Love's labours lost

Consumers can be a fickle lot when it comes to brand loyalty, but it canbe the brand’s fault if the relationship turns sour. Maria Evangeli finds out the secret behind making it last.

The UK's high streets are plagued by uniformity.

Chain stores don't go beyond the logo to grip customers with a personal and exciting experience. Shoppers want to be courted, nurtured and valued, but many established brands fail to deliver on their promises.

"Brands are like friendships. We get bored with certain relationships. Retailers need to surprise and delight us to maintain our love and affection," says Hugh Burkitt, chief executive of the Marketing Society.

Burkitt recalls when there were very few major chain stores in his local high street, but now it is dominated by fast-food outlets and coffee shops. "Shops like M&S and WHSmiths don't seem to do any one thing well any more and are relics of a bygone age," he says.

Peter Fisk, executive director of Brand Finance, says that high street retail lacks the leaders that treat brand as a key asset. Conventional retailers from M&S to Next, Sainsbury's to Woolworths, typically have weak brands – because they have lacked serious investment over time, they do not have strong differentiation and purpose.

As a result, he claims, most retail experiences are bland and commoditised and their ranges and products are similar. They blame their poor performance on supply chains and merchandising, but their brands are poor to start.

"Retailing has a culture of short-term performance, maximising footfall, improving time to market and focusing on quarterly sales. Retail management dominates brand management. Retail management is about getting people through the doors to browse and buy; brand management is about engaging people in a strong concept and building a relationship with them," he says.

Consumers can be a fickle lot when it comes to brand loyalty, but it can be the brand's fault if the relationship turns sour. Maria Evangeli finds out the secret behind making it last Love's labours lost

First impressions count and the in-store experience can be a good gauge of retail brand health.

"Topshop feels in touch with its customers – the music played, the food tastings, the guest DJs; they are curating that space rather than organising the shopfloor," says Ralph Ardill, marketing and strategic planning director at the design and communications consultant Imagination.

Selfridges has also created a retail theatre but GAP, Next and FCUK stock similar product lines and are missing their mark, he says.

"Great iconic brands challenge the mainstream in some way and have a disproportionate influence on the market relevant to their size," says Andy Milligan, director with branding agency Interbrand. "If your focus or target is ephemeral and temporary you become irrelevant."

But even iconic brands need to reinvent themselves periodically to stay relevant to the next generation of shoppers.

"We're past the point of trends and tastes; consumers are cynical, smart, sophisticated and outstrip efforts to influence them," says Nigel Piercy, professor of marketing at Warwick Business School. "We have blind faith that brands will protect the business but brands are not that robust."

Stephen Cheliotis, chairman of Superbrands Council, agrees that iconic history and status is not enough tomake a brand successful in today's market. Laura Ashley and The Body Shop are two 1980s high street icons that were original and distinctive but, looking at their balance sheets, have failed to maintain their relevance.

The Body Shop built its image on the socially responsible agenda promoted by its founder, Anita Roddick. But, in 2002, profits began to slide as competition increased and organic and environmentally friendly beauty products became widely available in outlets such as Boots.

"The Body Shop was an awful retailer but a socially responsible innovator. It has become politically correct [to be socially responsible] so its position has been eroded and replaced,"says Ardill.

After a failed takeover in 2002 by Mexican nutritional supplement company Omnilife, founders Anita and Gordon Roddick transferred control to new management.

"Once the founders were gone, there was no succession planning for the spirit of the brand," Ardill adds The company operates 2,039 stores in 50 countries but comparable store sales in the UK, the group's single biggest market, fell 5% in the first half of 2004. However, the company claims solid Christmas trading has improved year-to-date sales.

Body of evidence

Bill Eyres head of Body Shop's global PR, insists: "The fact that we've seen the first positive like-for-like sales in the UK for a number of years reflects good progress we have achieved in repositioning the brand. This performance is down to good execution, better customer promotions and improved product."

Laura Ashley is another high street name struggling in the new century. A UK-listed company, it is majority owned by Malaysia's Malayan United Industrie.

In January, the company's share price plunged following the announcement that thesecond chief executive in two months had resigned, and UK fashion sales fell 36%.

On 20 January, the firm unveiled full-year financial results showing a 10% slump in sales, on a like-for-like basis, against 2003.

Ardill claims: "Laura Ashley struggles to have a personality and is trading on a stereotype of Britishness made popular by Princess Diana in the '80s. It has failed to connect with the public."

But MarkWinstanley, the company's home creative director, claims salvation exists in the form of its home furnishings line, which represents 80% of its UK retail sales and grew 3%in the first half of last year.

"The range has evolved our brand's heritage and our goal is to emulate that success in our fashion division," he says.

Reinventing a brand requires a commitment to innovation and intimacy. But Ardill believes consumers are more forgiving of brands like M&S, Sainsbury's and Boots because they are part of the national identity.

"We look for institutions that endure and are a part of our Britishness, so we don't like to lose them from the high street," he says.

Piercy agrees that brands like Sainsbury's, which is currently losing out to Tesco in the supermarket battle, can be reinvented. "I have watched it destroy its brand and reputation and lose touch with its customers. It needs to be slicker and faster in adapting to trends.

"Its supply chainmanagement is appalling and implementing ideas is tough. Speed to market is critical. We are fed up in waiting for things. Supply chains that deliver have advantage."

The Marketing Society's Burkitt adds that accessibility is important for grocery brands like Sainsbury's, but points out this is often a problem for those in a high street location which cannot offer easy parking.

"Tesco was criticised in the 1990s for acquiring leases but now they have ring superstores outside every major UK city.

Smaller Dixons and Currys stores are also moving out of the high street so they can compete more effectively as superstores.

"Boots will survive as it has a stranglehold on popular toiletries and pharmaceuticals but, as a shopper, I get frustrated when they are out of stock. It's run by money men, not retailers," he adds.

Boots admits that, historically, the company underinvested, sought growth outside its core business and let prices drift, but says it is working hard to get the trusted brand back on track.

"We're now putting the ‘chemist' back into Boots. Customers want convenience and value so we've reduced our pricing, improved opening hours, modernised stores and have 100 edge-of-town stores," Donal McCabe, head of financial media, explains, although he admits there is still far to go.

"Current management is focused on retailing basics. We have reversed our declining market share in dispensing and increasedfootfall and sales, but it's early days and there is more to do."

If iconic brands fall in and out of favour, what about the staying power of brands deemed "cool" by 18 to 44-year-old urbanites?

"Cool brands make an emotional connection that's all about lifestyle.High street stores will never be cool because they appeal to the mass market," says Coolbrands judge and author of The Style Bible, Alon Schulman, although Topshop proves the exception – rating in the top five of the coolest fashion brands in Superbrands Cool Brand Leaders 2004 survey.

The price of losing your cool According to Shulman, brands can lose their cool credentials if they fail to innovate, become too mainstream or are out of touch with modern lifestyles. To be cool a brand has to be stylish, innovative, original, authentic and unique.

UK fashion chain French Connection – or FCUK – was rebuilt in 1997 on the back of a cheeky Brit Pop attitude, but is struggling to sustain a retail concept that grew from an ad campaign. In November 2004, the company announced a drastic profit downgrade. Analysts dropped their market forecasts by 15% from £39m to £33m.

"When you rely on shock tactics you have to escalate. It built a brand identity on defiance and now is losing that franchise. It will struggle making money from selling bedsheets and sunglasses," Ardill says.

"Brands with a real personality stand out in a cluttered FMCG world because they rip up the rule book, take risks and try something new," says Superbrands' Cheliotis.

"Brand loyalty varies widely across sectors.

Some of it's emotional, some based on product quality and image and some based on sentimental history."

Fisk says brands that have power, as well as scale, will endure. If they have a compelling idea and a distinctive experience, they will be financially successful as a result. These brands are emotionally and rationally engaging – for both consumer impact and business results.

Brands in retailing that demonstrate this, says Fisk, include Tesco, for its principles, Ikea which has charisma, Selfridges for the experience it creates, Amazon for its personal appeal and Space NK for its distinctiveness.

Brands and relationships, market strategy and innovation are critical indicators of future company cashflows and the high street will be the first place to embrace the brands that get it right.

Brands to watch 2005

1. Sky –maturing from land-grab into the brand leader

2. Samsung – innovator in technology becomes cool

3. Subway – world's fastest-growing franchise

4. Paul Smith – lifestyle brand extending in every direction

5. Amazon – diversifying now that consumers are on board

6. Quaker Oats – post Atkins, porridge is back in vogue.

Source:Brand Finance

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