It’s been a tough couple years for retailers – many of whom are struggling through bankruptcies or turnaround efforts amid online competition and rapidly evolving consumer tastes.
But at least one company is doing something that should catch the attention of other retailers: Abercrombie & Fitch, in August 2015, named a six-person brand leadership team as part of its turnaround efforts – and the company returned to growth early this year.
This is refreshing. Retail management often doesn’t have the necessary perspective to fix deep-rooted problems – leading to cash depletions, difficulty in procuring capital and the inability to comfort impatient lenders. These retail leaders cling to what used to work, which can be disastrous, especially when it comes to a brand.
Bringing in new blood – whether it’s a team of six or an individual in charge of branding – then, is a good idea. And it’s not something that retailers should only do once they start struggling. Cartier, which recently overhauled its flagship store on Fifth Avenue in New York, has a director of image, style and heritage who recently acknowledged that the company needed to become more user friendly and more approachable to non-celebrities. I typically lump titles like that one into a larger chief branding officer category, which I will use as a catch-all in this article.
CBOs are responsible for a brand’s image, the customer experience, and promise – all while overseeing marketing, advertising, design, public relations, and customer service with a mandate to develop and maintain the desired impression of the product. Put another way, CBOs are tasked with owning the brand experience. They succeed by living in the customers’ shoes and speaking for the customer within the organization to ensure all business initiatives consistently reflect the brand. The CBO must be protective and visionary at the same time – and take strategic risks to create opportunities that drive the business forward.
This ties into something that is especially important. For retailers (whether bricks-and-sticks, mall-based, free-standing, catalogues, internet or ship-to-direct) one key to survival is self-analysis of what the company does, why it does it, whether it still works, how the market is changing, whether the company is changing with the market and how the company distinguishes itself. CBOs can coordinate these functions among a wide arc of the company’s executives better than, say, chief merchandising officers.
To be sure, chief restructuring officers (CROs) are important, too – and some can wear the CRO and CBO hats during restructuring. In cases where the CRO and CBO are not the same person, they absolutely must work as a team. For retail chapter 11s that aren’t simply liquidations – i.e., when the goal is to actually fix the core business — cooperation between the CRO and the CBO is critical.
Retailers who want to bring in branding experts should look for individuals with the right vision and experience. Being the CBO for Apple would be much different than holding the job for JC Penney. Understanding underperformance requires sector-specific experience.
It might sound counterintuitive, but assuring that the retail brand is strong is actually not the goal, because brands can be strong in bad ways. CBOs must work to ensure brands are strong in way that draw shoppers. This requires a holistic approach and cooperation among the C-suite executives, including the CBO and the CRO.
Many retail executives (wrongly) believe that they already do these things – and that branding experts are unnecessary or luxuries they can’t afford. But thoughtful and progressive organizations see the value.
Of course, the standard methods of restructuring and reorganizing – deleveraging, reducing rent, closing stores, etc. – are tried and true. But the importance of brands can be seen if you visit any mall, particularly one that is upscale. For brands with a high degree of chic, some consumers will make a purchase because they think it’s cool to simply walk around with a branded shopping bag – regardless of its contents.
Kenneth A. Rosen, Esq. leads Lowenstein Sandler LLP’s Bankruptcy, Financial Reorganization & Creditors’ Rights Department.