This weeks inflation figures show that March quarter’s inflation fell to 1.6%, the lowest annual rate since late 2009. Most of our economic commentators are now predicting an interest rate cut by the Reserve Bank as a forgone conclusion. But if brand owners are expecting that a cut in interest rates may do something to awaken Australia’s consumers from hibernation, then they need to have a re-think. We seem to be moving to a low inflation, low interest rate and low growth world – brands will need to therefore adapt.
Posts Tagged ‘brand-scientist’
In Australia the department store sector has surrendered almost one third of its market share since peaking in the mid 1980’s (Herald Sun November 8, 2011). They are between a rock and hard place, with online and specialty retailers earnestly chipping away at their customer base. For the financial year just past Myer suffered a 5.5% decline in sales and David Jones a 3.2% contraction. Interestingly during the same period many luxury brands reported growth, so it is not all being driven by the new cautionary consumer mindset so prevalent in Australia.
Surfing brand Billabong International is moving down stream into retail to better control how its products are sold. An increasing trend amongst the large retail chains is to increase the proportion of merchandise they sell under their own brands. Brands like Billabong can either cop it sweet and sit back and let their share of floor space and sales decline or they can take steps to control their own destiny. It is pleasing to see that Billabong has opted for the latter. Billabong is increasingly seeking to make retail acquisitions as a way of gaining greater control to their route to market. Last year they acquired the California based RVCA brand, the West 49 retail chain in Canada, Surf Dive’n’ Ski and Jetty Surf in Australia. Likewise Billabong is investing to build its online sales, which currently makes up 3% of their revenue.
The day of just having beautifully attired mannequins is over. The digital world is opening up a whole new frontier for retailers. New and wonderful ways to engage customers and showcase products. The possibilities are immensely exciting, but the resource requirements challenging. The digital world is a two edged sword. A window to an imaginative and captivating domain, but equally leaving you looking like yesterday’s brand if you do not creatively unlock the magic of what is available.
Over the past couple of years we have been witnessing the demise of the Qantas brand, with its business strategy dictating the brand’s terms of engagement. Every public gesture that the business has made, has reflected an unwavering commitment to taking cost out of its operations. There has been scant regard for the brand or the customer.
Fashion retailers in Australia are simply devaluing their brands with a seemingly unrelenting reliance on price discounting. In Melbourne we have not yet officially hit winter but many of our fashion retailers are hitting the ‘sale’ panic button. In the past week I have had the pleasure of purchasing jeans and pullover from Saba at a 30% discount. This discount was not simply available on those two items, it was available on all menswear items. The interesting thing is that I went to store specifically to get the items, not knowing the sale was on. I am a loyal customer, the very thing that brand equity is based on. They traded off 30% in gross profit margin and did nothing to make me think that I had specifically been rewarded for my loyalty – as it was a discount available to all.
There is nothing like the mother of necessity to inspire creativity. Cigarette brand owners are amongst the most creative brand owners on this planet because they have to be. They will never roll over and die (like many of their customers!), they will simply fight each new hurdle imposed by Government legislation, because their very existence depends on them finding new and novel ways to retain their appeal.
I read with interest an article in The Australian newspaper this week (22 March 2011) which featured the ‘Sportsgirl Likes’ collections. In Australia, Sportsgirl as a younger woman’s fashion brand, occupies an enduring and esteemed positioning, the result of not sitting on its laurels. The Sportsgirl Likes collections is testimony of the brand’s capacity to look to the future. The collections provide Sportsgirl with a potent vehicle for fostering young design talent, and the same time injecting interest and currency into their brand.
Each year I expect that the delivery of my Yellow Pages print directory will surely be the last. I appreciate that at least you can now go online (yes note online!) to request that one is not delivered, but it is an interesting phenomena witnessing the decline of an outmoded product format.