The Brand Man Speaks

Macys sues Martha Stewart Living for deal with JC Penney

In a move that was highly anticipated (and actually took longer to happen than expected) Macy's is suing home living diva Martha Stewart's company Martha Stewart Living Omnimedia for making a deal with JC Penney to develop and produce exclusive products for the middle of the road retailer. Macy's has had a long standing exclusive product deal with MSLO and when the JC Penney deal was announced most marketing folks raised an eyebrow and assumed a lawsuit was to follow. Now it has.

Specifics of the suit have not been made public, but given how much support Macy's has put behind Martha Stewart especially when things went south with her becoming a felon, it was a bit suprising she made the deal with Penney's. One might speculate that the Macy's/Stewart relationship was probably not as profitable for MSLO as the years went on as they might have liked and thus they looked for another partner who would give them more money and more control.

I do not think Martha will get hurt by all of this. It is not like Martha is only up market these days and the JC Penney link could devalue her brand. Far from the case. Martha's products go from KMART up the ladder to very high end, more successfully than almost any other home brand, so that isn't an issue. JC  Penney can benefit greatly from the association with Stewart as that retail brand has been floundering for years with no identity.

More details to come.

Watching out for you everyday.

Eli

Sears Holdings to close 120 or more Sears and Kmart stores

It should come as no surprise to anyone who shops brick and mortar stores these days that Sears Holding the parent to Sears and Kmart is planning to close 120 or more stores around the US.

Most retail competitors did fairly well this year and particularly this holiday season. Why did Sears not enjoy the same benefits of consumers going out and spending?

Simple.

Sears has no brand identity and hasn't for many years. Yours truly has written numerous times that Sears is a retail brand dinosaur that should close up and die. The brand hasn't had a positioning of note since maybe the "softer side of Sears" over a decade or more ago that helped consumers understand they were also sellers of soft goods (apparel) besides hard goods, (tools).

Sears used to be the catch all retailer one could go to, to get anything (besides food) you needed. It was America's store. They sold virtually everything. As WalMart exploded as the mega retailer of the past decade and retailing in general became more defined and brand specific, Sears lost its way. It isn't known for good pricing, service or selection or unique goods (that are consistent with its mid-America brand--Kardashian products make absolutely NO sense at Sears but don't get me started about that emperor's new clothes business). Sears exists because of inertia not because of any reason to exist and that is why I expect the brand to be out of business within two years or less. Sears is just completely out of step with the world in which we live today. Period.

Watching out for you everyday.

Eli

 

Macys expresses uncertainty about relationship with Martha Stewart after announcement of J C Penney deal

As discussed in a previous post, Martha Stewart has been successfully able to distribute her branded goods broadly across the retail planet, however, Macys did react to the news that she had sold a percentage of her company and would be building shop in shops in J C Penney's US wide. They did not end their relationship with her but indicated they would "re-visit" their product selection under her brand.

What likely will happen is a jockeying for position. Macys will keep Stewart's products if they are distinctively exclusive to the retailer and not somehow copied for inclusion in Penney's. Further, they probably will want to readjust their financial relationship with her to a more favorable one.

Macys is a higher level retailer than Penney's and has been fairing well in the economic downturn by offering unique and meaningful brands and products to its customer base. Stewart's line of home goods has been important to Macys so just giving it up likely would not be a good idea. Macys deal with Stewart expires end of 2012. They should renew. One iffy note. Apparently according to the Wall St. Journal, Stewart's company did NOT tell Macys about the Penney's deal until just before it went public which probably caused some major ill-will.

Altough Macys noted a concern about "brand proliferation" of Martha Stewart branded goods (too much of a good thing in too many places) I believe her brand is strong enough to do well in more types of retail concerns and I also believe Macys will see this too.

Watching out for you everyday.

Eli

 

Martha Stewart partners with J. C. Penney to expand brand and help shore up weak sales at retailer

Martha Stewart proves if your brand is targeted right and the core brand essence is compelling enough it can appeal to a broad spectrum of Americans across socio-economic levels.

Stewart is partnering this time with J. C. Penney for the development of mini Martha Stewart boutiques inside the lagging retailer's stores nationwide. Penney has taken nearly a 17% stake in Martha Stewart's public company. For Penney's CEO Ron Johnson sees this co-branded venture as a way to increase the retailers exposure and importance as he tries to get the company back on its feet. Penney's is doing poorly relative to Macys and other traditional department store entities. Johnson recently took over the helm of Penney's after notable tentures at both Target and Apple where he developed the wildly successful Apple retail concept.

Stewart will provide new exclusive products for her shop in shop concept that will not directly compete with her current products sold at Macys, Home Depot and PetSmart. Staffers will be exclusive to Stewart's mini stores to ensure the brand message stays on target.

Although Stewart's empire has taken a big hit in the past few years because it is so advertising dependant (her magazine is a big part of her empire), her alliances continue to prove she has staying power and remains one of the iconic brands of the past several decades especially given her stint away from the business for illegal stock transactions followed by jail time.

Watching out for you everyday.

Eli

Free shipping becomes commodity offering vs benefit for holiday shoppers

For the past number of years, many millions of consumers had chosen to buy online vs in brick and mortar retail (Including on Black Friday) because of two reasons. First, no sales tax (in most states). Second, free shipping. Not all online sites had offered free shipping in the past. It might have required a minimum expenditure of say $50 but it did entice people to shop one place versus another.

This year it appears that "Free Shipping" has become a commodity offering. This means that it is offered by a much larger number of online only retailers and is being matched by many brick and mortar retailers on their online sites. It has in marketing parlance become "a price of entry" into the online shopping game. You have to offer it to survive and compete.

This is very good for consumers but could pose financial problems for retailers. Shipping costs are not inexpensive for retailers to absorb and could hurt profitability numbers at the end of the holiday season when all is tabulated.

One online retailer that appeals to young urban hipster types, Karmaloop.com, throws "free shipping" and percentage discounts out to its loyal buyers pretty frequently all year long. However, when you click through to final payment terms on your purchase you find they charge a $1.50 "handling" fee and don't see that has a shipping charge. I have expressed to the CEO that I feel this is a bit disceptive to consumers. The company's response has been they need to offset the huge costs of free shipping and this is how their bean counters told them to do it. Bad idea.

Personally, I have become a heavy Amazon.com shopper because of free shipping and very low cost two day and overnight shipping options as a "prime" member, (which costs $79 a year and is worth it in my opinion). I also have found from the comfort of my beach side lounge chair better deals on Amazon then some advertised Black Friday offerings at brick and mortar stores with the added bonus of no sales tax and no shipping fees. Pretty hard to beat without facing the vicious Black Friday crowds.

Watching out for you everyday.

Eli

 

LA Times "brand" story on Kardashian brand has follow up.

Here is the link to the follow up piece by writer Adam Tschorn. He explores my point of view.

Kardashian a Brand?

 

Watching out for you everday.

Eli

Black Friday moves to Turkey Day, Thanksgiving but will consumers respond positively to this move?

Getting a jump on Black Friday retail sales has become an obsession for millions of Americans. In the past few years most electronic and mass merchandiser retail concerns have opened their doors in the wee hours of the Friday after Thanksgiving. Some open at Midnight to lure shoppers to (supposedly) great bargains. Consumers have been seen lining up for hours to get into these special shopping events. But there maybe a backlash this holiday season.

This year a handful of retailers are pushing the time frame even earlier announcing they will open at 10pm on Thanksgiving. Some consumers think this is great news. However, a growing number are publicly saying they think stores opening in the evening of Thanksgiving Day is "crossing the line".

The line being crossed is the one which says making employees shorten their holiday family time to come to work is unfair, unreasonable and at one extreme a violation of workers rights. In many news articles over the past few days, thousands of consumers have expressed concern to full blown outrage that greedy retailers are forcing their employees (even with holiday pay) to give up time with family to work. Is this going to far? Are these outraged consumers right? Will retailers who open "too early" see a negative feedback in their sales? It is too early to tell but things are a brewing.

The "Occupy" rallies around the US have shown many Americans are fed up with corporate greed and the needs of the wealthy to make more and more money off the backs of the average guy. It is within this cultural paradigm shift that such a backlash against retailers forcing workers to work on holidays is getting much of its fuel.

It is a tricky line to cross because many retailers feel they must be competitive and lure shoppers in as quickly as possible to "snap up" the available holiday gift buying dollars especially in this on-going weak economy. Those retailers who will not open on Thanksgiving evening have expressed support for workers and their families but also acknowedge it could be a costly risk to lose valuable consumer sales.

Personally I cannot imagine being a part of this craziness and have found many of the same desirable items available from the comfort of one's home office online at comparable prices. But what is important here is the underlying voice of average Americans which has until the "Occupy" rallies been kind of quiet. I think it is very important for consumer products and service companies to be mindful of this increasingly vocal group and not to dismiss it as unimportant or minor in anyway. There will be changes in our culture that come out of this still undefined movement across the US. As of yet, as always when you are in the middle of a paradigm shift, it is unclear what kind or what magnitude of change will be forthcoming. Be rest assured, however, that an important shift is coming.

Watching out for you everyday.

Eli

Missoni for Target continues to overwhelm retailer and greatly disappoints consumers.

On Tuesday Missoni for Target launched across the US both in Target brick and mortar stores and online. The response, which has been covered extensively by the media, was overwhelming with much of the merchandise out of stock in a matter of hours despite the plan to run the special designer event through October.

One additional issue that is now plaguing consumers who bought online: getting the merchandise they purchased.

Target has already pushed back shipping and delivery of online orders to a large number of consumers twice since the orders were placed on Tuesday. Further, Target in many cases, as of today, Friday, September 16th, has not been able to give online purchasers any new reliable information about delivery. Thus, it appears not only was Target not prepared for consumers interest level in the Missoni offering but also Target was also completely ill-prepared to deal with selling the product and getting it into the hands of excited and anxious buyers.

Some Target supporters have explained the problem as due to the online operations recently shifting from a system with Amazon to Target's own proprietary processing system. If this was the case, it would have made sense to wait until this launch craziness was over or for Target to do far more due-diligence with their own system to ensure it would not disappoint so many consumers.

Things are still so bad at Target that their customer service telephone line is useless because they are so backed up with calls from unhappy consumers trying to find out when they will receive the Missoni items they bought online now that Target has sent out "delay" emails.

You would think (hope) that days later Target management would have fixed some of these issues and made every effort to be on top of the situation to satisfy buyers or at least be in better communication with online buyers to reduce their disappointment. I always recommend to my clients that when issues develop it is better to over communicate with consumers than under communicate so the trust factor remains strong. Target is angering a lot of customers, maybe a good percentage of whom may be new to the retailer, and doing little if anything about the problem in a timely manner.

Watching out for you everyday.

Eli

Sears taking Kenmore appliance brand on the road.

Sears, the retail giant that continues to flounder with an uncertain identity and declining sales is expanding the distribution of its once exclusive brands. Recently Sears starting selling its superb and well regarded Craftsman tool line in stores beyond its own. Now Kenmore appliances will be sold at stores like Costco.

Craftsman was always a top brand among its loyal customers. It's lifetime money back guarantee along with outstanding quality made it the go to brand for DIY and professionals alike. Premium pricing didn't seem to hurt the legendary brand. Unfortunately, the rest of Sears hasn't fared as well, except Kenmore. Kenmore was known as a low end appliance brand until the division upped its quality and design when the housing boom began to explode. In the past decade Kenmore Elite products have come to rival in quality and style super lux brands of Viking and Subzero.

As Sears tries to figure out how to increase revenue and possibly bring more younger affluent consumers into its stores, it has decided a good step is having the Kenmore brand sold in many more retailers beyond their own doors. Costco appears to be the first major retailer to carry the brand.

There is no question to me that Kenmore has established itself as a top appliance brand and independent quality reports back that up. However, I am not sure that the vast majority of prospects know Kenmore has been an exclusive Sears brand and now with its broader distribution I don't see this actually bringing more people to Sears. The rest of the Sears brand identity is so weak and undistinguished it will be difficult to attract these younger more well-heeled consumers to the retailer just because they produce Kenmore appliances.

I believe Sears is a old dinosaur and it will be a very difficult brand task to fix without a major strategic change. The brand doesn't have a definitive place in the retail world today and it has struggled for quite some time to figure out what positioning to use to establish its presence. The last major push of any note was "The softer side of Sears"  over a decade or more ago when the retailer made a big push into apparel and soft goods. Their most recent push behind the Kardashian sisters is a miss-step in my opinion given the brand image of those girls is nothing but high end super deluxe and no female consumer is really going to believe they would wear the clothes under their label sold at Sears. Likely to go the way of Sarah Jessica Parker's Bitten line sold at now out of business retailer Steve and Barry's.

Watching out for you everyday.

Eli

 

Missoni for Target launch wildly successful. A true lux brand goes mass

Target Stores launched another limited edition designer line on Tuesday this week that proved Americans want truly lux brands at cheap prices. The line from Italian textile fashion house Missoni included apparel, beauty, home goods, luggage and bedding among other categories.

The consumer response was overwhelming with stores selling out in a matter of hours and Target.com shutting down due to traffic overload.

Why the craziness? Missoni is one of the old guard true luxury brands that has not made any effort over its history to discount or offer cheaper lines to aspirational consumers. The quality of their designs and manufacturing is top notch. For such a lux brand to offer a large collection of goods at "flash fashion" prices is unprecedented.

I am familiar with Missoni through family friends in Italy who over the years brought us various apparel gifts on visits to the US. Scarfs and sweaters that cost many hundreds of dollars ( I have a sweater given to me 20 years ago that cost $1200 then) are still in our family because the products are timely in design and crafted to last.

I called to several local stores and was immediately told by noon on Tuesday that all Missoni products were "sold out" with no idea when the stores would be re-stocked.I was able to finally get online and buy a few things to see (in a few days) how good the low priced items are in terms of quality. I truly was shocked. I expected a good turn out but not a sell out this quickly.

Most Americans have never heard of Missoni as the family run company has not pushed to brand their products as household names in this country. They have preferred to be a bit off the radar for most consumers and cater to a smaller well-heeled audience who appreciate the quality of their fabrics and their unique patterned designs.

With the mass PR that this "sell-out" has garnered in the past 24 hours, it is clear the Missoni name will be far better known across the US by week's end. Additionally, products are already showing up on Ebay and other sites for re-sale at quite inflated prices given the limited edition of the entire collection. (The plan was to offer the line through October...depending on inventory. It seems unlikely there will be enough merchandise to keep the promotion going that long.)

A good question I am being asked is, "will this damage Missoni's brand image among its more elite customers?" Honestly, I do not think so. The designs look similar to the "real" McCoy, however, the quality is likely substantially lower end and good for limited wear and durability. I highly doubt the dresses and other fabric designs will have the same hand down generation to generation quality the originals do which will keep the loyalists buying the high end. Missoni has successfully reached a broader audience with this one move which could assist it with greater distribution (if desired) in the US for its luxury products assuming the economy improves (at some point in the future). Overall, a smart brand building move by Missoni and Target.

Watching out for you everyday.

Eli