Revenue is a lagging indicator of brand
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Revenue is always a lagging indicator of brand.
I spent last year as the Chief Brand Officer of Banana Republic leading its rebrand (including product design direction, styling, visual merchandising, website redesign and creative and art direction). Amid slashed annual forecast and stock drop, there was one bright stop in GAP, Inc. quarterly earnings report. In Q1 2022, Banana Republic’s comparable sales were up 24 percent.
To successfully reinvent your brand, you must rethink your approach to product, story, culture and customer. Brand rebounds often seem simple, logical, and inevitable when they are taught in business school courses and cited in the media. But few revival attempts are successful, and in the uncommon event that they do succeed, they usually take years or decades to yield significant results.
Notable brands, such as Apple, Gucci, and McDonald’s refreshed their marketing strategy and successfully renewed customer interest. Each of these companies succeeded by focusing on a new approach to product, story, culture, and customer. Powered by organizational and operational changes, these four elements have become the pillars of sustained brand turnarounds.
Analysis continues after the jump.
The other day, I got this excellent Orlebar Brown catalogue. The brand used it to promote their Wham! collaboration, but I can see this sort of catalog innovation becoming a norm for brands - aside of providing an Instagrammable moment and attractive product display, there’s also a natural narrative integration with visual merchandising in stores and on the website, and with social media content, making it is easy to for a brand to implement in sync seasonal themes, capsule collections, collaborations, and drops.
Start with the product
Throughout Gucci’s 101-year history the fashion retailer’s popularity has waxed and waned, and its business results have faltered and rebounded. Today, Gucci is the second largest luxury brand in the world. Its most recent revival began in 2015 with the appointments of CEO Marco Bizzarri and Creative Director Alessandro Michele. The changes they made that first year — notably a new creative vision, store refurbishments, and improved digital offerings — resulted in an annual revenue increase of 7.8%, an annual operating income increase of 21.7%, and an 86% increase in first quarter online sales compared to the same periods in 2015.
When Michele took over as Gucci’s creative director, he established the Gucci Look: an androgynous, hippie, renaissance mix of florals and sequins, glamour and glitz, surprise and whimsy, subversion and creative expression, accessories and prints that nod to equestrian motifs. Today, this maximalist, neo-Romantic look is instantly recognizable as quintessentially Gucci on the street and on the runway. “I feel Gucci!” and “That’s so Gucci!” are part of our cultural lexicon.
Apple underwent a similar product transformation. Shortly after his return to Apple in 1997, Steve Jobs called a meeting and lambasted his employees. “You know what’s wrong with this company?” he asked. “The products suck. There’s no sex in them anymore.” This meeting is rumored to have inspired the invention of the iMac. In the first five months of iMac’s existence, Apple sold 800,000 units, turning a profit of $309 million in 1998 and $601 million in 1999. The iMac marked Apple’s return to profitability.
Apple and Gucci understood that a signature brand aesthetic is crucial to a brand recovery. The more defined the aesthetic, the more curatorial rigor it offers to design, merchandising, and styling, and the more it allows these functions to align in delivering a new, shared brand experience. A signature brand aesthetic translates into core products, which are the purest distillation of what a brand is. For Gucci, these products are GG Marmont and Soho bags, Princetown slippers and loafers, the GG belt, GG canvas print, and 1970s-inspired suits and dresses. For Apple, these building blocks are the Mac, iPad, iPhone, Apple Watch, and AirPods.
These brand building blocks help to focus refreshes. Every brand, no matter the products it sells, should develop building blocks like these as it attempts to rebuild its brand. Even fast-food restaurants have signature products. McDonald’s has the Big Mac, McNuggets, and fries, but it struggled in the early 2010s because it attempted to expand its menu to appeal to a larger audience. In 2015, McDonald’s cut its menu offering and focused on price and quality. This “less, but better” decision helped lead McDonald’s sales to exceed $100 billion in 2019 and its operating margin to increase 43% year-over-year. Since its focus on core products, McDonald’s market value has nearly doubled to $160 billion.
Refine your brand story
A clear and compelling brand story gives products context and narrative, which can help increase their desirability. When a brand sells products, it’s selling a story. When consumers buy products, they are buying into this story. The story internally unifies the organization and streamlines decision-making. It connects brand editorial with its product collections, steers design to incorporate narrative anchors (like recognizable pattern, clasp, color, or stitching) into products, and streamlines merchandising, styling, and marketing. In addition to being a valuable brand currency, brand storytelling is also critical for customer acquisition and loyalty. Once consumers buy into a brand story, they are less likely to leave or switch than when they just buy a product.
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