Lessons from the Retail Apocalypse

 

 

Legends of Marketing Series by Gary Hoover

 

Lessons from the Retail Apocalypse

 

As a student of retail trends and strategies for over 50 years, I believe true understanding of the rise and fall of companies requires a look at each company and industry segment, always seeking patterns.

The impending death of bricks-and-mortar retail stores has been heavily reported.  While a look at the facts indicates a more nuanced analysis, there is much to be learned by physical retailers and ECommerce sellers alike from the decline of so many formerly prominent retailers.

As these retailers have declined, “easy” but inadequate answers are quick to be voiced.  First the cause was Walmart.  Yet as far back as the 1960s, discount retailing was the fastest growing type of store, with Kmart racking up billions in sales and growing rapidly.  Walmart was insignificant.  By 1990, Kmart was as large as Sears in domestic retail sales.

Next came cries about Amazon and online selling.  While their impact varied greatly by category, being especially tough in books and recorded music, today online represents only 11% of total U.S. retail sales.  That is a big dent, but still 89% of consumer purchases are made in bricks-and-mortar facilities.

These “easy answers” have been part of the challenge to retailers like Sears and Macy’s, but much can be explained by other factors which receive far less attention.  The following thoughts are applicable to other businesses and industries, including ECommerce.

It is hard to start anywhere but Sears, Roebuck.  Their mail order catalog was the equivalent of Amazon in its time.  In the 1920s the company began building stores, and from the 1950s through the 1980s was the world’s largest and most profitable retailer by a large margin.  (To understand how they achieved greatness, read this.)

Today Sears is in its final death throes.  So what happened?  Unfortunately, many things.

First, they did not understand a broader concept of what their catalog represented.  They closed it down the year before Amazon was created.  While Sears can be excused for not foreseeing the power of the Internet, perhaps they should have understood the power of ordering from home coupled with efficient delivery, things they had pioneered and dominated.  Every leader should ask, “Do we really understand the principles behind our success?”

Second, Sears did not defend its greatest strengths.  The company was dominant in auto parts, batteries, tools, and hardware.  It “owned” the major appliance business.  It was strong in sporting goods.  In the same years that Sears went “down the drain,” each of these categories have grown, giving rise to the tremendous success of Home Depot, Auto Zone, and other companies.  Yet Sears tried to find a “softer side” in high-margin apparel and a “financial side” by acquiring stockbroker Dean Witter and realtor Coldwell Banker.  They made no aggressive moves to defend their “moats” until it was too late.  Every company needs a deep understanding of its real strengths, what customers most love about it.

Third…and the cause of most big company failure….was success itself.  Prosperous large companies strongly tend toward bureaucracy, complacency, and arrogance.  Sears built the world’s then-tallest building, which did nothing to serve its customers.  Headquarters became rife with executive squabbling.  By the time Edward Lampert bought control of Sears (and Kmart), both were sick companies, though his leadership (or lack thereof) likely accelerated the decline of these formerly great organizations.    

(An aside on Kmart: just as Walmart was rising to surpass them, they bought BizMart, Builders Square, Sports Authority, Waldenbooks, and Borders Books.  Management appeared to think there was no future in discount stores, allocating human and financial resources to these distractions.  Sam Walton had a very different perception of the future of discount retaiing, and remained focused on his customers.)

The story of the American department store industry, today dominated by Macy’s, is different.  Unlike Sears, Macy’s is relatively healthy.  Yet the department stores as a group have lost dramatic market share over the last 40-50 years.  Their story offers more lessons.

In the late 1970s, I did strategic planning for an industry leader, May Department Stores, headquartered in St. Louis.  At the time, we closely tracked the performance of the other six big players: Federated Department Stores, Allied Stores, Associated Dry Goods, Dayton-Hudson, R.H. Macy, and Carter-Hawley-Hale. 

Each of these companies owned the largest general merchandise retailer (outside of Sears) in the cities where they operated.  Famous names included Macy’s in New York and San Francisco, Abraham & Straus in Brooklyn, Wanamaker’s in Philadelphia, Filene’s and Jordan Marsh in Boston, Rich’s in Atlanta, Burdine’s in Miami, Hudson’s in Detroit, Dayton’s in Minneapolis, Kauffmann’s in Pittsburgh, Famous-Barr in St. Louis, Foley’s in Houston, Bon Marche in Seattle, the Emporium in San Francisco, the Broadway in Los Angeles, and many others.

These companies had dominated American retailing in their markets since the 1890s.  Sears sold hardware and focused on male customers.  These department stores carried a wide range of products, but focused on selling apparel and home furnishings, primarily to women.  They were extremely profitable.  America’s great malls were anchored by the locally-famous department store at one end and a complementary Sears at the other.

Yet today, all seven of those “big players” listed above are part of Macy’s, and Macy’s share of total U.S. retail sales is far smaller than what those companies had 40 years ago.  What happened?  Was it Walmart?  No, Walmart has not been strong in apparel, the heart of the department stores.  Was it Amazon?  Not really.

The place to start in understanding this decline is differentiation.  When these companies were strongest, all merchandise buying was done by category expert buyers in each city.  They knew their market, often varying their product assortment by neighborhood and branch location.  These buyers searched the earth looking for items that their competitors did not carry.  In any given city, one store might be strong in china and glass, another in toys, yet another in high fashion apparel.  And most had distinctive, interesting restaurants to keep their shoppers in the store longer. 

Over time, in seeking efficiencies and economies of scale, this system collapsed.  The stores increasingly abdicated their roles as “merchandise curators,” turning over valuable floor space to suppliers like Tommy Hilfiger and DKNY.  Seeking the higher gross profit margins of apparel, they dropped booming categories like stationery, toys, and sporting goods.  (Note that Walmart and Target did not drop these.)  Chasing cost reduction, they eliminated local buyers and removed those decisions from local markets.

Those decisions combined to result in lookalike stores.  By 2000, it became impossible to tell one department store from another.  Hence, why even have all those stores?  Through a series of mergers, the vast majority are now Macy’s.

Nothing in marketing matters as much as differentiation.  When General Motors, Ford, and Chrysler cars looked alike, Toyota and Honda offered something different.  When American, Delta, and United all behaved the same way, Southwest, Virgin, and JetBlue offered something different.  When Kroger and Safeway felt similar, Whole Foods, Wegman’s, Trader Joe’s, WinCo, and Aldi offered interesting alternatives.  In the eyes of your customers, is your company deeply and clearly differentiated from your competitors?

Along with these stories of decline and ruin, it is important to note that America is full of strong, vibrant retailers.  Companies which continually innovate and differentiate.  Companies which deeply understand and listen to their customers.  Companies which don’t hide under excuses. 

Home Depot continues to grow rapidly.  TJX, the owner of TJ Maxx, Marshall’s, and Home Goods, is booming and adding new stores.  Dollar General is opening 900 new stores in the U.S. each year.  New concepts like Five Below flourish.  Grocers including Wegman’s and HEB compete successfully with giant Walmart every day.

As a lover of retailing, it saddens me to recite the preceding stories of decline and decay.  Yet, despite the never-ending intensity of retail competition, those bricks-and-mortar and ECommerce companies which think and learn can prosper.  As has been said many times, it is not about what happens to you so much as how you react to it.

 

 

Gary Hoover is a serial entrepreneur.  He and his friends founded of the first book superstore chain Bookstop (purchased by Barnes & Noble) and the business information company that became Hoovers.com (bought by Dun & Bradstreet).  Gary served as the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.  He has been a business enthusiast and historian since he began subscribing to Fortune Magazine at the age of 12, in 1963.  His books, posts, and videos can be found online, especially at www.hooversworld.com. He lives in Flatonia, Texas, with his 57,000-book personal library.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.

 

Humanizing Your Business

 

Legends of Marketing Series by Gary Hoover

Humanizing Your Business

 

The Internet can be an impersonal world.  As much as we love Amazon and eBay and know that somewhere behind those facades are real workers and real sellers, the customer experience can be pretty cold.

On the other hand, the recent passing of former Southwest Airlines CEO Herb Kelleher reminds us of the power of putting people at the forefront of your business.  For a great look at Herb, one of the best CEOs in American history, and his principles, see:

https://www.forbes.com/sites/kevinandjackiefreiberg/2019/01/04/20-reasons-why-herb-kelleher-was-one-of-the-most-beloved-leaders-of-our-time/#6bee8450b311

and

https://www.texasmonthly.com/news/herb-kelleher-southwest-airlines-made-world-smaller/

While most leaders understand the importance of people, that is often not reflected in their web presence

A friend once asked me to evaluate a consulting firm he was thinking about hiring, directing me to their website.  When I looked, nowhere did a find anything about the people at the consulting firm, their backgrounds or accomplishments.  Yet all a consulting firm is, is people and their skills.  While the consulting firm’s website bragged about how much they had helped other companies, I could tell nothing about the people who did the work.  This surprised me, and I told my friend I would not consider hiring them, based on what their website told me.

On the other hand, even giant organizations like Walmart and Target give great emphasis to their people on their corporate websites.  The “About Us” section is the perfect place to really talk about us.

There are other ways to humanize your website and online presence, to celebrate the human nature of your business, your employees, and your customers.

Think in terms of a bricks-and-mortar parallel.  Back in the days when record stores were still important, Richard Branson’s Virgin Music retail chain had a great website.  Instead of saying, “Contact Us,” the link was labelled “Get me a manager!”  All of the brilliant Branson’s businesses place a great emphasis on a sense of humor and humanity.  His airlines are far “friendlier” than most competitors, even in the signs and words they use.  Do you have a sense of humor?  How could your website and apps stand out from a boring crowd?

Great companies often use human stories, with real people and all their flaws.  Videos of your employees, their families and pets, and your customers and how they use your products and services can be very powerful.  I am sure you can find many examples on the web; here is a company that does a nice job of being deeply human:

Few things are more powerful than storytelling.  It is the foundational principle of the Walt Disney Company, and most great filmmakers, authors, and speakers.

Do you tell your story?  Are you proud of your history?  How did your company get started?  Who are or were the founders?  Your company does not have to date from 1806, like this great American company, to cherish its history:

Of course, the truly human enterprise goes well beyond the Internet.

How often do you talk to your customers?  At one of the companies I co-founded, Hoovers.com, one of our later CEOs spent each Friday talking to customers.  Every week, the sales team would give him a list of people to call, ranging from the smallest home office customer to the biggest enterprise subscriber.  At Build-A-Bear Workshop, the founder and original CEO Maxine Clark personally answered every single customer email, even when such emails numbered in the thousands.  One great Coca-Cola CEO spent something like eight hours a week in supermarkets, talking to workers and inspecting displays.

And Herb Kelleher always placed every single employee on a pedestal, spending what others considered inordinate amounts of time with them.

It is easy to get caught up in the big deals, working with investment bankers, venture capitalists, accountants, and flying along at “30,000 feet.”  But so often this altitude does not result in soft landings, because the real work of serving customers and leading and celebrating people gets lost in the shuffle.

 

 

Gary Hoover is a serial entrepreneur.  He and his friends founded of the first book superstore chain Bookstop (purchased by Barnes & Noble) and the business information company that became Hoovers.com (bought by Dun & Bradstreet).  Gary served as the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.  He has been a business enthusiast and historian since he began subscribing to Fortune Magazine at the age of 12, in 1963.  His books, posts, and videos can be found online, especially at www.hooversworld.com. He lives in Flatonia, Texas, with his 57,000-book personal library.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.

 

The Power of Cross-Promotion

 

Legends of Marketing Series by Gary Hoover

The Power of Cross-Promotion

 

The idea of working with other companies to build your sales has been around a long time in many situations.

Most of my life has been in retailing.  My friends and I built the first chain of giant bookstores, Bookstop, in the 1980s.  Barnes & Noble purchased the company and then expanded the giant store idea in a big way.  One of the most important parts of retail strategy has always been site selection.  In each of the 20+ stores we opened from Miami to San Diego, our first question was, “Who will be our co-tenants?  Will they appeal to the same customers who shop bookstores?”  Restaurants, movie theaters, and The Container Store were some of the co-tenants we sought.

Our first store was in a new shopping center in northwest Austin, Texas.  Two doors down was a young company’s second store, called Whole Foods Market.  I went to every store in the shopping center, maybe 15 of them, and offered to share in our grand opening campaigns.  Only Whole Foods’ management was interested.  We set it up so that if I customer bought enough at Whole Foods, they got a free book, and if they bought enough books, they got a free steak at Whole Foods.  All I clearly remember is that Whole Foods ran out of steaks in the promotion.

At the level of big companies, McDonald’s has worked with many others, including the makers of Monopoly.  But their greatest partnership is with Coca-Cola.  The inability to capture the business of fast food chains led PepsiCo to buy their own chains and create the second biggest fast food chain group.  Later, they spun those operations off as Yum Brands, which includes Pizza Hut, Taco Bell, and KFC.  Pepsi made sure they signed long-term contracts to have their products in those restaurants.

One of the most successful co-marketers is Intel, which sells nothing to end consumers, but backs the advertising of those computer makers who use Intel “inside” with their logo and sound bite.

And of course, the movie companies use co-marketing heavily, from James Bond and Aston-Martin to E.T. and Reese’s Pieces, from Burger King in Men in Black II to Mini Cooper in The Italian Job.

There is no marketing organization which can’t use cross-promotion to their advantage.  It’s just a matter of being creative.  When everyone else is just running low prices for Black Friday and special sales, surprise people with the unexpected, something different!

Starting questions include:

  • Who is our customer? (You gotta know that already!)
  • What else do they buy? (Think hard, do surveys or focus groups, look for the unusual or surprising.)
  • Which companies are best in those categories?
  • Which companies are most interested in tying-up with us, which are easiest to work with? (Especially if they already do some co-marketing.)

From a variety of sources, here are a few ideas – it’s up to you to figure out how to adapt them to your business:

Pool your marketing budgets and human resources to co-sponsor an event, from a marathon to a webinar to a museum exhibit.

Share in a contest – any contest.  Fill in the missing letters from famous quotes or movie dialogs, to spell out your company or brand name.  Find hidden codes in each other’s websites or email campaigns.

Have customers submit videos of themselves using both your products or services.

Exchange premiums – a gift of wine with cheese and vice-versa, a gift of cosmetics with clothes, a gift of consulting time with a valuable report or study.  Look for unusual combinations!

Create bundled products and packages that you both sell – a restaurant discount with a hotel stay, shoes with socks, website creation and social media marketing tools, and again cheese and wine.

Selectively combine frequent customer, loyalty programs, or points.  Buy ten things from us and get one from the other company.

Create affiliate programs where other companies earn commissions for driving traffic to your site or products and services, wherever they are sold.

Share content – if your food site has recipes tips, share them with the people who make the ingredients and vice-versa.

Share customer lists (within the rules and with the customers’ approval, of course!).

Get creative, look at every industry for more ideas.

Even without telling the other company, you may be able to promote their product without them objecting.  Tie something you sell to a popular TV show, movie, song, or book.  When our Bookstop employees tired of receiving book discounts as a perk, we added gift certificates from the largest local record store and people loved them (remember record stores?).

Any such program needs strong joint promotion and social media campaigns to work.  Tweet, Instagram, Pinterest, Facebook, Yelp, and TripAdvisor a lot!  Review each other’s products on Amazon.

With the right partner and creative thinking, you can both accelerate your business!

Here are some links for further research, inspiration, and idea generation:

https://petersandeen.com/partnership-marketing-methods/

https://blog.rebrandly.com/co-marketing-campaigns/

https://blog.hubspot.com/marketing/best-cobranding-partnerships

https://www.bluleadz.com/blog/10-great-examples-of-co-marketing-partnerships-that-work

https://www.powerlinx.com/resources/types-marketing-partnerships/

https://econsultancy.com/a-complete-guide-to-partnership-marketing-part-one/

https://adage.com/article/agency-viewpoint/10-branded-content-partnerships-2017/311725/

https://www.entrepreneur.com/article/254742

For small businesses:

https://smallbiztrends.com/2018/04/partnership-marketing-small-business.html

https://www.marketingdonut.co.uk/marketing-strategy/cost-effective-marketing/marketing-partnerships-that-every-small-business-should-build

https://www.hatchbuck.com/blog/small-business-partnerships/

https://www.inc.com/magazine/201504/erin-geiger-smith/tipsheet-the-tricky-art-of-parenting.html
(The link sounds wrong, but this is about marketing, not parenting.)

For bricks-and-mortar, local:

https://townsquared.com/ts/resources/cross-promotion/

https://www.nfib.com/content/resources/marketing/10-ideas-for-cross-promoting-your-company-50506/

https://www.independentwestand.org/cross-promote-your-small-business-through-local-partnerships/

https://www.thebalancesmb.com/attract-more-customers-through-cross-promotion-2947163

https://smallbiztrends.com/2018/05/cross-promotion-small-business.html

https://www.amfam.com/resources/articles/your-business/tips-for-cross-promotion-with-other-businesses

https://www.thryv.com/blog/7-cross-promotion-ideas-small-business/

Gary Hoover is a serial entrepreneur.  He and his friends founded of the first book superstore chain Bookstop (purchased by Barnes & Noble) and the business information company that became Hoovers.com (bought by Dun & Bradstreet).  Gary served as the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.  He has been a business enthusiast and historian since he began subscribing to Fortune Magazine at the age of 12, in 1963.  His books, posts, and videos can be found online, especially at www.hooversworld.com. He lives in Flatonia, Texas, with his 57,000-book personal library.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.

 

Splashing Outside the Digital Box

Legends of Marketing Series by Gary Hoover

 

Splashing Outside the Digital Box

Today’s marketers and retailers, online and off, face more competition for the customer’s attention than at any time in history.

Those customers may spend record amounts of time on their smartphones, tablets, and laptop screens, but they also still live most of their lives in a real, three-dimensional, non-digital, non-virtual world.  They walk, bike, or drive streets, they visit bricks-and-mortar stores for 90% of their spending, they go to concerts, festivals, churches, schools, dinners, and parties.  Above all else, they talk to their friends about products, services, and what is in the news, what is cool.

And in this world of competition for attention and engagement, those smartphones and other devices are distinctly flat and two-dimensional, no matter how imaginative you may be in their use.  We all recently witnessed the record sales day of Cyber Monday 2018.  But even Cyber Monday is flat, the same old thing, essentially boring.  Its excitement is entirely price-driven, not exactly how you build a unique and durable brand.  Cyber Monday is not about customer experience or engagement.

In this environment, how does one make a splash?  Perhaps we can get some inspiration from the “splash-makers” of the past.  Perhaps there are opportunities to make a splash in the three-dimensional world, even for online-based marketers.

“Mr. Stanley” Marcus was the man most responsible for making Neiman Marcus a globally known luxury brand, even though during his years as company chief, they only had stores in one state, Texas.  He explained to his publicists that every media outlet received hundreds of corporate press releases each day, most going unread and into the trash.  He said the only press releases his company wanted to send out were items that were truly news, that would be worthy of making the front page.  His specific tactics included a Christmas catalog which included such items and “his and hers aircraft” and in-store two-week-long “fortnights” which celebrated the culture, art, and fashion of a different country each year.  These attracted international attention.  Today the company generates about 100 times the revenue that it did when Mr. Stanley built its reputation for fashion innovation.

H. J. Heinz built one of the most recognizable global consumer brands. At the 1893 World’s Columbian Exposition (World’s Fair) in Chicago, he had a display booth, but it was relegated to an upper level gallery that was rarely visited. So he dropped coupons across the fairgrounds, offering a gift to anyone who came by his booth.  The gift was a small pickle lapel pin; the result was that the fair authorities had to reinforce the floor of the upstairs gallery due to the heavy foot traffic.  At the close of the fair, the other upstairs exhibitors gave him an award because of all the attention he brought to them.  In 1898, Heinz bought the big Ocean Pier along the popular Atlantic City Boardwalk, where he held concerts, art shows, and demonstrated Heinz products.  Operating for 46 years, the Heinz Pier drew 15,000 people a day in the peak summer season.  His competitors were left in the dust – and not just in Atlantic City!

At the same Chicago World’s Fair where Heinz passed out pickles, George Westinghouse substantially underbid larger and better-known competitor Thomas Edison’s General Electric to power the Fair’s remarkable and unprecedented lighting system.  The Westinghouse name soon became a household word.

A few years later, Westinghouse also got the contract for the giant turbines to power the Niagara Falls Power Plant, one of the largest in the world.

The power company encouraged manufacturers to move to Niagara Falls to avail themselves of the cheap, plentiful electricity.  One who did was Henry Perky of the Shredded Wheat Company.  Though a national brand, he like Heinz understood the power of attracting tourists:

From 1901 until discontinued sometime around 1946, tours of the shredded wheat factory were part of the marketing of Niagara Falls. Honeymooners saw the falls and then toured the factory. The company estimated that around 100,000 visitors took the tour annually. Perky had designed the factory with balconies and aisles that permitted visitors to see the machinery in operation. They were welcomed every day of the week all year except Sundays, in the lobby above, fitted to resemble that of a hotel. Off to one side was a demonstration area where free lunches were served to visitors that used shredded wheat products in various ways. Tour guides led the visitors through the 5.5 acre factory and up to the roof garden and auditorium where they heard lectures on diet, cooking and good living.

In this same era, in 1896 small-town (Chattanooga) newspaper publisher Adolph Ochs bought the struggling 13th-best-read newspaper in New York City.  While his primary tactic was to improve the reporting in the paper, to be fair to both sides of each discussion, and to skip sensational, bloody stories, he also had a knack for promotion.  He put a big lighted advertising sign near Madison Square, and later built the city’s second tallest building as the newspaper’s headquarters.  At the base of the building, he put the day’s news in a running electric banner.  Each New Years’ Eve, he had a lighted ball drop from the top of the building.  The city renamed the square next to the building from Longacre Square to Times Square, after Adolph Ochs’s newspaper, The New York Times.  The Times also sponsored risky ventures like Admiral Peary’s search for the North Pole and Lindbergh’s solo flight across the Atlantic.  Thus “the world’s greatest newspaper” was built.

When radio (“wireless”) came along a few years later, John Wanamaker’s New York department store put a radio receiving office on the top floor, to draw attention and publicity to the store.  Young radio operator David Sarnoff was the first to hear of the 1912 sinking of the Titanic, gaining Sarnoff (and Wanamaker’s) attention and fame.

None of these promotional ideas were the norm, none were expected.  Competitors were shocked, and often thought the ideas stupid.  Bold ideas  require imagination and courage, thinking “outside the box.”

These stories may seem old and irrelevant, but surely there are modern parallels that imaginative marketers could develop.  In more recent years, we’ve seen Red Bull gain global attention with unusual sports and events, and Richard Branson spread the Virgin brand by attempting unrivaled flights.

  • Is there an opportunity for your company to leverage concerts, fairs, events, marathons, or festivals, especially in geographical areas where you have a lot of customers?
  • Is there a way to reach out to your ever-moving customers, whether that be through wrapping some cars (or trucks or scooters) with your logo?  Or running a tour bus across America, stopping in key cities across the way to demonstrate your products?
  • What can your company or brand do that no one else is thinking about?  What would really make a splash?  Even if it requires leaving the comfortable world of the flat screen where your competitors are stuck.

Gary Hoover is a serial entrepreneur.  He and his friends founded of the first book superstore chain Bookstop (purchased by Barnes & Noble) and the business information company that became Hoovers.com (bought by Dun & Bradstreet).  Gary served as the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.  He has been a business enthusiast and historian since he began subscribing to Fortune Magazine at the age of 12, in 1963.  His books, posts, and videos can be found online, especially at www.hooversworld.com. He lives in Flatonia, Texas, with his 57,000-book personal library.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.

 

The Marketing Lessons of Sears, Roebuck

Legends of Marketing Series by Gary Hoover

 

The Marketing Lessons of Sears, Roebuck

For 60 years, Sears was the largest general merchandise retailer in the world, the most profitable retailer, and the most feared by competitors.  In October 2018, this once-great company declared bankruptcy, and may not be long for this world.  The rise of Sears and its downfall both contain many lessons for marketers and managements in general.

First, the rise.  Sears’ founder Richard Sears began selling cheap watches by mail in the 1880s, but he did not care about product quality.  In the late 1890s, he sold controlling interest to his supplier of menswear, Julius Rosenwald.  Rosenwald raised the quality standards by opening product testing labs.  He reorganized the company to insure quick and accurate fulfilment of the hundreds of thousands of orders that poured in via the U.S. mail. He and his team built new facilities and systems which were efficient.  He shared in the wealth by giving employees large amounts of company stock.  Sears blew past the older catalog company Montgomery Ward, and became number one.

 

In the 1920s, Rosenwald was ready to retire, and turned the company over to General Robert E. Wood.  Wood might be the greatest retailer of the 20th century, as he maintained Sears’ catalog dominance while entering the bricks-and-mortar retail business.  New stores were built from coast-to-coast, and soon Sears was bigger than any other general merchandise retailer (only grocer A&P was larger, but later Sears passed even them).  It is from Wood that we have the most to learn.

Building upon Rosenwald’s talented and highly efficient organization, Wood first put prime emphasis on finding the best products and innovating in every product category.  Whereas in the past, retailers tended to sell whatever was available or whatever they had on their shelves, Sears’ buyers worked directly with the best manufacturers they could find.  In the stores, they listened to customers to find out what they wanted.  They bought rubber in advance to help their tire suppliers save money.  They found they could make refrigerators larger with just a little more inexpensive steel.  Sears’ people learned every step of the supply chain and the manufacturing process, becoming free consultants to their suppliers.  Sears made more money, the suppliers made more money, and the customers got lower prices – a hard combination to beat.

What are your company’s relationships with suppliers like?  Are you at odds or working together?  Do you start with studying what customers need and then work backward to deliver it, as Sears did?

Robert Wood was an information addict.  He reportedly read a new page of a statistics book every day.  He became an expert on demography and trends.  His strategy was based on these facts.  Over and over, this allowed Sears to trounce the competition.  Do you know more about long-term trends than your competitors do?

Robert Wood was a believer in making mistakes, in trying experiments.  He thought failure was part of learning, and failure rarely held someone back from promotion, as long as the company learned from it.

 

Sears under Wood made enriching his customers and their communities a key priority.  When he found poverty in the south, he asked his suppliers to build plants there.  To support local communities, he kept his cash in local banks rather than in New York or Chicago where he might have made more profit.  His managers were expected to lead the local Chamber of Commerce, the YMCA, and help fund schools.  Sears became the ultimate example of being a good corporate citizen, but this was always based on how it would help their customers.  Today many companies support various charities, but is it really helping your customers or broadening your audience?

General Wood said, “There are four parties to any business….the customer comes first…the employee comes next……then comes the community….last comes the stockholder…..if the other three … are properly taken care of, the stockholder will benefit in the long pull.”  Would this description fit your company?

These are among the many ways Sears rose to the top of its field.  For more on General Wood and his fascinating life, read this.

Now, the decline.  Most of Sears’ long and tragic decline started at the top, with general management issues.  Of course, these problems found their way into every aspect of the company, including marketing.

At the top, the leadership began infighting, something Rosenwald and Wood did not tolerate.  The bureaucracy at headquarters grew and grew, until the company in the 1970s built the world’s tallest building, something that did no good for customers, employees, and certainly stockholders.  Experimentation died.  The arrogance that comes with success rose.  Talented young retailers found work elsewhere, not at Sears.  Because the company was so strong, it took years for this decay to kill the company.

From a marketing standpoint, Sears failed to defend its fortresses, or “moats.”

Sears was America’s source for auto services and supplies, lawn and garden items, tools and hardware, and major appliances.  They were very strong in sporting goods and other major categories.

Since the 1970s, when Sears peaked, demand for these categories have boomed.  AutoZone, Advance Auto Parts, O’Reilly, and tire stores have covered the nation.  Home Depot is now our most successful big retailer; Lowe’s and Menard’s are also large companies.  The home appliance business has been transformed by innovation and higher average ticket prices.  Academy and Dick’s do well in sporting goods.

Sears “let” these folks murder it, in categories where Sears’ expertise was unrivaled.

Sears also knew more about non-store selling (catalogs) and distribution than any other company on earth.  But they shut down their catalog in 1993, the year before Amazon was started.  ECommerce represents the natural evolution of the catalog, merely using the latest technology.

Strategic failure often reflects such inability or unwillingness to defend your own moats or fortresses.  It isn’t easy, but you’ve got to fight back if you are smart and want to have a future.

What are your company’s fortresses?  What is worth defending?  How far would you go to defend your position?  Yahoo, MySpace, AltaVista, and others show how fragile online leadership can be.

There is always a great deal to be learned by the successes and failure of others, and few companies have as much to teach as poor, old Sears, Roebuck.

Gary Hoover is a serial entrepreneur.  He and his friends founded of the first book superstore chain Bookstop (purchased by Barnes & Noble) and the business information company that became Hoovers.com (bought by Dun & Bradstreet).  Gary served as the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs School of Business.  He has been a business enthusiast and historian since he began subscribing to Fortune Magazine at the age of 12, in 1963.  His books, posts, and videos can be found online, especially at www.hooversworld.com. He lives in Flatonia, Texas, with his 57,000-book personal library.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.

7 Texas Businesses That Crush Their Marketing Strategy

by Patrick Foster

 

7 Texas Businesses That Crush Their Marketing Strategies

As the old phrase goes, everything is bigger in Texas, and that’s particularly true when it comes to Texan businesses. The Lone Star State is home to some of America’s largest companies, including ExxonMobil, AT&T and Pizza Hut.

But how does a small local business grow to the point where it is known both nationally and, in some cases on our list, globally?

The answer is by developing a highly effective marketing strategy. Marketing is the vehicle that builds a brand’s image and drives customer acquisition, which is the bedrock of a successful business. Here are seven Texan businesses that have got this just right.

Image Pexels

Southwest Airlines

Southwest Airlines are masters at emotional storytelling, a clever marketing strategy that allows them to connect with customers on a deep and authentic level. During 2017 and the first half of 2018, Southwest Airlines hosted an interactive microsite called 175 Stories, a nod to the fact that there are 175 seats on each of their new Boeing 737 planes.

Each of these seats contains a passenger with their own story to tell, a story that the brand leveraged in their marketing by exploring each passenger’s emotional journey as well as their physical one.

Southwest Airlines has also utilized empathy as part of their social media strategy. In their Dallas ‘Listening Center’, a team of 40 customer service experts monitor social media channels around the clock with one primary goal: to simply listen to customers.

Being on hand to respond to complaints, queries and comments immediately is an excellent marketing strategy because it makes customers feel like the company cares about their experience.

With 64% of customers expecting a reply on Twitter within 60 minutes, Southwest Airlines are cleverly aligning their social media efforts with customer expectations.

Dr. Pepper

A young pharmacist called Charles Alderton invented Dr. Pepper in Waco, Texas, and it has since become a staple in American culture.

Though a perennially popular brand, Dr. Pepper enjoyed a significant boost in sales by embracing both social media and online gaming. The brand launched ‘Pepperhood’, a college-style fraternity of friends and fans of the drink, which offered challenges, prizes and the chance to become Pepperhood President.

This strategy garnered huge social engagement, with more than 70,000 players registering and more than 4,000 pieces of user-generated content being uploaded to the Pepperhood site.

Most importantly, sales increased significantly during the five month campaign by an impressive 385,000 units. Dr Pepper might be 130 years old, but it’s ahead of the game when it comes to marketing.

Shiner Bock Beer

Shiner Bock is a craft beer brewed in Texas, which is beloved by its home state, but has also grown in popularity nationwide. With rapid growth in the craft beer industry, there is a constant focus on what is new.

As such, it seemed natural for Austin ad agency McGarrah Jessee to return to Shiner’s roots when creating a campaign for the beer. By focusing on the 108-year history of the brand, McGarrah Jessee marketed Shiner as authentic and part of America’s history.

Shiner’s marketing strategy was a multipronged one, and the company paid $1.2 million for a Super Bowl spot in 2018 to get their message out there. By leveraging several different marketing methods at once, Shiner is retaining the image of a local beer whilst offering it to a national audience.

This strategy is evidence of the importance of branding when it comes to marketing a product or service. A rejuvenation of a brand’s image could be enough to turn around an ailing business. Indeed, you could pick up a local Texas business that isn’t performing so well and turn it around with a careful, considered brand revamp. You could then easily flip it for a quick profit.

Dickies

Texan brand Dickies has successfully made the jump from workwear to lifestyle brand, via an unexpected foray into skatewear. This is due in part to the success of DickiesStore.co.uk, the online distributor in the UK for the global Dickies brand.

Digital marketing specialists MediaVision were asked to help Dickies grow their market share by developing new audiences. Due to their product range, Dickies had assumed that their target audience lay naturally in the building trade but research identified other lifestyle verticals including gardening, camping and agriculture.

MediaVision implemented a paid search strategy based on factors such as seasonality and geographic location, and developed bespoke landing pages for niche interest groups outside of the workwear industry, such as dog walkers.

This worked particularly well on Facebook, with focus being steered away from products and towards lifestyle, taking likes for the Dickies page from 2000 to 20000 in just one year.

Whole Foods Market

Whole Foods Market was founded in Austin by four people who believed that the natural foods industry was ready for a supermarket format. They were right: Whole Foods Market is now a Fortune 500 company and is America’s largest retailer of organic foods.

The company was acquired by corporate behemoth Amazon for $13.7 billion earlier this year, but has retained its image as an alternative to the usual supermarket offerings in its latest marketing campaign.

Under the tagline Whatever Makes You Whole, the new campaign puts emphasis on shoppers rather than produce, and attempts to help Whole Foods shed the ‘whole paycheck’ image that had dogged it for years.

And it seems to have worked: sales at Whole Foods have soared in the past year. Whole Foods have managed to walk the tricky tightrope of offering ethically sourced organic food at lower prices, and their marketing reflects that.

Dell

University of Texas student Michael Dell founded the huge multinational computer technology company in 1984 with capital of just $1000. As of May 2014, Michael Dell’s net worth was approximately $18 billion. Such a figure is clear evidence of Dell’s impeccable marketing strategies over the last three decades.

Dell utilizes content marketing as an important part of their marketing strategy and has created a hugely popular podcast called Trailblazers. Though chiefly aimed at C-suite executives, the podcast is interesting for anyone with an interest in disruptive technologies.

Trailblazer has been nominated for a Webby award, garnering huge publicity for Dell, and their overall content marketing strategy was named in the NewsCred Top 50 Best Content Marketing Brands of 2018.

This method highlights the value of content marketing for businesses, both small and large. Take a look at local Texas business listings and you’ll find any number of brands that, regardless of their business niche, have implemented a solid content marketing strategy. Content marketing creates ongoing value for their customers, which in turn ensures they’ll return to buy from a brand again and again.

Chuck E. Cheese

Restaurant Chuck E. Cheese is an excellent example of how being prepared to be flexible and think quickly can create a hugely successful marketing strategy.

In 2017, McDonald’s hit headlines when an Arizona mom began swab testing play areas in the fast food chain and finding dangerous pathogens. In response, McDonald’s banned her from its restaurants and created a storm of negative PR.

Enter Chuck E. Cheese, who came forward and volunteered to partner with the mom to establish new sanitation standards for their family restaurants. Chuck E. Cheese were clever in playing the part of the rescuer in this story. But they also recognized that a brief switch in loyalties doesn’t necessarily mean the customer won’t return to a competitor.

They turned this into an effective marketing strategy by making a long-term commitment to their customers in the shape of their Kids Play Safe certification. The logo gives visible assurance of their care for children’s safety, something that is hugely appealing to all parents.

Through employing excellent customer service, creating amazing content, making clever use of social media and positioning their brand as authentic, credible and trustworthy, these Texan brands have got their marketing strategies just right.

Patrick Foster is an ecommerce guru who knows a thing or two about marketing. He shares his years of experience on his blog and ecommerce community, Ecommerce Tips. Find the latest posts on Twitter @myecommercetips.

To get updated information about the team at Apogee Results, please follow us on your favorite social media channels.