By Rick Thomas, Business Advisor
Wal-Mart’s recent announcement that they would be closing 154 stores across the country caught my attention. Especially so given that 125 of those stores were Express and Neighborhood Stores, Wal-Mart’s attempts to go “small box”. I had a consumer’s perspective on this not long ago as I had visited a Neighborhood Store in search of some anti-freeze. Being familiar with the big box SuperCenter store that had opened in my neighborhood awhile back, I had grown to expect the offering from Wal-Mart for the variety of merchandise and competitive pricing. This is the essence of their brand promise, great selection and low prices. I do not, on the other hand, go to Wal-Mart expecting to receive exceptional customer service, be greeted by name or see a familiar face. Because whether intended or not, that too is part of their brand promise.
All this to say when I visited the Wal-Mart Neighborhood store looking for anti-freeze, I was soon disappointed. Turns out they did not carry automotive supplies at the Neighborhood Stores. They also didn’t carry sporting goods or household hardware items and I found the store nothing short of confusing, as if it were having a corporate identity crisis. Located in a building that used to be a Whole Foods location, it had a smaller layout typical of a boutique grocery store but with none of the premium features such as fresh espresso, handcrafted cheeses or Italian meats. Yet it also lacked the merchandise selection I had come to expect from Wal-Mart, hence when they announced the store closings I was none too surprised. By my experience alone, what Wal-Mart had failed to recognize at the outset was their foray into “small box” concepts were inconsistent with their brand promise.
A brand promise is not only the slug-line under a corporate logo, but also what the customer actually experiences. Wal-Mart’s official tag line is “Save money. Live better.”A bit grandiose but I do save money at Wal-Mart on certain items which is why I shop there and my experience is consistent with how they position themselves. Except for the small store market they decided to go after which created the disconnect between what I have come to expect, and the shopping experience I had at the Neighborhood Store. All of which has lead me to the question that screams to be asked: How is it that arguably the worlds most successful retailer missed on a fundamental concept of business in always ensuring the customer experience is consistent with the brand promise?
Surprisingly, it happens more often than one might think, and with some of the largest and most recognizable brands. In the 1990’s, under pressure from attempts to clone their OS, Apple licensed their software to a third party PC manufacturer and for a short period of time, you could buy a non-Apple PC running the Mac OS. It was a dismal failure and a far retreat from the brand experience die-hard Apple fans had come to expect. The Apple CEO, Gil Amelio, soon lost his job and hearkened the eventual return of Steve Jobs.
In another example, Howard Schultz, CEO of Starbucks famously penned an email to his senior leadership team just before his return to the chairmanship, lamenting that the growth of the business both in the US and internationally had lead to a significant dilution of the brand promise, namely the stores no longer smelled of coffee. In Starbucks zeal to drive further revenue growth, they had switched from the classic La Marzocca machines to a more efficient automatic machine that spit out venti lattes at a much faster pace. All of which lead to an atmosphere in the coffee shops that was a far cry from where they started as a small roaster in Seattle’s Pike Place Market.
What Schultz recognized was that by overlooking the brand promise, Starbucks had lost their soul and to his credit when he returned to the helm in early 2008, lead a significant brand overhaul. Schultz led this overhaul during the depths of the financial crisis when many argued it was not the time to take on the cost of a brand overhaul. His determination and eventual success, however, to reinvest in the brand in spite of the recession is further illustration of the importance of brand promise to the long-term health of the business.
And the list goes on of major brands that have lost sight of their brand promise, some who were lucky enough to recover, and many whom have not. The lesson is for all the talk around business models vis a vis product differentiation, segmentation, margin analysis, velocity of turnover and an abundance of other measures; the understanding of what is core to the customer experience and the essence of the brand promise is as fundamental as understanding profit. When a business loses sight of this, the impacts are often significant, if not a threat to its very existence.
If you have identified the brand promise for your business, kudos to you and you will be well served to keep it close by. Whether contemplating new strategy or optimizing your current one, filtering all of these considerations through the brand promise will ensure that the essence of the business is preserved. As Jim Collins famously penned in Good to Great, the precarious balance to be maintained in growing your business lies in preserving the core, while stimulating progress. Adherence to the brand promise is as essential as anything in preserving the core.
If, on the other hand, you have not identified the brand promise, then as is also famously penned, “The best time to dig a well was twenty years ago. The second best time is today.” In other words, get on it! A healthy discussion amongst the senior team at a minimum is a start (a simple internet search will produce plenty of resources), while some prefer professional facilitation. Regardless, however you get there…get there. Uphold the brand promise as much as you drive for return on your invested capital. Your business model depends on it.