A recent study by the National Retail Federation found that “consumers are still pessimistic about buying.” The study blames the economy. Brilliant. But really, whose fault is the current state of the economy? The government? The banks? Wall Street? Consumers? Retailers? Manufacturers? We’ve all had a hand in it for sure, but until companies focus on real innovation and bringing customer empathy back to their brands, I fear the markets will continue to be flat. Consumers will spend their money only on the things they must and only with the brands that are engaging and communicating with them on an emotional level.
I’m writing as I fly back from Las Vegas, where I’ve just spent a few days walking the apparel shows. I must say I had a similar reaction to the one felt by one of my partners at the recent men’s apparel shows in New York. He came back lamenting over how little any of the brands differentiated themselves from the others on the floor. There were no stories to engage the consumer, just the same hawking of product, which was indistinguishable from that in the next booth, and the next. The men’s apparel business is just one example of how a segment has largely gone backward from a brand perspective during the course of this recession, not forward.
But if you look at the stock market, there are brands that are doing better right now despite the recent volatility. And therein lies part of the answer. Rob Olser hit on this last month in a piece on Business Insider. We’ve all experienced the success of Apple, and it has now overtaken Microsoft as the most valuable technology company in the world. In the last five years, Microsoft stock has risen about 10%. Total. In the same five years, Apple’s stock has risen 487%. Innovation, consistency, culture, integration of marketing and product development, and building a story for every product–these are what has made Apple worth $300 billion. Everything is centered on the brand.
But here are a few other examples of success, along with some advice for those brands afraid to come out and fight:
1. Constantly innovate.
P&G has done a remarkable job over the years at continually and consistently raising the bar through innovation in their categories. Take razors and toothbrushes. Product design and innovation lead the way here, with better ergonomics and material use. It is also moving swiftly on the sustainability front. One example of this is the Supplier Environmental Sustainability Scorecard, which is now moving from its pilot program into benchmarking. These attributes make their brands much more emotive to consumers and desirable for retailers.
2. Rediscover the brand.
Nordstrom lost its way back in the 1990s after changing senior management. Much like what happened when Steve Jobs left Apple, Nordstrom soon moved away from the foundational values that made Nordstrom, well, Nordstrom–unparalleled customer service, on and off the floor. It wasn’t until the Nordstrom family [brothers Blake, Pete, and Erik, and second cousin Jamie] took over senior management and went back to the core principles of the Nordstrom brand, that they got their mojo back. Nordstrom just reported a 12.4% increase in net sales for the second quarter. Same store sales are expected to be up 4% to 6% for fiscal year 2011–at a time when other retailers are struggling.
3. Stay in your lane.
Five Guys Burgers and Fries have nearly $1 billion in sales. Its biggest concern right now, says founder and CEO Jerry Murrell, is staying true to the brand. Five Guys was built on a very simple brand promise–authenticity. Every burger is made to order, and potatoes are brought in from different farms every day. As the franchises expand, its biggest job is to instill the brand essence and culture that made the company successful. Unlike other QSR’s, Five Guys has kept it simple. And profitable.
4. Refocus on brand trust.
Luxury brand stocks like LVMH continue to outperform others. Why? Its brands, like Bulgari and Jimmy Choo, resonate emotionally with their customers. And what’s more, their brands are still trusted by consumers to deliver on the promise time and again. As a result, consumers are saving up to invest in a brand, rather than the crazy consumerism of several years ago. Continually investing in your brand so that it stands out from the competition is like buying T-bills. You’ll always get your money back, and you can always trust it.
Smart brands have a unique chance now to make their competition irrelevant through reinvestment in their brand. Forging an emotional connection with the consumer will not only create loyalty but profit–for you and the market. And I’ll give you credit for saving the economy.