Galaxy Note 7 fire hazard disaster

Galaxy Note 7 fire hazardThe Samsung Galaxy Note 7 recall because of the Galaxy Note 7 fire hazard has me thinking. What if any long term effect could this Galaxy Note 7 fire hazard have on the BRAND of Samsung?

Sure an exploding or smoldering smart phone is not a product feature in even the most optimistic consumer’s mind. But could this product recall seriously and permanently damage this mega-brand consumer products company?

In a word. Maybe.

Brands have meaning to consumers and great brands have great emotional meaning to customers. They associate with that brand meaning and, because that association should be about the customer and not the product, it becomes personal.

Galaxy Note 7 fire hazardNike has a premier consumer product position, not because it makes the best athletic shoes, but because Nike means the wearer feels like a winner. It’s the Nike promise that you should just do it. Forget the distractions. Keep focused because YOU are a winner for choosing Nike (read about the NIKE brand here). That is the power of BRAND.

I am trying to think about Samsung. What does the brand MEAN? Does the Galaxy Note 7 fire hazard in any way damage that association? I think it does and here is why.

Samsung is the largest electronics company in South Korea. It makes quality products and has infiltrated almost every category of consumer electronics. But it has a very poorly defined brand promise.

Galaxy Note 7 fire hazardLacking that emotional connection, it has allowed the consumer to position it as a value brand. That means Samsung is lower priced than the competition but are generally well made and dependable.

It might not be fair to dis Samsung as lacking in innovation but I think the market does not view it as being an innovator in any way. It is a fast follower, often copying the market leader’s products with a slightly cheaper (value) positioning.

This model has allowed them to steal the thunder from many storied brands. Take Son (Read about the Sony brands here) for instance. Its Trinitron TV brand reinvented the category.

Sony even led the way in flat screen innovation. But Samsung copied those products and dared to make side by side comparisons of product features — all with a value twist. The result? Growth in market share.

Galaxy Note 7 fire hazard has reshaped the smart phone pecking order

Same is true with the smart phone. Everyone knows the category was invented by Apple. Even the courts backed up that statement. Samsung entered the category with a cheaper reproduction and an nearly all-open sourced operating system. Side-by-side comparisons with the iPhone showed similar capabilities at about 50% of the cost.

Galaxy Note 7 fire hazardBut the Galaxy Note 7 fire hazard has undone much of that value cache. The great enemy of value brands is an underlying and almost universal human belief that, at the end of the day, you ALWAYS get what you pay for.

Customers who invest their emotional soul to value brands sit around waiting for the shoe to drop and hoping it does not. Want proof? Ask Value Jet.(Read about the fire that burned up an airline here: ValueJet). A failure by a low cost provider can be fatal to the brand.

Galaxy Note 7 fire hazardI worry that all the problems and bad press over the Galaxy Note 7 fire hazard feels like the shoe has dropped. (You are reminded of it every time you fly on a US passenger airline because they warn you before boarding that, having a Samsung Galaxy Note 7 turned on or charging, is forbidden because of the recall.)

To survive, Samsung might have to double down on its value proposition and make the risk worth the reward by gutting its profit margins.

Or it could call us and we could help them create a REAL brand that incorporates brand repair with a new juggernaut of meaning. Samsung won’t call however. It thinks brand is a logo and name. But there is no need to change either. There is a need to change the meaning.

Is Bass Pro Shops buying Cabela’s a good idea?

Earlier this week, Bass Pro Shops announced it is acquiring Cabela’s for about $5.5 billion. The acquisition will double its number of stores.

Bass Pro Shops
Does Bass Pro Shops really need to buy Cabela’s?

From an operational perspective, this completely makes sense. Bass Pro Shops has a great reputation in outdoors sports and recreation, particularly in fishing and boating. Cabela’s, on the other hand, has focused on hunting and fishing. While both brands offerings overlap, Cabela’s can help Bass Pro Shops fill in some gaps in product offerings and vice versa. (Assuming, of course, that Cabela’s is not swallowed up by Bass Pro Shops.)

The problems facing Bass Pro Shops.

However, there could be a problem. While on the surface, the two brands might seem to share a common customer interest and, with that, their customers may even share common values and purchase drivers.

But it may not be as simple as that. Does being owned by Bass Pro Shops reduce the focus that Cabela’s has on shooting sports, for example? I doubt that there is much difference in the type of customer. I can only hope that both brands leverage their strengths to the betterment of the other. But a merger of two rivals can often have some unintended consequences.

The most interesting and potentially problematic part of this acquisition is the tremendous amount of real estate that Bass Pro Shops is getting. It will get 85 more stores with about 19,000 employees. Geographically, there is some overlap, especially in the east. Some stores will have to be considered for closure.

And this is the root of the potential problem.

The retail segment is struggling. Sales are declining and more and more retailers are scaling back. It is a very risky business proposition to make a $5.5 billion investment in a business on the decline. While Bass Pro Shops would likely argue that its locations are destinations, the reality is that it is not immune to the changing buying habits of today’s consumer. We may be writing about how Bass Pro Shops is closing stores to maintain its profitability, if the downward trend continues for brick and mortar stores.

Bass Pro Shops is a privately held company and does not divulge its sales numbers. But Cabela’s does and, like many of the big box retailers, it has reported either declines in same store sales or, as in its most recent filing, a reduction in profits due to massive discounting. All is not rosy in outdoor sporting either.

Bigger is not always better, especially in the current retail environment. A year or so from now, this acquisition may a $5.5 billion mistake.

Another retail casualty: the CEO of Stein Mart

The retail industry is under siege, if you haven’t already noticed. Stores are closing, CEOs are leaving (being either fired or retired) and few know what to do in the battle against Amazon.

I have written plenty about this issue, maybe even more than you know. I am a regular contributor to RetailWire, which you can read about here. The single biggest question asked is, “Where do retailers go from here?”

Stein Mart
The resignation of the Stein Mart CEO is another demonstration that retail is dying.

The latest shoe to drop is the resignation of Stein Mart CEO Dawn Robertson, who left after same-stores sales declined 4% this past quarter. You sense a trend here. Office Depot and Staples, once thought to be merger partners, are looking for new CEOs. Macy’s is closing stores even though it promoted a national holiday hiring day.

It’s a mess out there for retailers.

The problems facing Stein Mart and others

The problems are two-fold for retailers, such as Stein Mart. First, they have never gotten the basic strategies of creating preference right. Secondly, they are behind the curve when it comes to online retailing.

Retailers were once powerful, thriving during the days when malls took over the marketplace. Malls were a community of stores, aping a downtown marketplace. Shopping at a mall was efficient and easy for buyers. Retailers reaped the rewards of shoppers buying more than they intended. (Think the Sam’s Club model. You go for a great deal, but stroll up to the checkout counter with loads of merchandise.)

In good times, brands often get lazy. They live off their success, thinking that there’s nothing they need to do to prepare for change. So few, if any, actually built brand preference. Instead, retailers fought over price, some adopting the Walmart model of always having a low price with others holding sales every week (that’s what has gotten Stein Mart in trouble). When you do that, you teach audiences to shop on price because you haven’t given them any other reason to choose.

So shoppers choose Amazon.

That second issue, failing to be a strong presence online, caught retailers with their pants down. They were slow to prepare and any preference they did have disappeared. In essence, retailers have reaped what they sowed.

What do retailers do now? They have to go back to the basics. Build a brand that actually stands for something, one that is different and better. That better part is difficult, but the different part is what has befuddled them. The retail choices all look, sound and, frankly, are the same. There’s not a squat of difference between Stein Mart and Kohl’s from the point of view of the customer.

No wonder we all shop on Amazon. At least we know what’s different there.

Macy’s national holiday hiring day is disingenuous

Troubled retailer Macy’s is creating yet another made up holiday – national holiday hiring day. The holiday will be on September 30th when Macy’s plans on hiring 83,000 seasonal workers to fill holiday positions in their call centers, distribution centers and fulfillment centers.

The move reeks of terrible PR and feels incredibly disingenuous.

national holiday hiring day
Macy’s national holiday hiring day is a joke.

Earlier this year, Macy’s announced that it was closing about 15% of its stores. This came amid six straight quarters of sales declines that were blamed on an increasing number of consumers moving to online purchasing – because as we all know, no one saw Amazon coming.

We have written a lot about the soft brick and mortar retail environment as well as the problems with Macy’s. Too many stores were built too fast with no vision of the future. Isn’t that the real reason?

National holiday hiring day should be laughable.

Now Macy’s is touting national holiday hiring day. I get the need to hire temporary people during this time of year. However, Macy’s bragging about creating the first national hiring day is simply a bad idea. It’s a naked attempt to get people to forget it is shuttering 15% of its stores and firing the countless people affected by those closings.

Have you ever watched a bad movie for a little longer than you should have just to see how bad it was going to get? Macy’s is much like that bad movie, getting a little worse with each passing minute. This blatant PR move once again demonstrates just how far Macy’s has fallen. Its brand is in decline, stores are closing, sales are declining and yet it is touting a national holiday hiring day. It’s a major disconnect and a failure of the Macy’s brand.

Will the holiday work? Of course it will, but not because of Macy’s. People need jobs and others need a second job to make their children’s Christmas special. Most people won’t be bothered by it, save the ones who are getting laid off in the store closings.

But Macy’s has lost its way and this is yet another example.

Staples Workbar won’t fix the overall problem

Oh boy. As Staples (and its failed merger partner, Office Depot) tries to recover from disappointing sales, it has partnered with Workbar to set up office spaces for customers in a few stores around Boston.

Staples Workbar
The Staples Workbar space is nice, but who cares?

The space is far back from the retail area where customers can work without having their own real office. Said Evin Charles Anderson, whose video production company has been using the space, “On the weekends when we’re here, we see people peering in through the windows.”

Yeah. They’re wondering what the hell Staples is doing. The office supplies stores are in a free fall with Office Depot closing stores and regulators ending the proposed merger between Staples and Office Depot.

Staples Workbar is a tactic, not a strategy

Both supply stores, in fact, are looking for new CEOs to lead the retailers into a new era where all retailers are becoming more and more irrelevant. The Workbar additions, just in beta stage at this point, won’t hurt but it won’t fix the problem either.

For one thing, who wants to work in the back of a Staples store? FedEx, off its successful merger with Kinko’s, has something similar that has now existed for nearly a decade.

More importantly, however, the working world is no longer dependent on having a traditional office or even one that resembles one, such as the Staples Workbar situation.

As many employees at very large companies will tell you, working from home is the new normal. (The sheer number of them doesn’t even consider freelancers.) You may go to FedEx Office for shipping but you can buy just about anything off the internet. There’s no need to go to a Staples store to work.

That is, unless Staples had a brand that compelled you to seek it out.

But there’s no emotional reason to go to Staples or even the Staples Workbar space, which is the only reason to create preference. As Napoleon said, “You must speak to the soul to electrify men.”

That’s what the office supplies stores are missing. They believe they can out-tactic their way out of their dilemmas, rather than looking at a complete overhaul of what they provide and what they mean.

I’ve been thinking recently that the entire brick and mortar retail market is in serious trouble. Malls are becoming a thing of the past and the industry as a whole is losing their shirts to Amazon.

So, there’s now Staples Workbar. OK. So what?