YOU CAN’T CUT YOUR WAY TO SUCCESS.

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Last week, my former employer, Circuit City, announced a new wave of cost cutting efforts where by 3,400 employees would be fired and replaced by lower-paid workers in order to become more competitive with other electronics retailers. However, being competitive doesn’t necessarily mean that you have to have the lowest cost efficiencies and lower sale prices,. To me, this is just another step in becoming less of a factor in their category and a guarantee that the market share will continue to erode.

Back in the mid-90’s, Circuit City was the number one choice by American consumers for their electronics and appliance purchases. At that time, we conducted over 3000 interviews with consumers and determined that, in fact, most of them preferred the CC format in providing knowledgeable salespeople and helpful service while maintaining competitive pricing. Just a couple years ago, while working in that category again on the agency side, I consistently read a lot of research indicating that customers, especially females (who now have a say in over 80% of electronics purchases), still had a lot of questions when it came to making technology purchases and would appreciate someone more than a cashier when deciding on what to buy.

The discontinuance of commission salespeople accelerated CC’s move toward self-service and the latest move should put them right there with Wal-Mart who doesn’t promise to be anything more than a low price source. I can’t help but think of The Container Store where they have not only one of the most loyal employee groups, but also one of the highest paid. Consistently rated one of the best places to work in the country, The Container Store has made selling basic “stuff” exciting and it all happens at the store level. I recall hearing the companies’ founders, Kip Tindell and Garrett Boone, say that the key was keeping and paying the best employees. They insisted that a great employee could do more work than three so-so employees and they could pay them twice as much and still be cost effective.

Branding is much more than just a low price. It starts with a great strategy and then having people in the store (who are the brand to the customer) who are motivated and excited about the store and the merchandise they sell. With this latest move, I’m sure that the quality of service at a store that used to promote it was “where service is state of the art” will become not only non-existent, but also a detriment to future share growth. No wonder more electronics buyers (note I did not say “shoppers”) are going on-line or to the warehouse stores to get what they want.

It forecasts a continuance of Circuit City’s lagging sales and diminished market share trends, and I don’t think even having Jim Nantz (who, by the way, did the play by play of the Florida Gators’ championship win) in their commercials will motivate the customers to come back or the employees to do a great job.

Now Boarding…Your Brand.

As the New Year quickly gets moving and Wal-Mart reorganizes its marketing, (No, I am not going to talk about the changes that every advertising and retail publication has covered in every little detail>), it’s time to look for some new ideas in strengthening our brands.

With the Super Bowl finally drawing near, I was thinking about how all the bowl games are now branded and the stadiums also sport commercial names. It’s ironic that the "big game" is going to be played in Dolphin Stadium, formerly known as ProPlayer Stadium, former known as Joe Robbie Stadium. For building awareness, paying several million dollars to put your name on the stadium is not a bad idea. Well, unless, you were the Astros who played in Enron Stadium. The team got better. The stadium changed names for obvious reasons.

Anyway, I was intrigued last summer while waiting to arrive at our gate at London’s Heathrow airport. All the jet ways were labeled HSBC. I’m sure some travelers thought this stood for Heathrow’s Super Baggage Corridors rather than one of the world’s largest banks, which must need more awareness around the world. However, as I sat there I was curious about the idea of using these usually bland jet ways as a branding device and thought that this is really good real estate to build awareness and recognition for international travelers and business people. (By the way, the letters stand for the Hongkong and Shanghai Banking Corporation in case you were wondering.) All I knew about them is that they handle the finance offers for a lot of retailers, like Levitz, so that you don’t have to pay for that sofa until 2010.

Shortly thereafter, I was flying into JFK airport in New York and low and behold their jet ways were HSBC sponsored as well. As a matter of fact, it seemed like I was now seeing HSBC wherever I looked in the city. A growing company using innovative ways to gain higher brand recognition. I started thinking, wouldn’t it make sense for Macy’s to have their names on all the jet ways at LaGuardia or Newark? What about American Tourister or TravelPro luggage at other airports, or maybe they could sponsor the baggage wagons that come out to unload the planes. Speaking of planes, we’ve seen the Shamu version of some Southwest Airlines planes sponsored by Sea Worlkd; why not have each plan sponsored (much like the busses in some metro areas)? We could fly in the Target plane to Minneapolis, or the Home Depot 737 to Atlanta. Maybe a Neiman Marcus jet to Dallas. I know that Frontier Airlines was going to sponsor their airsick bags and plastic ware. So many branding opportunities...

I was always impressed by the Target logo in the end zones right between the goal posts at NFL stadiums. I thought the Sports Authority logos at courtside and rink side at many venues made good sense. Branding isn’t just another great ad or commercial, it’s using available venues to further enhance not just awareness, but also the personality of the brand. So many retailers are stuck on running weekly circulars, price and item TV spots, and a “vigorous” website. Circuit City ran an ad this week for it’s Firedog computer services. It was great because it promoted the fact that the company was giving a donation to America’s firefighters to support their important role in the communities. Enhanced the brand and said we are more than just the next big deal on an HD big screen TV.
Building a relationship with your customers is what branding is all about. It’s not just another ad in the paper or name on the jetway.

By the way, learn branding ideas from 18 experts, including yours truly, in the valuable book, Marketing Magic. Cover price is $19.99, but it's only $10 if you order it online through my website at www.kenbanks.com.

The Good News and The Bad News…From Bentonville

The Good News and The Bad News…From Bentonville

It’s the holiday selling season and there’s a lot of news in retail, especially from the center of the retail world in Arkansas. While there are many other stores to talk about, let’s take a look at two stories worth considering.

First the good news. Thanksgiving has come and gone and by now the 40 pounds of newsprint that landed in my driveway has made its way to the recycle bin. Of all the ads and inserts in my paper, I couldn’t help but read one from cover to cover. It had the best photography, the right gift items, and probably the best prices. No it wasn’t Target (as good as their ads always are). Penney’s spent a lot, but looked like everyone else. Nordstrom, Macy’s and Dillards looked like—well, like department stores. The best of the batch, in my opinion, was a slick-looking 16-page standard insert from none other than Sam’s Club. Great photography, heavy, quality stock, terrific items, subtle prices with not so subtle savings. Made me want to read every bit of copy and check every price. While you could argue was this vehicle incongruous with a warehouse club store, you couldn’t argue with the creativity and the savings. Of course, Costco, as always, didn’t run any advertising, but Sam’s set the pace with this circular and I suspect resulted in far better performance than their parent discount chain.

Which brings me to the bad news (unless you’re Target or Kmart). First, as a consumer, I didn’t feel the presence of Wal-Mart at all during the Thanksgiving week. I saw more of the spots from the union trying to break down the conditions of working for the world’s largest retailer than I did from the store. Usually, a dominant player, I didn’t even see a Wal-Mart preprint and the television was transparent. Maybe the new marketing gurus from Chrysler and Frito-Lay had them running ads in Real Simple or Field and Stream magazinea. The lack of any presence by the largest retailer makes you wonder what’s happening in Bentonville. Obviously, from the sales results, consumers felt the same way.

To me it’s another example of this store trying to act like a packaged goods or automotive marketer and forgetting the sense of urgency that retail demands. The fact that they took their eye off the ball to conduct an 8-month agency review (who needed that anyway??), then selected one that really has no retail experience, then fired the key marketing exec from Chrysler and her assistant and then unbelievably started the agency review all over again. Something stinks here. Now they are going to waste another 8 months and countless marketing energy by renewing the search (oh, to be an agency search consultant!) I went into a Wal-Mart this weekend and I think they were as well merchandised as ever. The big difference was that there were no lines at the registers and that really worries me. How blind can they be to their problems? The great brand is in jeopardy.

We will have to see how the Holidays finish for sales, but I hope the news at your company and home is all good . Happy Holidays...