"Can
Gap's Ailing Old Navy Concept Right Its Ship?"
asked a recent Brandweek headline. Wall Street
analysts and investors have echoed this same question
in recent weeks as the specialty clothing retailer's
value brand continues its downward spiral. With over
1,000 stores in the U.S. and Canada, "Old Navy
is doing worse than they expected and a lot worse
than the Gap division," commented Mark Montagna,
a senior analyst at CL King Associates in New York.
News of the brand's continued sputtering performance
comes on the heels of a significant strategy shift
away from Old Navy's traditional base of lower-income
young adults and young families.
In
July, after two years of flat or declining same store
sales—the holy grail of retail performance—Old
Navy announced the brand had become "overly focused
on value." It began the roll-out of new products
and prices aimed at the more upscale shopper. The
chain advertised in high-end fashion magazines such
as Vogue and InStyle and a new advertising
slogan urged buyers to "get your fash'on"
at Old Navy. Though some of the upgraded items with
higher-end materials such as silk and leather initially
sold well, Old Navy continued to have "an unexpectedly
difficult time attracting customers to stores and
has struggled to clear out leftover merchandise,"
according to the Wall Street Journal. Not yet
six months into its new strategy, speculation mounts
that another shift in strategy is just weeks away.
That
it's already a forgone conclusion that the upscale-shopper
strategy's days are numbered is not at all surprising.
When a brand is in hole, its managers are understandably
impatient for a way out. Add in the urgent pressures
from senior management and Wall Street for signs—primarily
in the form of sales and profits—that happy days
are indeed here again and it's a miracle that a new
marketing strategy gets even six months to prove its
self. In fact, the halls of marketing history are
littered with here-today-gone-tomorrow marketing strategies
which were all heralded at the time as THE way forward,
but failed to stimulate the much anticipated rise
in revenues.
Most
in business are loathe to admit that a consistent
downturn in sales is rarely the result of a single,
sudden event. Typically, a combination of things—new
competition, new technology, changing buyers needs/problems/interests/etc.,
plain old complacency on the part of the brand's managers,
and more—compound over the course of several
years, making the likelihood of a simple, painless,
and, most importantly as far as CEOs, CMOs, and analysts
are concerned, QUICK solution pretty remote. Still,
instead of bringing the brand into the shop for an
overhaul, companies tend to stick with the marketing
equivalent of a quick lube. When sales are not turning
around after some relatively short period of time
with the new marketing strategy, so the thinking goes,
it's better for the company to just cut its losses
and try something else sooner rather than later. "We're
like ADD ferrets on amphetamines," GM's executive
director of global market and industry analysis Paul
Ballew said of auto industry marketers, but he could
have been speaking about any company in America.
We
believe there's an inverse relationship between the
amount of time and effort a company invests in developing
a new marketing strategy and the immediacy of results—in
other words, the longer a company spends working to
understand current problems and developing a strategic
solution, the sooner it sees results. For example,
Brazilian brewer Brahma, now AmBev, a division of
InBev, the largest brewer in the world, came to a
crossroads with its Skol brand, a distant #4 player
with eroding market share. The company launched the
largest study ever undertaken of the Brazilian consumer
beer drinking market in almost 30 large and small
urban areas, as well as a thorough investigation of
their distribution channels and B2B customers: bodegas,
grocery stores, restaurants, bars, etc. Based on the
research, it identified a target with high profit-potential
and a compelling positioning, "smooth flavor,"
from which the advertising agency created a successful
advertising campaign. It retrained the sales force
to put a heavier emphasis on the key channels that
reached the target market. As you might expect, all
of these things took significant time. Within
six months, Skol's sales skyrocketed and market share
has continued to rise ever since.
On
the other hand, if a company comes out with a new
strategy every six months, it's hard to believe they've
done anything of substance to try to identify major,
real opportunities and devise a plan for executing
marketing efforts against them. To Ballew's point,
American car companies are a perfect example of the
problems associated with revolving door marketing.
As BusinessWeek's David Kiley pondered on the
Brand New Day marketing blog, "If you can't make
up your mind about what this brand is supposed to
be and stand for in the marketplace, how can consumers
be expected to figure it out?" Dropping a new
marketing strategy after a relatively short-period
of time and moving onto something else, therefore,
may actually do more harm to a brand than good, even
if sales aren't reviving.
Remember
sales numbers tell you nothing about what areas of
a strategy and plan are working and what isn't. Sales
numbers by themselves are neither a diagnostic or
prescriptive tool. Little in the way of good sales
news, particularly in the short-term or when implementing
a new strategy involves considerable upheaval (i.e.,
Wal-Mart), is by no means an indication of whether
a new marketing strategy was a "bad idea"
in the first place. The question for marketers to
ask is not, "what should we try next?" but
"why isn't what we have in place working and
what can/should we do to fix it?" And if a company
never investigated the answer as to why its brand
was declining to begin with, it's an even better place
to start. Perhaps the target is off. Or maybe it's
the positioning and product mix. Or it could be the
advertising campaign or the media plan. It could be
the strategy is not worth fixing, but the process
for coming to that conclusion should point to a better
option. Unless these questions are asked and thoroughly
answered, moving on to something else or going back
to what you had to begin with doesn't do anything
other than cause more brand confusion.
