Trend-Value without an Iconic Retail Brand

What happened for the past decade when a specialty apparel retailer in the Trend-Value segment failed to develop an Iconic Retail Brand? First, a quick definition of Iconic Retail Brand: a brand name, logo or graphic which is identifiable without prompting, and associated by consumers with specific brand values. This applies to all consumers, not just those being targeted by the Brand positioning. As an example, most consumers have an image of what Abercrombie stands for, or Victoria's Secret. Different groups might attribute different brand aspects to each, yet a remarkably common set of brand distinguishers (the words people use to describe a brand) emerges. I didn't make that up....actual research has been done on this subject. Back to the initial question: what happened in the past decade when a specialty retailer failed to develop and sustain an Iconic Retail Brand? In general, they had good years and bad years. The good years were brought on by participating in the strength and longevity of macro-apparel trends. The bad years were a result of poor trend interpretation or a down-cycle in trends themselves. In general, in the good years these players did not lead the pack in comp sales or gross margin basis point improvement. In bad years, they often DID lead the pack in comp sales declines and gross margin basis point decay. Not to mention inventory management and senior merchant turnover. But the point is, mostly, they survived and made a respectible living, when averaged across the years.

Now we enter the recession. What does this imply for these non-Iconic Retail Brand specialty stores? It means your probably volume is even more negatively elastic than your more entrenched competition. Fewer dollars to go around means consumers are more likely to choose locations with greater awareness levels and stronger brand positioning. If you don't know what a store stands for, likely, you'll walk by it when you have less available income. Makes sense, right? Why go in....shopping isn't as fun, you KNOW where you are more likely to find something you like, and you really don't have the time or the emotional energy to hope that this new store will do it "better". In fact, you don't really care about "better"....just about "adequately and less expensively".

Even when one of these non-Iconic stores does an excellent job of trend interpretation, how is this communicated to the consumer? Remember, foot traffic is DOWN. So advertising through window displays is less effective. Yes, word of mouth will still be an important part. Yet even this is impacted by the recession. Fewer "experiments" mean fewer peers trying different stores means less "sampling" translating into less word of mouth impact. Or something like that. Trend-Value players without Iconic brands have depended on location and trend strength for their success. Location leads to traffic, and trend strength leads to sampling and searching.

So what does this mean if you operate a Trend-Value store without an Iconic Brand? First, it's probable you don't see yourself that way. Get an outside opinion. That aside, it means that you MUST do one of (and preferably both) things immediately. First, if there is any potential to establish an Iconic Brand, do it. Borrow it. Steal it. Merge with it. Just get it. Second, you need to be REALLY good at the operational end of your business. Your merchandise cost has to be as low as humanly possible because markdowns ARE going to be higher. Your operational efficiencies have to be tight because your sales per square foot ARE going to be lower. Your inventory control and supply chain has to be tight to t he poinit of JIT because your turns ARE going to be smaller.

First and foremost, get creative about having an Iconic Brand. The risk is worth it. The odds are, if you aren't extraordinarly good at the operational end of the business, or have really deep pockets (strong balance sheet, existing cash and a good credit line)....you may not make it through the recession. Because some of you won't. The best possible solution to the dilemma is to have that Iconic Brand which will give you the upside potential to garner a disproportionate share of diminished demand and interest.