over. Not so fast. I do not see this strategy working anymore. Consumers have become accustomed to big sales and will baulk at full price. If the luxury retailers have to put things on sale all year-round...and I don't mean just a few unsalable things....new items...their raison d'etre will no longer exist. Retail brands as we know them may change drastically in the coming year or two....with even some well-known well-established names biting the dust for good.

Finally, the LA Times Image Index says the iPhone is "out". I still like mine but it is true the cache that originally drove the brand is long gone especially with WalMart now selling the phone for less than retail. I am already looking for the next "in" phone/hand held computer gadget. I do think that expanding the retail landscape for Apple will mean some strong sales this year but does selling Apple products at WalMart negatively hurt the brand image? I say yes, big time. This may be an opportunity for another electronics brand to take on Apple. Even though Apple was successfully reaching the masses with everything from MacBook's to the iPhone it did it in a way that still communicated "cool", "hip" and "in". The association with WalMart changes that forever.

Watching out for you everyday.

Eli

Retailers facing worst year in memory but it isn't just due to the recession

Retailers are facing the toughest year in recent memory as consumers dramatically curb their spending this holiday and stores slash prices to move inventory and ultimately reduce profit to near zero or even to a loss.

The problem is composed of several elements, the most obvious is the recessionary economy. However, this will not be the only reason retailers will be able to blame come January. The second most harmful thing: insufficient sales staff on hand. Yes, it's a domino effect. Business weakens, employers reduce their workforce, which in-turn (at retail) can further reduce sales and so on.

Empirical evidence supports this.Take this example. I have visited five Macy's stores around Los Angeles in the past week to find the stores overflowing with unsold discounted merchandise. So much it looks like a flea market out of control. I also saw a fair amount of consumers shopping amidst the mess and eager to snap up bargains. The problem? No sales help to ring up transactions. In one case I saw at least a dozen shoppers with arms full of merchandise searching desperately but unsuccessfully for a sales associate and in almost all cases giving up, dropping their goods and leaving the store. How can Macy's afford to lose so much business? Is there a point a which cutting back on staff damages your brand image and your bottom line? Absolutely.

I found similar but not as drastic conditions at Bloomingdale's and Neiman Marcus. Saks seemed to have sufficient sales staff but the least amount of shoppers. Over at Abercrombie and Fitch there are plenty of sales associates but virtually no customers given they refuse to discount any of the apparel and teens and college kids are really short on disposable income this year. (Maybe A and F can lend Macy's some of their staff--especially their teen heart-throbs?).

I found conditions improved this year at Best Buy where although not enough to meet demand there seemed to be more helpful sales people on the floor then in previous years to handle electronics buying given it requires some information sharing before the sale.

I guess you could say retailers maybe penny-wise and pound foolish this holiday season. We shall see.

Watching out for you eveyday.

Eli

US Automakers must consolidate brands to survive; something that should have been done years ago

As GM and Chrysler begin their bail-out effort it is important to consider that it was not only the economy that brought the US automakers down but also their refusal to see that they had too many brands and marques out in the marketplace.

Many of the branded marques are just sheet metal duplicates of other marques with little or no true differentiation. For years aggressive marketing programs helped distinguish each company and their products but in reality more and more they were producing numerous products with different names but nothing else meaningful to consumers. For economic reasons, most of the marques shared so many parts that it made too many models look alike without any reason for their existence other than inertia.

Other than Cadillac and Chevy the other GM brands Olds (now defunct) Buick and Pontiac have become mostly interchangeable and undistinguished with boring designs and uninspiring attributes. Cadillac was nearly dead before the Escalade became a staple in the "hood" with the bling group and probably is one of GMs best moves in recent years prior to the gas crisis....although the Hybrid Escalade seems like a joke to me, there is a place for some model of hybrid that truly is luxurious and efficient on par with the Toyota Prius.

Chevy has always been the work horse brand. But even among Chevy marques several could be eliminated and not many would be missed because they are so bland.

It might make sense for GM to reduce their models to half of what they are now. They should just sell a few Cadillac marques (high end) a Buick/Pontiac mix of a five or six models (mid) and Chevy (low) and eliminate most of the rest of Buick and Pontiac and of course Saturn, Saab and Hummer to concentrate on survival with meaningful and competitive product.

Chrysler is mostly a loser in my mind as a brand. Beyond the success of their mini-vans and maybe the 300 series and Ram trucks, the rest of the marques are pretty weak, uncompetitive entries. Jeep still has an important spot in the marketplace because it is a unique brand but honestly the rest of the collection could be tossed..(ok maybe save the re-introduced Charger but it won't sell enough to keep Chrysler alive).

Ford, which isn't asking for and has not received any bail out money could also go through some marque pruning and be a better, stronger brand. Of the three, Ford seems to have a better handle on innovation and new interesting designs (Edge and Flex) and is making an effort to offer more fuel efficient cars than the other two. The product has improved greatly since the days of F.O.R.D, Fix or repair daily, Found on the road dead. I was impressed with their new ideas at the LA Auto Show. Ford should, however, dump the Mercury division altogether...duplication without any reason for being. Lincoln needs a major shot of innovation and design help or it too should go bye bye.

Watching out for you everyday.

Eli

Walmart security not primary blame for worker death on Black Friday

Tragically, a temporary worker at a Walmart store in Long Island, NY was trampled to death on Black Friday as the store opened its doors to a stampede of consumers rushing to buy heavily discounted specials (primarily electronics) available in limited quantities by the world's largest retailer.

The rush must of been incredible as the worker killed was a 6'5" 270 man in his thirties.

Initially the blame was put mostly on the lack of adequate security provided by Walmart for this kind of madness. However, in the lawsuit filing made by the estate and family of the deceased worker, Walmart's marketing is being blamed and New York State Police and Politicians are calling for changes in how Black Friday retail promotions are marketed to prevent this from re-occurring.

The complaint details are noted below from Ad Age this morning.

"A complaint filed today in New York State Supreme Court in the Bronx on behalf of survivors of the fallen worker, Jdimytai Damour, claims that besides failing to provide adequate security, Walmart "engaged in specific marketing and advertising techniques to specifically attract a large crowd and create an environment of frenzy and mayhem,".

There is no question that retailers across the US have over-hyped Black Friday for years, but especially this year, to get consumers to spend what little money they have at their stores. The theory has been that by offering a few incredible deals consumers will stay on to buy more profitable items with smaller discounts or at full price. (This theory has not held true for the past few years but retailers still hope for it. Most consumers are savvy to know that once the bargains are gone they leave to search for bargains elsewhere instead of overpaying for the rest of the merchandise).

It is unfortunate that it takes a tragedy to wake up companies to how dangerous some of their marketing and promotions efforts are. Some feel however that Black Friday has become a sport for most consumers and that it is not a marketing issue at all but solely the responsibility of stores to do a better job of controlling the frenzy with security and staff including managing the number of people allowed in the store at one time during this special sales.

Despite the incident, Walmart does have a silver lining here. The PR value of the event was worth millions and although most consumers will find the story unsettling it does confirm the branding fact that Walmart is still the king when it comes to deep discounts generating more traffic to their stores than competitors. A sad statement but in my opinion a true one.

Watching out for you everyday.

Eli