When a brand gets over distributed

The Redwood blog
Published:  22 October, 2013
Mike Redwood

The business world was surprised to learn that after ten very successful years as CEO of Burberry Angela Ahrendts is to leave next year to run the retail side of Apple. Apple retail has been rather a poisoned chalice lately and possibly it is only a stepping stone to replace Tim Cook before long.

Yet there are a couple of points to ponder. First Angela Ahrendts will manage both online and off-line retail to ensure a seamless consumer experience. Second if she can build the same relationship with designer Sir Jonathan Ives as she had with Christopher Bailey at Burberry she will be able to control the Apple brand in the same tight way that she achieved at Burberry. In her ten year period with Burberry one of her most praised moves was to buy out all the licensing and other agreements which had weakened control over the brand image and its distribution. She is fanatical about brand management just as Steve Jobs was.

This sort of tight control over who can sell your product and where it is sold are essential elements in managing a premium brand. Since it was founded in1964 many of the crises that Nike has had to deal with have arisen from the brand becoming too widely available. Its core customers lost interest in products that were getting perceived as ubiquitous. Each time Nike quickly returned to making great products for its core athletic customers and regained its authenticity. Indeed part of the reason why Reebok never quite managed to achieve the heights of Nike was that too early on its life Paul Fireman moved it into being a “lifestyle” brand and left it in no man’s land between the worlds of sports and fashion.

For the component "brand" leather we have some observers who believe that as leather becomes less available in global per capita terms its rising cost will naturally pull it into the premium segment, especially luxury goods, and its true value will be recognised in better margins for tanners. Yet as we see this requires close control of distribution, quite apart from quality. Sadly I do not see this as being this easy.

Online business

In the last week I was directed to two items about leather. First came via the very innovative Cuir a Paris who pointed us to the EBIDT Journal of October 17 in which Katie Smith highlighted a 52% increase in leather garments being promoted online in the last three months compared to one year ago. Skirts and dresses both had more than a 75% increase in items coming online. On first look very good news. The garment leather side of our business needs such a boost.

The second article was in Fibrenews and came via David Winters. It talked about "Automakers wooing car buyers with affordable leather luxury". Leather is an easy way to make a car feel like a luxury vehicle. Studies suggest that just under fifth of European cars have leather upholstery with about 5% on top of that being leather mixed with plastic. The US is thought to be a bit higher and China higher again and both are less rigorous about definitions of leather and plastic.

With leather increasing its market share in both clothing and autos what would Angela Ahrendts do? At what stage would she say that leather is over-distributed and sliding into market sectors which damage its image? How far down the price points and into which levels of the fashion and automobile sectors can leather go before it is no longer premium?

The man who did so much to develop the Apple retail stores left in 2011. Ron Johnson, who resigned as senior VP of retail to head up J.C. Penney, quickly discovered that Penney was not the same closed controllable structure he had at Apple, or as Ms Ahrendts so skilfully created at Burberry.

The tanning business is a highly fragmented industry with lots of medium sized companies in almost every country in the world so brand management is complex. Yet if the concept that leather is to become a more scarce and at the same time more valuable material is to succeed then all of us must look to the example of the brand control shown by the likes of Apple and Burberry if we are to succeed.

It might appear too difficult to contemplate but once upon a time any side leather in Europe discovered in the wet-blue or crust with a small scar was at once destined for buffing, impregnation and hand padding. This heavy corrected grain became habitual, until our friends in Santa Croce taught us that innovation could create soft natural leathers with features, not defects, rather than thick, hard pigmented leathers. And the consumers preferred them and it is the comments of such consumers, so called ‘word of mouth’ that means that Italian leathers are still held as being of the highest quality.

Innovation, design and distribution management. Leather needs it just as much as Apple and Burberry. 

Mike Redwood

mike@mikeredwood.com

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