When Brand Reputations Decline and What We Can Learn from the Rise and Fall of Well-Known Retailers



5th April 2022

One of the key roles of retail design and brand positioning is to ensure companies remain firmly rooted to their core values. But the enduring success of a business can be linked directly to its ability to continually adapt to evolving customer choices and the competitive landscape. Agility is everything, and Branding remains a vital tool when it comes to getting a business’s story across to customers. But history is littered with examples of businesses who have misjudged their customers, failed to evolve, or disowned their core values by placing bets on short term trends.

When Marketing Campaigns Lose Touch: FCUK

Up until the late 1990’s, French Connection was considered an iconic, and cosmopolitan fashion brand, with a loyal following of well-heeled 20-30 somethings. But when they decided to adopt the acronym ‘FCUK’ in the late Nineties, their clothing became standard issue for a new category of customer, defined not by their desire to wear stylish understated clothing but by a new set of anti-establishment values represented by brashness and attention seeking in the form of t-shirts emblazoned with a not-so-subtly misspelled vulgarity.

Sales rose sharply, from £156m in 2000 to £241m in 2003, but with this success came an over-reliance on what was essentially a marketing gimmick. With feverish overuse across their collection, and facing a headwind of rebukes by the Advertising Standards Authority, along with action from several pressure groups and religious institutions, retailers such as Macy's and Bloomingdale's began removing FCUK-branded clothes from their shelves. FCUK soon became as ubiquitous as it was puerile and what was once an iconic, stylish and youthful brand found itself in no-man's land.

The brand is now almost entirely synonymous with the use of over-sized slogans such as ‘Fcuk like a bunny’ and ‘Fcuk for England’. Frozen out by the rise of more agile competitors such as H&M and Zara; French Connection has been left in a dismal position. From peak-to-trough, shares fell 90% between 2004 (the FCUK heyday) and 2014. With sales continuing to falter, and with limited options for brand recovery, in 2016 it was announced they would be resurrecting the FCUK logo and would be launching an ‘exciting new’ FCUK campaign.

By displacing and alienating their core customer, and pursuing a short termist, income driven strategy, French Connection toxified their brand and mortally wounded their reputation. After an aborted sale attempt in early 2020, the future looks bleak for a brand that was once a fixture on the British high street.

The Innovation Vacuum: Forever 21

Since its founding in 1984, Forever 21 has been one of the forerunners in the Fast Fashion market. With giant stores, packed full of identity-defining clothing, they were a go-to destination for teens in the 2000s. In 2015 they posted over $4 billion in sales. Four years later they filed for bankruptcy and shuttered thousands of stores worldwide. Their decline can be attributed to three key factors: failure to acknowledge that the customers they attracted 20 years ago, eventually grew up, and the next generation of customers no longer relied upon bricks and mortar environments - they also placed inadequate focus on e-commerce, had too many stores occupying vast expanses of space, and were slow to adopt sustainability-focused initiatives.

When the retailer’s ecommerce platform was popular and it’s social media campaigns were enjoying high levels of engagement, the company didn’t take the opportunity to invest in its online presence. Overbuilt stores and high rents compounded their woes; so while competitors downsized to smaller spaces, mini-shops and pop-up stores, Forever 21 struggled to pay expensive rents while facing a growing assault from H&M and Zara.

The company’s fast fashion model is also perceived as wasteful by Gen Z and millennial consumers, who consider a brands’ environmental and social commitments when making purchasing decisions. Meanwhile, H&M launched its Conscious Collection in 2011 while Zara began installing collection bins in 2016 as part of their recycling initiative.

When Big Companies Are Able To Adopt Startup Agility: STARBUCKS

Starbucks always positioned itself as an exclusive coffee shop with a friendly atmosphere, great staff and, above all, good quality coffee. But the perception of these attributes will always be measured against the competitor environment of the day, and what was once exclusive and high quality, eventually became generic and mundane. In 2007, they closed 600 stores.

Aggressive expansion had led to an overemphasis on grab and go, which eroded the exclusive club feeling. A bloated product range led to an undermining of the brand and resulted in an over-complicated menu and longer waiting times. Greater pressure on staff then reduced the amount of time they had to dialogue with customers which further eroded the experience. Prices remained high though and so perceived value began to drop.

The opening of too many stores in close proximity to one another led to reduced morale of store managers and cannibalisation of sales and what was once considered luxury became everyday ordinary. And that is just where Starbucks found itself; the everyday coffee choice for the mass market, not the elevated luxury experience it once was. All this while, globally, the coffee market was continuing to show strong year-on-year growth.

So in the face of a steadily declining business, and having lost touch with its origins, Starbucks made seismic changes to its model in order to re-establish itself as the premium coffee operator. They launched the Reserve store, designed as theatres for coffee, offering different types of coffee experiences: pour-over, siphon, clover, specifically roasted Reserve coffees on-site that you are able to buy from a scoop bar, and interactive experience with bars and baristas. Through its new store portfolio, the company hopes to address the problems of competition and ubiquity by delivering customers the highest quality coffee and returning to their core values. We will start to learn whether these changes will improve Starbucks long term success over the coming months and years as this new model is rolled-out.

The Rise Of Vertically-Integrated Brands

As consumers have become increasingly comfortable with using the internet to make the kind of purchases that they would previously never have dreamt of committing to without being there in person, (think buying a car in the case of Rockar with the likes of Jaguar Land Rover), we have started to now also see the rise of vertically integrated businesses that own the entire supply chain from the manufacture of unique, design-led own-brand products through to distribution both online, but also, in some cases, in tandem with bricks and mortar retail environments, to form an holistic, tightly integrated closed walled system where unnecessary costs are stripped away, prices can be lowered and margins still maintained. Warby Parker have disrupted the eyewear industry by doing exactly this, developing a fully independent brand that avoids unnecessary markups and essentially keeps everything in-house. This enables them to sell lensed eyewear for less than $100 USD against competitor prices of around $500.

But what really sets Warby Parker apart from the market is the clever integration of a series of high-value initiatives, such as distributing a pair of glasses to someone in need for every pair sold. On top of this, they allow customers to try out 5 pairs of glasses for free for 5 days and then simply return them in a specially designed, prepaid box. They have also developed an app with an augmented reality function that enables you to virtually try out as many pairs as you want which has become one of the highest rated on the Apple App Store with a 5 star rating from almost 100,000 reviews. And to top it off, they inject so-called ‘miracle moments’ into their customer experience, and in doing so, can turn first-time buyers into lifetime customers. One great example of a Warby Parker miracle moment was the inclusion of a make-a-snowman kit in every purchase around the winter holidays.

So, are we witnessing the prototype business model for the next generation of brand success stories? It seems that a design-led approach, supply chain ownership, high-convenience and rapid gratification along with memorable experiences and an authentic, consistent message are a great recipe. Time will tell whether Warby Parker, who are still barely a 10-year old company, can adapt and thrive as they face the inevitable challenges of some of our other examples.

Successful Brands Take Nothing For Granted

Enduring , timeless brands remain consistently true to their core values, whilst habitually adapting to changes in customer behavior, by not just following trends, but creating them. They never forfeit their values, but they become leaders in the ability to pivot their offer to best reflect consumers’ shifting motivations and remain continually relevant.

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