We tend to become obsessed with the concept of the brand. Nowhere is this more clearly exemplified than in the retail sector. We delight in hyping up successful brands and in the context of teaching courses on retailing we feature them prominently in our discussion and analysis.
As can be seen from some of my previous blogs I obsess about once-successful brands that have fallen on hard times or have disappeared from the high street (you can read my previous blog on FCUK for evidence of this obsession).
Another such brand popped up on the business pages in the last couple of weeks: I refer to that bastion of Britishness: Jaeger. It has been around since the latter part of the nineteenth century (founded in 1884) and its origins came from the writings of a German Professor of Zoology; Gustav Jaeger. He believed that it was healthier for people to wear clothing that was made from material such as wool, animal hair and fleece. It firmly established itself in retail folklore in 1919 when it introduced a range of camel-hair coats to the market.
Arguably its key period of success was in the 1950’s and 1960’s where famous actresses such as Audrey Hepburn, Marilyn Monroe and Jean Shrimpton wore their fashion items. Since then it has undergone a number of transformations both in terms of ownership and approach to design. It has vacillated from the classic design to a more modern approach with a focus on casualwear and then back again to the classic design. Its financial fortunes have swayed backwards and forwards as well. Sadly over the past fifteen years or so it has suffered more than most of the retailers on the high street and has recorded a steady and unremitting series of losses.
Moe recently in 2012 it was acquired by Better Capital for around £20 million and since then has also made losses: it is estimated that it has recorded losses of around £63 million. In January Better Capital sought offers and set an asking price of £30 million. It was rumoured to have sold off its debt of £7 million to Edinburgh Woollen Mill, whose owner is well-known for acquiring and turning around retailer brands such as Peacocks.
In April it went into administration having failed to generate interest from buyers, although it is expected that Edinburgh Woollen Mill will eventually acquire it.
So what went wrong? Why has this quintessentially British brand ceased to become relevant?
We can point to a number of actors for its demise.
Firstly it clearly lost its way – mainly through the bewildering array of owners and their approaches to keep it meaningful.
In terms of positioning it was perceived originally as a brand that appealed to the older and more discerning shopper seeking quality with aspirational values associated with the brand. Its main competitor was arguably Burberry, although the latter retailer underwent significant trauma about ten years ago when counterfeiters made it popular with the so-called “chav” element of society. It eventually recovered its tracks to regain its position in the market.
By contrast Jaeger has not made any inroads on its losses. So what initiatives did Better Capital implement in the period between 2012 and now?
One of the problems that we should acknowledge at the outset is the readiness of an investor such as Better Capital to make the long-term investment in order to turnaround such a retailer. Typically such investors are not prepared to take a long-term view of such a brand. It has clearly fallen off the radar to such an extent that only major investment would provide it with an opportunity to survive. Although it spent some money on it is was nowhere near enough to make inroads on the brand image and its overall brand equity.
If we refer to the challenges of positioning that we discussed in the text-book, Jaeger arguably made some fatal mistakes. By constantly changing its approach – classic to casual to classic and all over again it fell between a number of stools in the minds of both its core market (older and affluent women and men). In effect it found itself between a rock and a hard place to use a cliché. It came between a premium brand such as Burberry and slightly cheaper brands such as the US retailer J. Crew. This reinforces my view that such a position is a meaningless one. It makes it difficult (I would say virtually impossible) to carve out a clear, meaningful, relevant and substantive value proposition which can easily be perceived and assessed by shoppers. It is in effect a “non-position”.
This noon-position was compounded by the practice of the new owners to consistently introduce discounting and markdowns. This is exemplified by the following practices.
For instance it introduced a policy of twenty-five per cent off all items on Cyber Monday and fifty per cent off everything on the Black Friday weekend in 2015.
Suits officially priced at £400 sold for as little as £100.
In 2015 it operated its pricing for only two out of the fifty-two weeks without resorting to discounting. In 2016 this improved (relatively speaking) to eight weeks. This in my view is the “kiss of death” for a brand which claims to be a premium product.
While everyone accepts that discounting and markdowns are inevitable for all retailers, to systematically introduce a policy of discounting to such an extent is reckless. Effectively a retailer is conditioning and educating its core customers to expect such promotions and discounts. If repeated on such as regular basis it also changes the perception of shoppers about the position of the brand. How can you claim to be a premium brand if you are constantly feeding the shoppers with such discounts?
The owners also closed the main flagship store in Regent Street, London in early 2016. This was part of a necessary overhaul of the property portfolio and can be assessed from a number of perspectives. Arguably it was the correct one as the cost of renting such as prime location probably could not be justified, given its financial performance. It opened a smaller store (2,000 square feet) on Marylebone High Street. While it is a good location it simply is too small to act as an overall flagship store. Prior to administration it operated forty-six stores: a mixture of outlets and concessions.
Notably Jaeger was slow to embrace the inexorable move towards online retailing, relying instead on its supposed strength as a “heritage” brand and maintaining its physical store portfolio. This handed the initiative to other retailers and they succeeded in encouraging shoppers to visit their websites.
It tried to lure a younger shopper to its designs and partially succeeded (but not sufficiently) regular new designs such as Jaeger Boutique and Jaeger London collections. While the latter received critical approval, this was not reflected in sales sufficient to generate the required profit to offset continuing losses.
Undoubtedly in the past year rising labour costs and uncertainties over Brexit and the declining value of sterling has not helped Jaeger or indeed many retailers on the high street.
By trying to become trend-led (creative designs) it has compromised on its classic appeal and again falls between two stools: losing many of its older shoppers and not being price-competitive to attract a younger audience.
In summary it is a mess and this is reflected in its move into administration.
What will happen?
A prospective buyer such as Edinburgh Woollen Mill can perhaps keep the brand alive by incorporating it into its brand portfolio and it may retain a few concessions. The physical stores will close and EWM may sustain it through its online retail operations.
Lessons to be learned?
Heritage brands have to remain relevant if they are to survive. To do this they need to be proactive in their strategy development and implementation. This did not occur with Jaeger – probably due to the frequent changes of ownership and personnel that were brought in to rejuvenate it. A failure to embrace online retailing in time also led to its demise.
Do not confuse your target market. Consistent discounting does not square up with a claim of being a premium brand.
Maybe we should accept that every brand has a lifespan.