AND THE WINNER IS….. LESSONS FROM THE WORLD OF BASEBALL.

As the baseball playoffs got underway last night, the line-up of teams by and large looked the same as usual with the Yankees, Red Sox, Angels and –oh yeah, for the 14th straight year—the Atlanta Braves.

It’s hard to remember back to the days when the Atlanta baseball team came to our marketing group at Eckerd looking for potential promotional tie-ins with their sorry team of perennial losers. Now they hold the longest winning streak of any professional sports team. It hardly seems fair to someone like me whose Devil Rays finished last for yet another year in the American League.

As I read an interview between the Wall Street Journal and John Schuerholz, the Braves EVP and General Manager for all of those 14 straight playoff years, I was impressed on how the principles of building a consistently, great team is a lot like building a great brand, especially in the competitive retail world. When asked how he managed to achieve a record that any CEO would die for, Mr. Schuerholz said:

“It really turns on one significant principle, and that is surrounding yourself and filling your organization with quality people and providing them with a clear vision, an uncompromising game plan.”

Notice he didn’t say put together an exciting group of characters, have regular stadium promotions, and have a memorable team slogan. Once again it’s the people, stupid! Now I know there are some that will say that it’s just a matter of getting the best players, spend a lot of money on them, and the rest happens. Schuerholz talks about the entire organization and not just the players and coaches. Winning brands are the same. It’s not just having great merchants, great marketers, and dedicated operations people. It’s having everyone from the distribution centers to the sales floors understanding the brand vision and then executing it better than the store across the parking lot.

I’ve talked about the 5 steps of totalbrandintegrationÒ that we have developed to get everyone to live up to the brand everyday. It’s not coincidental that Schuerholz’ 5 Tips on Transforming a Culture of Losing are very similar to the branding principles:
· Gather everyone, communicate the plan and preach it daily. How often we forget to market our brand to our own people as effectively and as consistently as we do to our customers.
· Constantly remind them that it works. Just sending out a video and a newsletter is not gong keep the brand top of mind. It has to be talked every day at every store. The store managers are the team leaders.
· Don’t be afraid to get rid of the people who don’t buy in. There is no shortage of the right people for the job even at store level. You have to go after the right ones and recognize the attributes of your best people and replicate them. Let the rest of them go on the free agent list.
· Make the lowest level employees feel as important to success as the top-level executives. The people on the floor or on the phone in customer service are the one’s who have the interaction with the customer and make the brand a reality (or a false promise).
· Show trust in everyone to do their jobs well. We all talk about empowerment as much as we do about branding. The key is to living it with great people who understand what the company is all about.

In the coming days, we will hear a lot of interviews with the winning players and managers and they will likely say something to the effect that “it’s really a team effort” that makes winning possible. Winning consistently and having a preferred brand day-in/day-out, certainly is a team effort and the brand is the personification of the team and the vision.

Now back to the game.

IT’S ALL ABOUT PRICE. (Yeah, right.)

There isn’t a presentation that I do or a discussion that I am involved with in this retail marketing and branding world which doesn’t come down to a discussion about low prices being the key to getting today’s consumer. No doubt about it. Every consumer market research study that I have ever seen ranks price as number one in importance in selecting a place to shop. I always point out that this is no surprise and that price just gets you on the playing field and it’s all the other branding and marketing activities that a store does which make up the customer’s mind as to where he or she is going to spend their dollars. It inevitably comes down to a discussion about value. After all, if it really was all about price, we’d all be driving Dodge Neon’s and doing all our shopping at Wal-mart.

That’s why it was interesting to see the news reports last week about Neiman Marcus’ 4th Quarter performance, which showed record-breaking results:

“Apparel and accessories retailer The Neiman Marcus Group Inc has enjoyed fourth-quarter and full-year profit increases, encouraged by full-price sales and expense control.

Fourth-quarter net earnings leapt 67 per cent to $34 million compared to $21m in the same period last year. Net sales totaled $851m compared to $784m the year before, while same-store sales grew 9.6 per cent.” Just-Style.com, 9/7/05

Wait a minute. Did that say “full-price sales” helped earnings increase 67%? Now, granted N-M has never been known as a place for great discounts. But if the consumer is so conservative and looking only for a good price at all levels of income, this just doesn’t seem to make sense. (Especially, when you read that Saks sales were down 0.3% for the month)

I didn’t have to wait long for an explanation. The day after reading this report, I was talking with a colleague of mine from the National Speakers Association and we were discussing my presentation focus and the importance of people in the branding strategy and execution. She indicated that she was a regular shopper at Nieman’s—not a really big spender, but a loyal customer. She said it was all about the way she was treated and that even though she didn’t consider herself a major customer, the store treated her as if she was one of the late Stanley Marcus’ dear friends. She said she regularly received mailings and personal phone calls advising her of new merchandise that matched her past purchases and tastes. More importantly, she said, “was the way she was treated when she walked into the store. “People actually called to me by name and welcomed me back. They made me feel like I was the most important customer in the department. And my friends, who sometimes accompanied me, were really impressed.”

Well, if it works at Nieman’s, it certainly works at the local grocer, the corner drugstore and the big box at the local Town Center. Give the customer personalized and interested service and they will come back and drive up your profitability. A few years ago, Yankelovich and Partners, did research which showed that over half (53%) of customers will pay as much as 10% more to get good service. So why don’t stores make sure that the people in the store understand this and perform to customers’ expectations. Unfortunately, it’s because management is too obsessed with the next great sale circular or full-page ad or major promotion. Loyalty is the key—both from customers and from employees—to driving up record sales and profitability. Stanley Marcus understood this a long time ago. It’s time for today’s merchants and marketers to get with it too. It’s a people business after all.

Let us know what you think.

Ken

The story behind the headlines.

"Exec cleared of Kmart Fraud"
Headline Detroit News, 8/15.
"Wal-Mart author's theory says discounts are now entitlements" Headline, USA Today, 8/15

Much has been written about these two discount chains over the past several years, drawing comparisons (and mostly differences) about how one chain has succeeded unbelievably while the other has teetered on extinction for quite a while. A couple things occurred to me as I read these articles that I thought would be good material for this forum.

First, Charles Conaway, may have been found not guilty of doing anything illegal while he was CEO, but he certainly can shoulder a lot of the blame (as could some of his predecessors) for Kmart's ongoing loss of share, loss of sales, and loss of trust by its customers. The company simply ignored what competitors like Wal-Mart and Target were doing in building brands that people not only trusted but where people liked to work. The ongoing reliance on sales and promotions that were not supported in the stores not only turned off most of Kmart's customers but it depressed and de-motivated most of its employees. So the stores looked lousy, the inventories were never where the customer expected, and the customers basically had a poor shopping experience until they gave up.

Unfortunately, the company continued to reward this poor performance with big bucks at the top and big severances for doing a pitiful job of branding the company. The civil court may have found him not guilty, but the jury of customers passed their judgment a long time ago and they haven't forgotten.

Secondly, in his book, "The United States of Wal-Mart", John Dicker calls Wal-Mart the "champion of cheap" while maintaining that all customers care about any more is low prices and one-stop shopping. Well, there's no doubt that Wal-Mart's success has its foundation on having the lowest price perception of any retailer (notice I didn't say cheapest). For some reason, since Wal-Mart has become the largest company in the world, we think it's a fault that they have driven down prices for the consumer. The reality of it, as born out in countless research studies, is that the company has won because the customers trust them to have the lowest prices and to have what they want and need. And they trust the people working in the stores to make sure they do in a friendly way.

Is Wal-Mart a predator? I think "competitor" is a more appropriate description. As a company obsessed with getting the best prices and the best values for its customers, Wal-Mart has beaten a lot of lesser retailers (like Kmart and all those poor small town retailers who never provided good value to their captive markets). And it has developed an organization that believes they are providing the best for their customers. Sure there have been some guilty parties who have taken advantage of the company's strength and positions lately, but with over a million people in an organization, these have been the exception. In a recent store check (which I do regularly), I found the checkouts at both Target and Home Depot (2 of my favorite stores) to be fairly empty on a recent Tuesday night with only two checkouts open plus the self-service aisle. Wal-Mart, on the other hand, had at least seven open and ringing up big shopping baskets.

People shop Wal-Mart because they like it, they trust them, the like their people (who most of the time love where they work), and by the way they save money. That's not being cheap!

What do you think??
Ken