The consultant that couldn’t say no

The consultant that couldn’t say no

“Macy’s has survived and thrived for 152 years. By adapting to the current demands of our customers, we can be here 152 years from now if we keep the customer at the centre of all decisions.” – TerryLundgren, chief executive of Macy’s

How long should and could a brand last? What really are the birth, growth, maturing and declining stages of a brand’s lifecycle?

To read seminal works such as Built to Last by Jim Collins and Jerry Porras, we would understand that very few brands actually last over 100 years in duration, relative to the total number of new businesses and brands created. These “clock building” rather than “time telling” businesses are clearly an exception rather than the reality for many brands.

This really came home to me at a recent consultants meeting which in itself was fascinating. It seemed like a meeting of cardinals to me, each consultant eminently well qualified to interpret and comment on the brand health before them and each being quite religious about their perspective. Each adopted the view that it was all about refining and growing this old business model.

What really came home to me was the prominent historical business model and brand presented to this group of consultants, each with a plan and perspective to renew, re-invent, refine, re-innovate and generally restore greatness to this business model. My perspective was to question whether this business model was effectively in such decline that energies and capital were best utilised in new business/brand development.

Now, admittedly, this case was an extreme and nearly every business can be resuscitated and renewed to some degree, although sometimes the ultimate value add is to say goodbye to that one business model. In this case, technology changing the consumers’ category behaviour was the dominant driver. This single category retailer, operating out of 1000 square metre sites, was simply operating yesterday’s model today with little perspective on tomorrow’s reality.

Consumers are generally shopping differently and within the category. Meanwhile, questions of brand and product differentiation ensured that this prime mover of the late 1990’s was a laggard in 2014.

So what options were being considered? Well the understandable, including:

  • changing and reducing format size;
  • focusing on the uniqueness of the offer through brand differentiation;
  • building a loyalty program;
  • increase social media usage; and
  • reduce working capital ratio.

Would these topics actually, in unison, ‘fix’ this business model?  They could certainly help in the short term, but could they in themselves restore this business model to its former glory? Or would the funds be better utilised elsewhere?

In other words there is, in my humble view, a widespread perspective and belief that business models and brands should live on for an infinite lifetime. This view has spanned industries of businesses all offering “strategic” support each squeezing out the last gasps of oxygen from the patient, hoping to share the wonderful news with all stakeholders that the terminally ill patient has somehow miraculously burst back to life with enormous vigour.

After all, all life forms as we know them have a finite life span, why should business models be any different? Even if the brand architecture remains constant (e.g. David Jones, Macy’s Qantas) the sub brand changes, adapts, innovates and grows organically and differently.

The point is that sometimes a business model is actually in decline and many would say that this is the opportunity to reinvent or renovate. I would venture to say that this is often the point where the gate has closed and, somewhat paradoxically, true innovation and even reinvention occurs during the growth stage of the business and brand lifecycle.

So it’s not about saying no per se, rather evaluate, consider contextually and recognise that unlike the fairy tales, we and our business brands don’t generally live forever.

Happy fit retailing.

Brian Walker is managing director of Australasia’s leading retail consultancy Retail Doctor Group.


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