NAME GAME

What is in a name? A question that we often ask about various things in life. In the context of marketing, many of us relate this question to the concept of a brand. When we mention brands such as Apple, Coca Cola and so on, they conjure up various perceptions, opinions and beliefs. The stronger the brand equity, the more positive the perceptions and viewpoints.

In late 2019, Sports Direct owner, Mike Ashley recommended to its shareholders that the company should re-brand as Frasers. He justified this move because it reflected its “elevated” strategy. It also focused on the changing profile and customer proposition of the group.

Initially I was surprised by such an apparent major change in its overall positioning in the marketplace.

Why? Well mention the name “Sports Direct” and many people will associate it with low prices, heavy discounting, cluttered stores and so on. Surely, such a strong brand would not “fit” strategically with upmarket brands such as House of Fraser?

Ashley, we should note, acquired a number of various retailers, in an aggressive acquisition strategy during the couple of years leading up to this name-change. These included such a diverse spread as Evans Cycles, Jack Wills, Sofa.com, Game Digital, Flannels and House of Fraser. The latter two retailers traded as up-market retailers. It could be argued that these acquisitions fundamentally changed the portfolio of retailers owned by Sports Direct.

In the case of House of Fraser, Ashley purchased the operation for £90 million in 2018, as part of a rescue deal. This reflected his approach to doing business. Around the same time, Debenhams also underwent major financial hardship. Ashley always sought out opportunities where bargains could be acquired – such struggling, well-known retailer brands. This bid did not work out.

Shortly after acquiring House of Fraser, Ashley expressed regret at the purchase. He inherited a struggling brand, the associated debt and over fifty outlets with expensive leases.  He went so far as to state that the problems were terminal. Subsequently he announced that he planned to “roll out” a chain of luxury high street stores, named Frasers. These outlets would carry a range of beauty, sports and luxury fashion items.

In some of the closed House of Fraser stores, Ashley began to stock them with discounted Sports Direct merchandise and re-opened them for business. He argued that it made sense to re-brand some of the other stores as Frasers, in order to reinforce the image of a new and luxury mini-retail chain, selling more expensive and exclusive labels. This appeared also to support his long-term vision of turning the Group into the “Harrods of the High Street”.

The overall Sports Direct Group has a market value of around £1.8 billion. Ashley justified the re-branding of the Group’s name as Frasers Group to reflect its changing circumstances: based on moving away from a sole dependence on the sports items, to that of a lifestyle brand.

As we mentioned earlier, the original Sports Direct brand has constantly attracted criticism from various stakeholders over the years. As well as being perceived as selling cheap and low-price sports trainers and clothing, it received heavy criticism for the low pay of its staff (many on zero hour contracts) and overall working conditions. Ashley’s background as an opportunistic entrepreneur, initially operating in market stalls, never fully disappeared as his business empire grew.

His acquisition of Newcastle United football club consistently attracted criticism from it fans. Such negative comments revolved around his lack of understanding of football, his unwillingness to pour money into the club and his attempts to change the name of the stadium to “Sports Direct”.  Critics also accused him of using the perimeter advertising as an opportunity to promote Sports Direct. To be fair, some argue that Ashley simply applied the basic principles of running a business to the football industry and treated his ownership of the club as a business asset to be exploited accordingly.

Disputes with fellow board members and accountancy firms (over auditing the corporate accounts) further reinforced the perception among some commentators, that Ashley was “damaged goods”.

In summary, Ashley would appear to have run a very successful sports apparel brand in the case of Sports Direct. It has continued to make money. However, in his quest for further development, he acquired an eclectic range of other retailers to build up his empire over the past few years.

His main motivation appears to revolve around the desire to shed the overall image of being “cheap and cheerful” and move into more upmarket and exclusive areas that broadly address the lifestyle and luxury dimensions of the retail sector.

What are we to make of such a strategy? In fact, we might begin by posing the question as to whether or not there is any evidence of a planned and strategic approach to the development of the Sports Direct (now Frasers Group) brand in the first place.

A cynic might suggest that the acquisition of the retailers mentioned in the preceding paragraphs came from opportunistic and accidental motives. Hence, the position that it currently finds itself in: operating in a range of apparently diverse retail businesses.

Other commentators might argue that it reflects the entrepreneurial and pioneering approach of Ashley: always seeking out opportunities from potentially “high-risk” ventures, and willing to “put his money where his mouth is”, to back up such a strategy.

In some ways, the strategy poses more questions than any “ready-mad” answers.

Arguably, Ashley has thrashed many of the basic principles of branding and positioning. For instance, how can you maintain consistency, clarity within your communications to your customers, if you utilise a standard name: Frasers, to encompass a range of different retail brands?

Is it credible to suggest that you can sufficiently differentiate your value proposition when your core brand is locked into the discount, low price segment of the market, while at the same time trying to project some of your brands in the exclusive and more upmarket segment?

By retaining the different brand names such as Flannels and sports Direct, is Ashley in danger of confusing the respective target markets with mixed messages?

Many commentators argue that in order to reposition a brand, it is essential that internal change is critical. Unless the group changes its approach to its treatment of workers and working conditions, it will be almost impossible to change peoples’ perceptions and attitudes to the brand. A simple change of name will not achieve this objective.

Somebody once said that the true test of successful brands and how they are developed is based on what people say about you, when you are not in the room. This explicitly reinforces the view that a simple name change will have little impact on people’s perceptions. Rather, it requires a fundamental shift in corporate culture from within. There is little apparent evidence that this is happening within the overall group.

Within its core business (Sports Direct), the Fraser Group faces intense competition from retailers such as JD Sports. Is there a danger that Ashley, by moving more fully into the general, lifestyle market, will “take his eye off the core business” and ultimately run the overall group into the ground? Let’s see.

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