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Why Brands Fail

August 3, 2017

American Fashion In The UK: Wrong Fit?

 

The Shuttered American Eagle Store, Bluewater

 

 

Last week American Eagle announced that after only three years it was pulling out of the UK market. Add to that the names of those who have exited or are struggling - J.Crew, American Apparel, Forever 21, Hollister and Banana Republic immediately come to mind - and you begin to see a trend appearing.

 

What’s behind this? Why are these brands failing?

 

On the face of it, all should be performing well. Good stores, good locations and in most cases good customer experience.

 

However, look a little closer and a different picture emerges.

 

Take American Eagle; three stores one in each of Westfield Stratford and Westfield Shepherds Bush and one in Bluewater. Those sites don’t come cheap.

 

Add to that the market they are in; attracting 15 to 25 year olds with an affordable ‘preppy’ look – an age group notoriously fickle when it comes to fashion preferences. Oh and add in the small matter of fast fashion icons such as H&M and Zara and it makes for a strong headwind.

 

Put all that in the context of a decidedly challenging UK retail fashion landscape where, faced with rising costs and a slowdown in consumer spending, most of the more well established brands are struggling.

 

You get the picture.

 

But for me there’s another, perhaps more vital ingredient which is lacking.

 

More than ever, brands are having to compete like crazy to get into our consciousness.

 

According to research firm PMR, “the recall of one brand blocks off the other brands from the range of alternatives in which the consumer makes his/her selection”.

 

So, it’s already extremely difficult to achieve any kind of brand awareness. But when one considers the penetration and influence which social media has today, the task of gaining brand recognition in a new market assumes almost herculean proportions.

 

In a recent blog from Brandwatch, up to “96% of conversations happen outside the official, owned channels of the brand”. Therefore it follows that the brand no longer owns the brand, the consumer does.

 

"More than ever before, we need to understand what a brand stands for, why it is in business and what value it can offer us"

 

It’s an intriguing proposition; does brand loyalty still exist? The effects of austerity continue to be felt and perhaps our shopping habits have changed forever.

 

A brand must understand its why before anything else - why it is in business and must be able to articulate that why in an effective manner. Unfortunately, too many continue to simply broadcast their message. In today’s socially aware, savvy consumer, brands also need to engage with their audience.

 

It is about inspiring consumers; in his excellent book ‘Start With Why’, Simon Sinek states “We are drawn to organisations that are good at communicating what they believe”

 

More than ever before, we need to understand what a brand stands for, why it is in business and what value it can offer us.

 

In the case of American Eagle this message was lost, with fatal consequences.

 

 

Andrew Busby is Founder of Retail Reflections and an IBM Futurist

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