http://www.jeffharbaugh.com/wp-content/uploads/2014/08/logo_color_640.gif 0 0 jeff http://www.jeffharbaugh.com/wp-content/uploads/2014/08/logo_color_640.gif jeff2014-04-18 16:24:292015-09-09 08:30:15The Economy, Value of Brands, and Relationship between Brick and Mortar and Online
I went to the Snowboard Industry Conference. I had fun. I learned stuff. I talked to people. I drank beer. I made a speech. Uh, I made the speech before I drank the beer just to be clear.
During that speech there were three pieces of information I want to pass on to you. It’s not that the rest of the speech wasn’t worthy of your consideration, but these are the three things from it that I really want you to think about because they apply to the whole industry- not just snowboarding. All have been stolen from other sources to which I give full credit.
The Value of Brand Heritage?
The question mark is intentional. The people at Trendwatching.com create a free, more or less monthly, publication on brands and trends. You should sign up for it. It makes you think. Anyway, in one they sent me a couple of months ago, they said the following:
“The reality for many brands is that the needs and wants of the new consumer often don’t align with the narrative that they’ve labored to build. For rising numbers of consumers, brand heritage and story has become at best irrelevant, and at worst an active barrier: one which prevents brands they might engage with from offering a product or service that’s right for them, today.”
I added the red. I think you’d agree with me that it’s a pretty significant statement. I’ve written that some older brands may have the issue of aging out, where they keep their traditional customers (who tend to start buying less as they age) but have trouble attracting new, younger customers. I’ve also said that as distribution expands, you may have trouble attracting customers in that broader distribution because they may know your brand, but not your story.
The issue if you’re a heritage brand is that you need both the existing customers and the new ones. Trendwatching.com talked about heritage brands doing unexpected things that were contrary to what their traditional brand positioning would call for. “Unthinkable” is the word they use. One example I remember is the venerable champagne brand Moet Chandon selling small bottles of their champagne in vending machines.
Conventional branding wisdom would say, “Don’t do that! You’ll confuse your customers and damage your market position.” Heritage brands don’t want to damage their market positions (no kidding) but they do have to change it. Because if all they have is the customers they grew up with, someday they won’t have any customers left.
I may have said a time or two, “The biggest risk is not taking any risk at all,” and that applies here. Follow the Trendwatching.com logic. What I think they are saying is that stepping outside of your brand’s comfort zone and doing some things unexpected and taking some apparently inappropriate actions for your traditional market position has the potential to attract those new customers you have to find. But if done well, it won’t be noticed by your traditional customers. Maybe that’s wrong. Maybe it will be noticed, but they won’t care. The goal is to have the best of both worlds.
I can’t do this justice in 500 words. Here’s the link to the Trendwatching.com report.
Lessons from Walmart
Probably not where you were expecting me to get my inspiration from. Let’s start with a quote from Mr. Gibu Thomas, SVP for Mobile and Digital at Walmart.
“With mobile, we can make a small store feel like a big store and a big store feel like the Internet. We can combine the breadth of online and the immediacy of offline to create an experience that means we can be a one-stop shop for you.”
In this interview in the Atlantic, he talks about how online and brick and mortar are being made to work together. Basically, what he says is selling stuff online is fine and dandy. But what’s a lot more important are mobile influenced offline (brick and mortar) sales. He thinks that by 2016, ecommerce sales will be about $345 billion in the U.S. and that online sales through mobile devices will be 10% of that. But he thinks that mobile influenced offline sales will be (drum roll please) $700 billion. He notes that two years ago, less than 10% of the traffic at Walmart.com came from mobile devices. This last holiday season, it was more than half.
In my presentation, I concluded that how mobile influences brick and mortar sales may be more important than what you sell online. Think about that. Online and mobile doesn’t preclude or replace brick and mortar. It enables it. I’ve mentioned this article before. Go read it if you haven’t already.
One thing I thought about was the impact on specialty retailers. One of the implications is that there won’t be any reason to have a store where one third of the square footage is devoted to back stock. Inventory will move between stores and/or the customer’s home as they demand. The trouble, of course, is that there’s no benefit to be had if you’re just one or two stores. I’m wondering if that isn’t becoming another advantage of larger retailers, making the financial model of core stores more difficult.
And finally, from the Bureau of Labor Statistics, I want to bring you the unemployment rate for 16-19 year olds as of February: 21.4%. For 20 to 24 year olds, it was “only” 12.7%. And I’ve reviewed a study showing that in 2000 45% of teens age 16-19 had jobs of some sort. At the end of 2011, when the study ended, that number was down to 26%. Perhaps it’s improved since then.
There’s not much you can do about that (well, maybe hire some kids) but clearly many of our target customers have less money to spend than they used to. That exacerbates our already over branded and over retailed situation. As always, the flexible, open minded companies with the strong balance sheets will be the ones who do well. Go read some of the stuff I’ve pointed you to and consider taking some risks. You might be surprised how well they work out.