strong brand

A strong brand won’t prop up a weak business

3 minute read

Sir Philip Green’s retail empire, the Arcadia Group, had a reprieve this week. Until the last minute, there were doubts that it would survive a meeting of its creditors and would be forced into administration. In the end, the creditors broadly accepted Green’s plan for Arcadia though it came with significant strings attached, including the closure of many of its famous stores up and down the UK, with around 1,000 job losses. Nevertheless the late rescue enabled Green to declare victory saying, “even if you score in the 95th minute, a win is still a win.

Arcadia owns some of the best known brand names in UK retail, including Topshop, Burton, Miss Selfridge and Dorothy Perkins. Only recently Green owned the former favourite of the UK High Street, BHS.

Despite the recognition and presence of these brands, they have been unable to prevent the near collapse of the Arcadia business.

In our book Myths of Branding, we argue that some marketing Mythmakers credit brands with powers that they simply don’t have. One of these is the idea that a strong brand can successfully mask the deficiencies of a weak business. There may have been a time when a strong brand identity or advertising was a sufficient sticking plaster that could be applied to a business in order to cover up a myriad of ills. But whatever the historic situation, that is certainly not the case today. Even in businesses operating in categories where image has a strong influence on the purchase decision, such as fashion.

A weak business fails its customers either because of poor quality, poor value or poor choice or because it is out of step with what its customers want, need or have been conditioned to expect. None of those things can be masked by good graphic design or great communication.

Businesses like BHS and Austin Reed, once a much-admired men’s clothing retailer, fail because they do not move with enough agility. They stop offering enough of what their customers want in a way that their customers want it. And they can’t meet the increasing costs of their operations especially if they face rising rental and business rates.

“In today’s market place a brand is not distinct from the business it serves, they are in fact integral to each other.”
And the failure can happen fast. In just a few short years BHS moved from being a jewel in the crown of Sir Philip Green’s empire, hugely successful and highly cash generative, to being almost irrelevant. New entrants like Primark were proving better attuned to the taste for fast and affordable fashion. Supermarkets had moved into the category, proving highly effective at retailing children’s clothing. E-commerce was providing new ways of shopping online. Other brands were meeting the demand for a more exciting customer experience. BHS found itself surrounded and its competitive advantage eroded. Similarly, Austin Reed another stalwart of the UK high street just couldn’t find its niche. Between the new generation of high street fashion retailers and the more upscale luxury brands, its mix of conservative fashion allied to good quality failed to excite. All that is left of Austin Reed now is an online site and representation at a few outlet stores.

Compare this with the continued rise of Primark. Its success is almost a reverse mirror of the troubles experienced by brands in the Arcadia Group. More than a decade ago Primark was not the ubiquitous brand it is now, nor was it particularly associated with popular fashion. But the global financial crisis changed people’s attitudes towards affordability and value. Primark’s focus on being brilliant at the basics of retail: keeping its fashion ranges up-to-date with customer trends, keeping them at affordable prices and ensuring availability, helped the business to grow exponentially. There were two other accelerators for the brand and business. One, despite the fact that Primark remained defiantly opposed to selling online, the online world exponentially increased its sales and salience. The trend for young people, particularly women, to use social media to share their fashion choices and recommendations led to phenomena such as the Primark Hauland Primani (mix-and-matching Primark clothes with more upmarket labels such as Armani). None of this was proactively managed by Primark but they were able to respond to it with great agility. Two, ABF, Primark’s owner, were acquiring properties on secondary and then primary high streets which not only gave them a strong asset base but also stores which were living billboards for the brand. Primark now makes a significant contribution to ABF’s revenues and profits in a way which Arcadia would surely envy. And Primark spends hardly anything on advertising.

In today’s market place a brand is not distinct from the business it serves, they are in fact integral to each other. Attempts to use brand identity and advertising to trade on a long-established reputation as a way of papering over a weak business, is likely to prove unsustainable and counter-productive. At the same time if you have a good and growing business, you can apply the virtues of strong brand building to accelerate its growth and value.

To stretch a fashion analogy: branding is not just the clothes your business wears but what your business does and how it does it. In business as in life, ‘handsome is as handsome does’.

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Andy Milligan
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