Building Immersive Brand Experiences: American Girl and RH Restaurants

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Prior to the pandemic, Starbucks’ founder, Howard Schultz, stated that the way forward for brands is making your branded space an “experiential destination.” At that time,  

Starbucks’ CEO, Kevin Johnson said, “To survive, merchants need to create unique and immersive in-store experiences.” Covid-19 changed things for Starbucks as the company post-pandemic focuses more on drive thru and digital rather than the original experiential third place.

Brands focus on making their experiences come to life in many different ways. This is because a favorable experience with, for example, an iPhone and/or an Apple Watch and/or earbuds increases the probability the same customer might buy an Apple iPad, Mac Air or Mac. With a stable of desirable offerings, Apple continues to build an over-arching power brand by connecting with younger cohorts. In 2018, financial news magazine, Barron’s commented, “Getting more people into the Apple network early can be extremely valuable, especially if they sign up for services that make them unlikely to switch to other phones. And, finding that interest in the Apple Watch is also growing would only help.” Samsung hopes that positive encounters with Galaxy mobile phones will persuade customers to purchase a washer and dryer or other appliance from Samsung when the time comes.

Extended brands that offer multiple product and service experiences strengthen the customer’s commitment and conviction in the brand promise. Disney created spaces where you can meet the animated and other movie “friends” through rides, hotels and cruises.

One of the ways that brands have become immersive is through food. Brands are using restaurants to make the brand encounter a far deeper three-dimensional sensory involvement. Think surround sound for your psyche, soul and stomach. Restaurants make brands immersive without the metaverse.

American Girl, the doll company, and RH, the upscale furniture lifestyle brand both have in-store restaurants that extend and enhance the brand for the customer.

The website for American Girl Stores states, “Ready to make memories together you’ll always treasure? Discover all the experiences our stores offer for a day full of fun!” In addition to in-store parties, a “Dolled Up” salon for the dolls, a doll hospital, activities and hotel packages, there is the restaurant. “Enjoy selections that appeal to girls and grown-ups alike – plus we offer special seats just for doll friends.”

One blog told the story of an American Girls Store dining experience as follows: 

“… hordes of customers (usually moms and daughters, but not always) lining up to have afternoon tea with their dolls. The dolls get their own scaled-down cups and saucers so they can sip invisible tea while the humans polish off petite sandwiches and glasses of American Girl signature pink lemonade.

“(The website states that) possessing your own American Girl is not a prerequisite for the dining experience: “And don’t worry if your girl forgot her doll – we always have extra dolls available to dine with you.”  

RH, formerly Restoration Hardware, has taken the in-store restaurant to an even higher level. As described in The New York Times recently, RH uses its restaurants to provide surroundings focused on RH’s special décor styles and offerings. The restaurants are décor showrooms with a menu. Unlike IKEA, where the spare cafeteria may feature some available lighting or a storage unit, RH has made its aesthetics palpable for its high-end customers. Although the food is quite elegant, albeit expensive, most guests indicate that the beautiful, pleasing surroundings is the draw.

The idea of using a restaurant to immerse customers in the brand, enhancing the brand experience, bringing the brand’s promise to life, is what intrigues Crate and Barrel. In the very tony Oakbrook, IL., mall, Crate and Barrel just opened its first in-store restaurant, Table and Crate.

Privately owned, UK department store, Fenwick’s, also uses the in-store restaurant as a customer draw. Fenwick’s has two different in-store branded restaurants, Fuego and Mason & Rye.

Brands use stores-within-stores to generate traffic. Many of these stores-within-stores are other brands such as Toys R’ Us in Macy’s and Sephora in Kohl’s. Having other brands enhances both brands. Both brands benefit. For example, Macy’s gains the ability to offer customers quality, fun, year-round toy shopping. Toys R’ Us gains actual brick and mortar facilities, a reliable stream of shoppers and the ability to reinforce its brand with old and new customers.

The in-store restaurants also generate traffic. But, the restaurants do much more. In-store restaurants allow a brand to enmesh a customer in the brand’s promise, enhancing the way in which the customer perceives the brand.

The focus on the total brand experience as a physically and emotionally “immersive” destination is not a new concept but a concept that has new traction as we navigate a virtual, digital environment. In 1998, B. Joseph Pine and James H. Gilmore wrote a pivotal, highly influential article for Harvard Business Review titled, “Welcome to the Experience Economy.” The authors argued that experiences are distinctly different from products and services. Increasingly businesses are “explicitly designing and promoting” engaging experiences, and charging for these experiences. An experience happens when a brand “uses services as the stage and goods as props… creating a memorable event.”

In a marketing environment that is weighing the benefits of an artificial immersive world of the metaverse, many brands are choosing to immerse customers in the real world of tastes, smells, feel and food.

Walgreen’s Bets Success On Segmentation

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Walgreen’s’ CFO told The Wall Street Journal that the pharmacy’s almost two-year focus on Covid-19 was at the expense of its established customer base. While selling hand sanitizer rubbing alcohol, masks and dispensing vaccinations, Walgreen’s lost relevance with its core customers’ other needs. Walgreens’ is clearly unhappy about this situation. Now that the urgency of coronavirus has abated, Walgreen’s is planning a marketing surge to regain its lost customers and convert vaccination-only people into “permanent” customers.

What is Walgreen’s first step? Needs-based, occasion-driven market segmentation. Using its customer data base, Walgreen’s is analyzing the who, why, how, when and where of customers’ behaviors and needs. Walgreens’ CEO said that the pharmacy intends to group customers into segment “communities” based on needs, preferences and how, where, when they shop.

This is a smart move.

Needs-driven, occasion-based segmentation is a for effective marketing. Market segmentation is especially essential when trying to restore brand relevance. Identifying markets and market potential is the underlying premise of market segmentation.  Segmentation recognizes that the marketplace is diverse.  It recognizes that not everyone is the same; will want the same things; will use products and services in the same context.

Segmentation creates a customer-driven map of the category divided into 1) what the needs are, 2) who has the needs, and 3) in what occasions people have these needs. Knowing the audience, knowing the needs and knowing the occasions are all important. The challenge is to integrate this three-dimensional view of the market into brand- focused market segmentation which is exactly what Walgreen’s plans to do.

Industry classification, price classification and product classification do not reflect customer needs. For example, the automotive industry is adept at segmenting the industry with language that customers never use—mid- size luxury, near-luxury, entry level – but no customer comes in to a dealership with these constructs in mind. The customer has a need. The customer wants a vehicle that can carry a group of kids or is appropriate for a night out with a significant other. Or the customer wants a sporty performance vehicle that is great for winding, country roads. Or the customer wants an off-road vehicle for winter weather. 

The hotel industry continues to use language such as entry level, mid-scale, upper mid-scale, limited service, full service, luxury. Would you say to your significant other, “I made a reservation for us at a mid-scale hotel for Valentine’s Day.”? Segmentation must reflect segments that are meaningful to customers not the industry.

Market segmentation is an important guide for product innovation and renovation. Products and services must address customer problems, satisfy customer needs or anticipate customer needs. Market segmentation provides specific directions (not the answers) for developing relevant, differentiated creative solutions. Walgreen’s will be using these types of insights to create digital ways to regain and convert customers. 

For example, according to Walgreen’s, some groups of Walgreen’s customers could be called “efficiency enthusiasts.” These customers “… are often digitally connected.” They wish to have their shopping over and done with as efficiently yet effectively as possible. “Efficiency enthusiasts” would be those best addressed with promotions offering local store pick-up of online orders.

On the other hand, some groups of customers could be viewed as “support seekers.” These customers probably desire more in-store pharmacy support. “Support seekers” would receive promotions dealing with in-store services. 

Regardless of “community,” Walgreen’s will use its segmentation to fit in with a customer’s “everyday living.”

Using needs-based, occasion-driven market segmentation as a first step is the right thing to do. And, as Walgreen’s is demonstrating, market segmentation is more than math. It is also craft. Walgreen’s is using its information to generate a more creative, yet potentially powerful customer understanding based on actual customer needs and occasions.

In order to find competitive advantage in this fast-paced changing world, it is imperative that Walgreen’s – and all brands – have the clearest understanding of their consumers from all angles – what they buy, who they are, why they buy, how, when and where they use.  

How Burger King, Subway and Starbucks Are Planning to Win in Our Post-Pandemic World

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In our post-pandemic world, brands are dealing with changed customer behaviors. Attitudes about and usage of technology leap-frogged decades. How and where we work together is now very different. How we buy foods and beverages has altered dramatically. 

For several brands, one of the outcomes from coronavirus is the reinspection and revitalization of their brand experiences. Peloton and Netflix are just two. Peloton is becoming a subscriber brand while becoming more of a mass brand. Netflix is now offering ad-supported services and is getting into gaming. 

But, it cannot be mere coincidence that, at the moment, three brands in fast food are “remaking” their brand experiences. Burger King, Subway and Starbucks announced major brand revitalizations, all with the same intention: brand revitalization to provide customers with a more relevant experience. Although these brands had problems prior to Covid-19’s advent, the pandemic exacerbated areas of weakness in adapting to users’ changing habits. 

At Burger King, the initiative to modernize and refresh the BK experience is called “Reclaim the Flame” At Subway, the initiative to reinvigorate the brand and upgrade the brand’s customer perceptions.is called “Eat Fresh Refresh” Starbucks’ initiative is called “Reinvention Strategy”. According interim CEO and founder, Howard Schultz, Starbucks “lost its way”. Although Starbucks did fairly well during the pandemic, Mr. Schultz sees things differently. In an open letter to employees, Mr. Schultz wrote: “The Starbucks business as it is built today is not set up to fully satisfy the evolving behaviors, needs and expectations of our (employees) or customers. It is not designed for the future we aspire to for ourselves and the communities in which we serve.”

In order to achieve a successful brand revitalization, it is necessary to have a Plan to Win. A brand must commit to a roadmap defining how to win. A Plan to Win ensures the integration of brand actions across the Eight Ps: Purpose, Promise, People, Product, Place, Price, Promotion, and Performance. A Plan to Win puts the purpose, the promise, the actions, and the performance metrics on a single page. A Plan to Win generates organizational alignment behind the revitalization. 

It is essential to know what are the brand’s purpose and the brand’s promise. For Burger King, Subway and Starbucks, there was little talk about what the brand purposes and promises will be that underpin these new brand revitalization initiatives. Burger King said that it will update its brand in the customers’ eyes. There will be a focus on modernizing the “Have It Your Way” slogan and reintroducing the relevance of flame grilling. As far as Starbucks is concerned, the move to digital, drive-thru with more streamlined stores, some without seating, will affect the brand’s original premise as a third place. All three brands should probably review their brand purposes and promises to ensure that the revitalized experiences support the visions.

The five action P’s – people, product, place, price and promotion – are how a brand will bring a brand’s promise alive for customers as the brand actualizes its purpose. So, let’s look at the how Starbucks, Burger King and Subway have created their actions plans.

People

People are the first action P. This is because employees are the most important assets of any business. They are the frontline when it comes to customer relationships, especially in a service business. 

Starbucks will focus on making work more “appealing, including the availability of more sick time, increased training and technology allowing customers to use credit cards to tip individual baristas.” Additional technology is being installed to make drink customization easier (fewer steps) on the barista. Starbucks pledged to spend an additional $1 billion on labor including barista hourly wage increases. (According to The Wall Street Journal, the National Labor Relations Board has certified unions in 224 Starbucks restaurants.) Mr. Schultz wants to ensure that the next generation of leadership lives and breathes the Starbucks culture.

Burger King and Subway have not articulated to the press plans for their people. However, Burger King’s elevation of its brand should instill pride in employees. Subway’s new menu will allow customers to (hopefully) choose pre-made sandwiches without customization. This will put less pressure on employees during busiest hours. 

Product (and Service)

Product (and service) are the tangible evidence of the truth of the brand promise. A brand needs to be relevantly differentiated, delivering superior customer-perceived value. 

Subway’s renovation is primarily menu-based. Subway is upgrading its bread as well as upgrading eleven ingredients. Last year, Subway upgraded twenty ingredients. The chain of 21,000 US restaurants is “creating a whole new taste profile.” Additionally, the new menu should reduce customer customization that slows down the line. The menu is now organized into four categories consisting of three sandwiches for each category, called The Subway Series.

For Burger King, the focus is on the iconic Whopper. The Whopper will undergo a “premium makeover” so the sandwich is now off of the value menu. Burger King is also hyping its new chicken sandwich, the four-flavor Royal line. Burger King removed the Ch’King chicken sandwich from the menu.

Starbucks promised investors and analysts that the brand would be improving the menu. Fresh baked pastries and to-go salads are under consideration. Changes to machinery reflect the changed behaviors of customers: Gen Z prefer iced drinks to hot drinks.

Place

Place can be anywhere the customer interacts with the brand. It can be a physical location (a restaurant, for example) as well as a virtual location (a website, app or the metaverse, for example). Wherever and whatever it is, place is the face of the brand. 

Starbucks is planning to open 2000 restaurants in North America by 2025, approximately two a day. Some of these stores will handle only pick-up, delivery or drive-thru orders. New store designs will speed service. This includes the new cold bar that can cut the time of making the brand’s specialized cold drinks. Starbucks is also expanding mobile ordering as well as using Uber Eats and DoorDash. The brand expects that delivery will double in revenue in the next couple of years, according to Barron’s. There will also be a push to open stores in China.

Learning from the pandemic’s massive effect on delivery, Subway is instituting Subway Delivers – a DoorDash service available on the brand’s website or app.

Burger King will be investing $250 million in technology, as well as “… new kitchen equipment, building enhancements and high-quality remodels and relocations over the next two years,” according to Eat This, Not That!

Price

Price is a component of the value equation. Value is determined by the total branded experience a customer expects (functional, emotional, and social benefits) for the costs spent (in terms of time, money [price], and effort) multiplied by trust. 

Although none of the brands spoke about price, most of the brands in the restaurant industry have raised prices. Burger King announced that part of its remake is to push Burger King into more “premium” territory. Subway has raised prices over the past year. Starbucks raised prices from 30 cents to 70 cents.

New kitchen technology, simplified menus and digital connections also help to keep prices down. Lines and crew move faster. 

Promotion

Promotions about creating an integrated approach to raising awareness, familiarity, and preference of the brand. Promotion includes every communication on behalf of the brand. 

Subway has been advertising its new sandwiches over the past year. The campaign used sports celebrities. However, only Burger King committed publicly to $150 million in advertising. This is a 30% increase over the past year. Advertising will tout BK’s new experience. Starbucks has not been as active as other brands when it comes to advertising. However, the brand is currently running ads for a few of its coffee varieties offering personalization (“Made to be yours”) as the benefit.

None of the brands discussed metrics. One must assume that many of these revitalizations are based on data. And, it is safe to say that decisions on actions will be measured. For example, the chicken sandwich Royal line quickly replaced the Ch’King sandwich because data showed Ch’King was faring poorly.

Covid-19 upended the trajectories of many brands by ushering in new customer behaviors, attitudes, needs and problems. Having a Plan To Win is critical not just for internal alignment but for succinctly articulating the brand’s direction and actions and performance. The changes at Burger King, Subway and Starbucks show how each brand has outlined the necessary actions needed on the road to the future. Having a complete Plan to Win would be a more successful approach for each of these three brands.

Responsible Innovation Team at Meta

Relinquishing The Responsible Innovation Team at Meta

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One of a brand’s most important elements is its perception as a responsible entity. This is especially true of a corporate brand. Responsibility is about demonstrating good corporate citizenship. Responsibility must be corporate-wide. Responsibility must be ingrained into the enterprise as a whole and reflected in all thought and action. Every brand should have a responsibility ethic. Having a responsibility ethic means being an aware, effective global business behaving positively on behalf of people, stakeholders, communities, countries, animals and the planet.

If there is one brand that has faced issues around its responsibility ethic over the past years, it is Meta, aka Facebook. Meta, as Facebook, careened from one irresponsible scandal to another. There was always denial and deflection. The brand’s behavior did not reflect anything close to a responsibility ethic. In order to address its ethical and social issues, Meta, then Facebook, created a Responsible Innovation Team. The Team’s mandate was to figure out how to address the disadvantages and drawbacks of Facebook’s product offerings. According to The Wall Street Journal, the Responsible Innovation Team comprised “… engineers, ethicists and others who collaborated with internal product teams and outside privacy specialists, academics and users to identify potential concerns about new products and alterations to Facebook and Instagram.”

The vice president of the Responsible Innovation Team stated that the Team’s efforts helped design product offerings “with a privacy-first approach.” She indicated that she was optimistic about the Team’s abilities as its efforts were advised by experts in “civil rights, accessibility, human rights and safety.”

Now, it turns out that all that “optimism” may have been misplaced. A spokesperson for Meta says that the Responsible Innovation Team is disbanded. The Team’s members will be dispersed into the company while its “safe and ethical design resources were better spent on more issue-specific teams.”

From a branding perspective, this is a mistake. Responsible business practices influence brand perceptions which in turn influence brand preference. A brand’s societal reputation influences purchase and usage decisions. Data show that ethical policies tend to increase profitability, not decrease profitability. This is because many people are prepared to pay a premium for products and services that have a responsibility ethic at the core.

Other data indicate that people build relationships with brands that do good things. And, increasingly, people are willing to reject brands they perceive as irresponsible. These data are not just recent. As far back as 2013, a large global study showed that 85% of the 10,000 respondents “considered corporate responsibility” when deciding where to shop, what to buy and what to recommend. Brands that are perceived as responsible gain customer trust, an extremely critical element in today’s uncertain world.

Meta is currently staring down some major hiccups with a slowing of its advertising business and a deft competitor. Younger users seem to prefer and interact more with TikTok. And, there is the transition to the “metaverse” that CEO Mark Zuckerberg wishes to achieve. These issues could be helped by reinforcing Meta’s commitment to responsibility. Advertisers are increasingly sensitive to responsibility as consumers are very alert to irresponsible brand behaviors and attitudes.  Furthermore, one of the mandates for the Responsible Innovation Team was to play a part in shaping the way Meta addressed and managed the potential ethical downsides to building the metaverse. Without this guidance, Mr. Zuckerberg’s metaverse could wind up as an amoral meta mess.

Brands do not exist in a vacuum. A brand is more than a consistent, distinctive identity. A brand contributes a common, positive, ethical relevant culture, values, purpose and ambition to the brand’s priorities and objectives.

Having a responsibility ethic within an organization builds a strong, trustworthy brand internally and externally. A strong brand is a value creation advantage. Having people perceive a brand to be responsible creates strong brand bonds. These strong brand bonds create value with customers. Without customer-perceived value there is no brand value.

Allocating responsibility project-by-project within a massive organization such as Meta is mismarketing and mismanagement. This approach does not create internal responsibility ethic. And, without an internal responsibility ethic, there will be no external responsibility perceptions. Responsibility cannot be corporate-wide if it is addressed in a piece-meal fashion. Responsibility becomes siloed within a project.

The Meta brand could use a corporate-wide responsibility ethic. For Meta, as for any brand, not having a corporate-wide responsibility ethic is irresponsible brand management behavior.

Apple: A Powerful, Valuable Brand Makes Money And Opportunity

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Building powerful, valuable brands makes money. Building powerful, valuable brands generates opportunities for leverage across customer needs and problems. Building powerful, valuable brands must be the goal of every brand leader.

Case in point: Apple.

Do you pay attention to the yearly surveys listing the most valuable brands in the world? Do you think it matters which brands are the most valuable brands?  So, what if Apple, Google, Microsoft and Amazon are always the top four brands, should I care? 

If you are a marketer or a manufacturer, yes, you should care. Being one of the world’s most powerful, valuable brands matters. Your brand may be affected by the power of a leading, valuable brand.

The 2020 Forbes Most Valuable Brands survey listed Apple, Google, Microsoft and Amazon as the top four most valuable brands; Toyota at number 7 was the first automotive brand on the list. Kantar’s BrandZ top 100 Most Valuable Brands (2022) listed Apple, Google, Microsoft and Amazon as the top four most valuable brands. Interbrand’s 2021 survey listed Apple as number one and Toyota at number 7.

Do you think that General Motors or Ford or even Tesla care that Apple is always the most valuable brand, aside from the ego-kick-in-the-butt? After all, many new vehicles arrive with Apple technology, Carplay, inside. So, it is a selling point to have Apple be so valuable; it can raise the price of the vehicle. Besides, Apple makes phones, tablets, watches and other software. Apple has a virtual app store that can make or break an offering. It has brick and mortar stores that sell its products with the famed Genius Bar.

Right now, for General Motors, Ford, Stellantis, Audi, Volkswagen and many other car manufacturers, the brand to care about is Tesla. Every one of the big global brands wants to out-Tesla Tesla. 

Maybe these Tesla chasers need to make a strategic change. Perhaps, they should ask Siri.

According to Bloomberg, the street.com and 9to5mac.com and other business observers, the latest Strategic Vision (a research-based consultancy) automotive survey among 200,000 new vehicle owners included Apple on its list of 45 brands. The data show that 26% of these new vehicle owners would “definitely consider” purchasing an Apple vehicle in the future. Toyota came in first for “definitely consider” (at 38%) followed by Honda (at 32%). “Apple is the 3rd highest brand consideration with 26% of customers stating they would “definitely consider” an Apple vehicle in the future,” said Alexander Edwards, president of Strategic Vision. 

Even more interesting were the data for “I love it” – when asked about the quality of a potential Apple car. Apple was number 1 in terms of quality impression at 24%. Toyota came in with 15% and Honda with 13%. “What should be concerning to others is that Apple generates a greater amount of Love than any other automotive company, double that of strong brands like Honda, Toyota and Tesla,” Mr. Edwards added.

Tesla may be the darling of all EV’s, but car buyers are aware of Tesla’s quality issues. When it came to “definitely consider,” Tesla came in number 4 at 20%. But, its quality impression was at 11%, well below Apple’s 24%. And, according to Strategic Vision’s data, more than 50% of Tesla owners indicated they would definitely consider an Apple vehicle in the future.

Commenting on this data, Bloomberg Hyperdrive writer David Welch pointed out that Apple is a software company as well as a hardware company. Where many car companies are frustrated with software glitches, Apple could easily rise above these types of issues. “(Tim) Cook (Apple’s CEO) employs legions of coders capable of developing the brains a modern electric vehicle needs to manage battery power and navigate traffic.” 

Automotive software glitches create serious setbacks, embarrassments and safety concerns. In July 2022, the CEO of Volkswagen Group was fired due to software development issues delaying the launch of the prestigious new Porsche, Audi and Bentley EVs. General Motors’ Cruise self-driving robotaxis have been recalled due to software issues. The software was not correctly predicting the direction of oncoming vehicles causing a serious accident.

Mr. Welch also points out that although Apple does not have a factory, its strategic partner Foxconn just bought an assembly plant from General Motors that is big enough “… to make 400,000 vehicles a year.” Foxconn already has its own EV venture that already has 10,00 pre-orders. And, even though, its initial Apple Car initiative, project Titan, has been disbanded, one analyst believes Apple has not given up on an EV vehicle by sometime soon after 2025. Or, other options are a purchase of an existing EV startup such as Aurora Innovation Inc. whose CEO recently saw a purchase by Apple or Microsoft as one way to survive.

Assuming Tim Cook greenlights a vehicle, and assuming that the coders and factory all fall into place, Apple would be operating from an incredible advantage. Those most valuable brand ratings are not just for investors, analysts and the financial community. Those most valuable brand ratings also reflect consumer perceptions. This is because these most valuable ratings usually include a series of customer-centric elements, not just financial elements.  For example, ratings are gathered across elements such as familiarity, regard (esteem), relevance, uniqueness, performance and trust. 

A brand’s power is based on its distinctive identity, its familiarity, its special (relevant and differentiated) promise and its perception that it is an authoritative source including quality, leadership and trustworthiness. All of these combine to create value. The whole point of brand management is to profitably create and grow enduring customer-perceived value for the brand(s).

Powerful, valuable brands make money The goal must be to become the identity that is the most familiar, highest quality, leading, most trustworthy source of a relevant, differentiated promised experience. A powerful valuable brand is a preferred brand.  A preferred brand has loyal customers who are willing to pay more even when their second choice brand is less expensive. The Apple iPhone 14 is the latest example.

As Mr. Edwards of Strategic Vision stated, “Of course, what Apple ultimately presents in terms of styling, powertrain, product and other key features will finally determine the level of interest generated among car shoppers. However, their (Apple’s) brand awareness and reputation provide a formidable platform that automotive manufacturers should brace themselves for accordingly.”

Apple has spent decades building its brand into a global behemoth of authority and specialness. Customers have flocked to Apple’s product offerings not just because of their beauty and usefulness but because of the brand’s quality and trustworthiness. Apple’s reputation is stellar. All of these elements give Apple the leeway to cross over into categories outside of phones, tablets, computers, laptops and entertainment. Perhaps cars are a future step.

The Tesla chasers need to think about the power of the Apple brand now and how that power can vault a vehicle to become number one. When, even hypothetically, customers say they are more interested in an Apple EV than a Tesla EV, everyone needs to take notice.

As Apple shows us, building a powerful, valuable brand allows leverage across categories. Building a powerful valuable brand is an ongoing, every day activity that rewards customers and other stakeholders in the present and in the future. 

omega watch branding

Abundant Rarity and the Omega Swatch MoonSwatch

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Recently, a commentator for Financial Times wrote that “luxury is scarcity.” The reporter referred to issues concerning the German wine industry and the German car industry. Apparently, German wines no longer have a cachet. One of the reasons is the expansion of its varietals. Quantity over quality. As for the German automotive manufacturers, Mercedes is excising its entry-level brands to focus on its more expensive, more luxurious models, in other words, fewer luxury vehicles. On the other hand, Porsche took the opposite approach: Porsche went for quantity and variety over scarcity and seems to have been successful. It is supposedly headed for an IPO.

Whatever, the situation, saying that scarcity is luxury and vice versa is a marketing miscalculation. Luxury is more than scarcity. And, some brands are winning by embracing a different luxury model for today’s changing world; a model that turns scarcity on its head.

The French branding expert, Jean-Noël Kapferer, writes extensively about luxury. He has examined the traditional concept of luxury as something exclusive and rare. A luxury brand in its classic sense is “an inessential, desirable item that is expensive or difficult to obtain.” In his writings, he describes a new concept of luxury that brand owners might consider: luxury can be both widely available and exclusive: he calls it “abundant rarity.” His concept is based on the discussion of how a luxury brand can remain a luxury brand even if it is so available that it is no longer rare.  

This is a paradoxical conundrum. If a brand remains highly exclusive with limited production units and waiting lists, it is a smaller, coveted brand than if it has wide distribution: think the Hermes Birkin bag. But, to satisfy the desires of people around the globe, some luxury brands are no longer difficult to obtain. One no longer has to travel to Paris to find Louis Vuitton or Chanel. Once a luxury brand is widely available it may become less exclusive, even if it maintains its price premium. It may run the risk of losing its hard-won cachet. Many luxury brands are no available on upscale resale sites as well.

Mr. Kapferer says that some luxury brands will have to figure out how to maintain a high-class, exclusive aura while being available to many.

This brings us to Swatch. Not exactly your brand defining luxury. Please be surprised. Abundant rarity not only is a way for luxury brands to exist in today’s changing world, it is also a way to create a sense of scarcity for more mass market brands.

Swiss-based Swatch Group is the owner of some of the world’s most coveted luxury brands. Swatch Group owns Blancpain, Breuguet, Harry Winston, Omega, Longines, Tissot and Rado, to name a few. It is also the owner of Swatch, the inexpensive, battery-powered, quartz-regulated watches that became cult offerings in the 1980’s and 1990’s. 

Swatch was your “second watch,” hence the name. Swatch wanted you to change your watch every day according to how you felt and what you were wearing and doing. Over time, Swatch generated a wide variety of “collectible” watches even though the brand was widely available. Swatch offered the caché of Swiss precision in a whimsical, unique, “affordable accessory.” Swatch was so successful that in its heyday its sales reached close to $20 million a year. Consumers fell in love with the creative, colorful designs. New models were scooped up immediately.

One of the extraordinary elements of the Swatch brand was its ability to leverage abundance and rarity. Although not a luxury item, Swatch understood the consumer need to own something inherently unique that was available to anyone, anywhere. Swatch dropped new, immediately coveted designs on a regular basis.

You may not know this but plastic Swatch single-handedly resuscitated the sedate, serious, exclusive traditional Swiss watch industry in the late 1980’s and 1990’s. So much so, that currently, extreme luxury watch brands are hot. Financial Times sometimes devotes an entire section to watches. Not only are these watches bought as investments, these watches are pitched as items that can be passed down to future generations as more than mere status but as family tradition.  High-end watches are rare and expensive. They are also prestigious, conferring a particular image to the wearer.

Furthermore, it turns out that coronavirus lockdowns have hyped the desire to own expensive Swiss timepieces. During the pandemic, expensive mechanical watches became hot items for those stuck at home. Brands such as Rolex, Patek Philippe and Omega Speedmaster saw prices rise. According to CE Noticias Financieras English, with Covid-19 forcing people to stay at home, “…prices for some steel sportswatches (sic) more than doubled on the secondary market, and today it’s nearly impossible to buy a Rolex at the suggested retail price, even from an authorized dealer.”

However, Swatch brand watched from the sidelines. As its high-end siblings grew more coveted, Swatch’s fortunes were hammered by fitness wristbands, smartwatches and smartphones, all of which changed the way we perceive and use watches. According to Swatch CEO, Nick Hayek, Swatch lost some relevance to younger generations. 

In order to bring back the swagger, Swatch joined with one of the Swatch Group’s more prestigious brands, Omega. The result is the Omega-Swatch MoonSwatch. This is another example of Swatch employing abundant rarity to its advantage. The Omega Speedmaster Moonwatch is a rarity among timepieces. It is also a fine, luxury Swiss watch. Swatch’s version shares in its sibling’s limelight.

The Omega-Swatch MoonSwatch highlights the look, feel and tradition of the coveted Omega Speedmaster Moonwatch, the watch worn on the wrists of U.S. lunar astronauts. The Omega Speedmaster Moonwatch is a steel, hand-wound timepiece selling for about US $7,000. Its new, scrappy sibling, the quartz, ceramic and plastic Omega-Swatch MoonSwatch costs around US $260. 

As quoted in CE Noticias Financieras English, CEO Hayek credits the collaboration with Omega for bringing Swatch back into the luxury category.  Mr. Hayek says that “… sales of Swatch brand in Switzerland (excluding the MoonSwatch) rose 41 percent since the watch’s launch, and other regions have seen similar increases.”

Although the Omega-Swatch MoonSwatch is not a limited edition, there appears to be a robust resale market for the brand. Data show that Omega-Swatch MoonSwatch watches are selling for twice its original price online. This is something you see with high-end brands such as Rolexes due to the brand’s scarcity. But, twice the price for a Swatch?

Swatch has come back and grown relevant by cleverly using the concept of abundant rarity. The German wine makers and automotive companies might want to take a look. The collaboration with Omega that draws on Omega’s heritage while maintaining the benefits of a Swatch watch shows that the disruptive marketing of the 1980’s and 1990’s that made Swatch a must-have are still as applicable today. One of those elements is abundant rarity, the ability to be seen as highly unique and highly available.

The End of An Era: The Dodge Challenger And Dodge Charger Are Now Muscled Out

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In July 1965, Bob Dylan went electric at the Newport Folk Festival, abandoning the acoustic guitar for the rock genre that was sweeping through the counterculture. It was a defining moment for music and for a changing society.

The segue to electric vehicles has been at a slower pace; more of an evolution than a revolution. Up until now, drivers have had the option for electric vehicles. Since 2006, there was Tesla. General Motors (2016 Bolt) and Nissan (2010 Leaf) were available. These days, eyeing Tesla with envy, all of the other domestic and international automotive manufacturers have jumped on board with laser-like focus on being the first choice electric vehicle. But, the transition for drivers will not be overnight.

As far as electric vehicles go, there has not been that instant recognition moment that the world has changed… until now. Sadly, or not, the checkered flag has come down on brands that epitomized the gas-guzzling, hyper-powered American automotive dream.

This week was the end of the brand promise of the American-made pursuit of horsepower and performance. This week was the end of powerful gas-powered performance-oriented muscle cars that express the drag-racing, car chasing quarter-mile crushing spirit of the street.

This week was the end of The Dodge Challenger and The Dodge Charger. Good-bye, Dukes of Hazzard (1969 Dodge Charger). Adios, Fast and Furious (1969 Dodge Charger). Never again, Vanishing Point (1970 Dodge Challenger R/T 440 Magnum). Car chases will never be the same.

Car enthusiasts received the news that those American-made, 2-door sports coupes with V-8 engines designed for high performance driving, rear wheel drive, street performing vehicles were giving up life for the electric car. Muscle cars are now officially muscled out.

Stellantis, owner of Dodge, announced that the Dodge Challenger and the Dodge Charger will be excised from the Dodge line-up. Both the Charger and Challenger will be discontinued at the end of 2023. According to The Wall Street Journal, Dodge is hoping that its loyal muscle car buyers “will embrace a new kind of muscle: one that runs exclusively on battery power.”

This new “muscle car” will be an all-electric concept vehicle designed to embrace the memory of the gas-powered Dodge Challenger and Dodge Charger.  The new EV is expected to go on sale in 2024. It will be the Dodge’s first fully electric model.

Dodge hopes that calling the EV concept car the Charger Daytona SRT, “after the vehicle that first broke 200 miles an hour on a NASCAR track in 1970,” will lessen the pain of the loss. To make the transition even more natural, Dodge also created a synthetic “exhaust tone” designed to reproduce the “thunderous roar of its gas-engine muscle cars.” 

It will be interesting to observe whether a synthetic exhaust tone will jump-start sales. The Dodge Charger and the Dodge Challenger are beyond iconic brands in the lore of American automotive. 

The Dodge Charger’s first year was 1966. The car was an attempt to manufacture an upscale, upsized, affordable, highly-styled rear-wheel pony vehicle. A pony car defined a vehicle model that was performance-oriented, compact but with a long hood, either a coupe or a convertible at a reasonable price point.

The Dodge Challenger’s first year was 1970. It is considered to be Dodge’s late response to Ford’s Mustang. The long-gone, but gorgeous Pontiac Firebird and the Mercury Cougar were also in the competitive set.

Muscle cars were hot. But, during the 1970’s, their sales declined as new amendments on emissions from the Clean Air Act had an impact; there was a fuel crisis and insurance costs rose.

However, car enthusiasts kept the flame alive. The Dodge Charger and the Dodge Challenger were vehicles originally manufactured by Chrysler, a brand that underwent a series of mergers and de-mergers, finally winding up in the arms of Italian automotive maker Fiat. 

However, Stellantis will give us one more year to manage our angst. Stellantis tells us that the Charger’s and Challenger’s last model year will be a throwback. The goal is to keep the brands alive in the minds’ of its loyalists so that these buyers will make the segue to the EV version. This is a big bet. Giving us the best of the best for one last time may make us view the electric model as cringe-worthy.

As reported in JALOPNIK, an online automotive newsletter, Dodge will use the last models to “pay homage” to the Charger’s and the Challenger’s past. There will be seven models, colors from the cars’ heydays and an “expansion of SRT Jailbreak models.” The Jailbreak models will include the 717 horsepower Charger and Challenger SRT Hellcat. 

The idea is to connect each 2023 model with some element of Dodge’s 1960’s and 1970’s history. There will be a “Last Call” plaque on each vehicle as well as a nod to the American origin of both brands “Designed in Auburn Hills” and “Assembled in Brampton.”

The CEO of Dodge, Tim Kuniskis said, “We are celebrating the end of an era – and the start of a bright new electrified future – by staying true to our brand. At Dodge, we never lift and the brand will make the end of our iconic Charger and Challenger nameplates in their current form in the same way that got us here, with a passion both for our products and our enthusiasts that drives us to create as much uniqueness in the muscle car community and marketplace as possible.”

This sounds great. But, the reasons for the demise of the Charger and the Challenger brands are more complicated and not as brand-passionate as stated. To stay competitive, Stellantis has stated that it wants half of its portfolio to be battery-operated by 2030. This cannot happen with The Challenger and The Charger in the roster.

The Wall Street Journal indicates that Dodge and other makers of sports cars have the problem that the popularity of their models “mostly resides in the power and performance of the engine. Some, like the Chrysler-developed Hemi engine, have become recognized names in themselves.”

Additionally, “the popularity of gas-guzzling models like the Challenger and Charger are dragging down Stellantis’s average fuel-economy rating, which has long lagged behind competitors. That has resulted in the car maker having to pay fines for failing to meet certain environmental regulatory requirements.”

In July, Stellantis announced that it had allocated $685.5 million in anticipation of fines related to not meeting US fuel-economy standards.

One dealer speaking with The Wall Street Journal said, “The transition to electric is going to be important, and I don’t know that we will still have those same buyers,” said John Morrill, who owns a dealership in Massachusetts that sells the Dodge, Jeep, Ram and Chrysler brands.

He said muscle cars attract a very specific kind of old-school customer and getting the shift to electrics right will be critical because the brand’s lineup is already narrow. Dodge currently sells only three models.” Another dealer agreed, saying that he did not see current muscle car drivers making the transition.

If you are in doubt as to the impact of ending the lives of The Challenger and Charger, please note that these two brands “accounted for nearly 62% of the brand’s U.S. sales in 2021. The third model is the Durango SUV.” Other muscle car competitors have not fared as well. And, Ford has already manufactured an EV version of the Mustang.

Whatever the case, the reality is that the end of The Charger and The Challenger marks an end of an American era. It is unclear whether an EV with a synthetic sound may help. American muscle cars were defining. All you need to do is type into Google “muscle car chase scenes” to confirm how embedded muscle cars are in the American psyche.

Dodge is mindful enough to recognize that its muscle car loyalists may not transition well. But, the exigencies of a changing world, changing consumer behavior and changing regulations require automotive companies to change their ways.

It takes guts to cancel The Charger and The Challenger brands. 

Airbnb And The Power of Localization

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In a recent Wall Street Journal interview with Brian Cheskey, CEO and a founder of Airbnb, reporter Preetika Rana discussed the way in which Airbnb survived during the pandemic and is now flourishing.

Although there were several financial measures that Airbnb employed to sustain itself during the crisis of Covid lockdowns and quarantines, one of the most important Airbnb strategies was to leverage the power of localization.

Globalization, personalization and localization shape how brands must be managed. These three dynamics are colliding and intertwined. The challenge for marketers is to harness the strengths of each to build strong brands. 

Globalization delivers a familiar, consistent, and reliable branded experience. Personalization delivers a branded experience that recognizes and reflects the customer and is exclusively designed to meet an individual’s needs for a particular occasion. Localization delivers a relevant, respectful, place-based branded experience.

Globalization provides us with the comfort of seeing familiar brands anywhere we travel. We appreciate their regularity and standardization. We are calmed by their familiarity and security. Perceiving a brand to be a global leader enhances the brand’s status and stature. 

Personalization creates valued, unique experiences that meet an individual’s physical, psychological, social and emotional needs. Personalization reinforces respect, status, and positive self-image. 

Personalization is different from customization. Customization focuses on features and functions – the practical aspects of a brand – readying the brand for a transaction. A custom-made Nike shoe is about finding the features you like – colors, stripes, laces, and so on – creating a transactional event. It is similar to finding your measurements and fabrics that customize a bespoke silk suit or shirt. Personalization is experiential. It happens when, based on who you are and what you like, an entire branded experience is created. 

Localization provides us with that special sense of place. Locally sourced, locally crafted, locally owned, regionally authentic, one-of-a-kind, and so on bring a sense of cultural, ethnic, economic and social connection. Artisanal cheeses from a specific region, local distilleries and breweries, grass-fed cows on local farms, cage-free chickens, arts and crafts, non-GMO, fresh, organic, locally made employing local people and other local elements and activities that bring “real” into our lives continue to grow and are increasingly attractive and affordable.

Airbnb is a global entity. It has rentals around the world. Airbnb is also a personalized brand. Its website, for example, makes it easy for customers to select the exact type of home rental suited to their needs and desired experiences.

But, it is the brand’s leveraging of localization that saw it through the worst of the pandemic. According to Mr. Cheskey, Airbnb’s localization strategy was threefold.

Airbnb capitalized on the desire for staycations. Briefly, a staycation is when people either stay at home or venture only as far as their locale. It can also mean taking a vacation in one’s own country as opposed to traveling abroad. During the pandemic, as with the financial crisis of 2008, staycations became popular. Airbnb switched its emphasis to local travel and local stays.

Additionally, with office closures, office workers could work remotely from anywhere. This also created an opportunity for Airbnb. Some workers left for more exotic areas. But, many workers chose to relocate locally and domestically. Rather than work from a hotel room, working from a home in one’s locale offered many risk-free benefits.

Lastly, with salaries and overtime cut for many workers, hosting became a way for many people to make many money. For erstwhile local travelers and remote workers, an Airbnb stay was a way to save money on stays away from home, being less expensive than a hotel. In other words, with Airbnb, one could locally “make a buck” and “save bucks.”

One of the great elements of localization is its enhancement of the concept of neighborhood. During the pandemic, neighborhood was important. Neighborhood is safe. Neighborhood is known. Neighborhood is comfortable and secure. Neighborhood is predictable and reliable. Neighborhood allowed for school pods, for example, where children could learn with their local school pals. Neighborhood grows from people living near each other in time, space and relationships. When the pandemic isolated us from our normal social contacts, the people in our neighborhood became our sole human contact outside of our families or roommates. Neighborhood has always been much more about the people than the place.

Many brands tend to focus on globalization and personalization. In fact, because of digitalization, personalization tends to receive a lion’s share of resources. However, localization has an important role to play by bringing people together and by enhancing the nearby neighborhood. Localization delivers place-based benefits such as local farmers’ markets and crafts. With a focus on digital, we sometimes overlook the fact that localization of experiences delivers great results. This was certainly true for Airbnb. Localization helped keep Airbnb afloat when hotel chains were suffering. In our virtual reality-augmented reality world, nearness has value. Localization is extremely meaningful in a world where the emphasis is on virtual, digital reality.

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Have you Noticed That Brands Are Here To Make Us Happy

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In 2013, Pharrell Williams had a huge hit song called Happy. That song played everywhere. Happiness was all around us.

Now, it appears as if we really need to be happy. Having been released from our Covid confinements, we are looking for ways to get happy again. Type in “happiness” for the last month on LexisNexis, the information retrieval brand, and you will see over 25,500 articles on happiness, from how to be happy, what it means to be happy, happiness classes, happiness indices, and so forth.

In 2020, Arthur Brooks of Atlantic magazine started writing about happiness. The idea was to help readers and listeners (of his podcast) “… reframe the misery and loneliness of the coronavirus pandemic’s early days as an opportunity to think more about well-being?” It must be successful because just recently Mr. Brooks wrote his 100th happiness column.

And, it turns out that brands want to jumpstart our achievement of happiness. Today, multiple brands are selling happiness as the core of their brand promise. It is as if we need to be reminded that being unhappy should be a thing of the past and that now we should “c’mon … let’s all get happy.” At least four brands are betting that the benefit of happiness is the perfect way in which to connect to customers. 

So, who wants us to be happy?

Happiness is now a promised benefit for Carvana, a brand that greatly benefited from the woes of coronavirus. Buying and selling a car from your home without risking the possibility of Covid infection or the frustration of dealing with a car dealership had a lot of pluses. What with Covid now more endemic than pandemic, Carvana wants to remind you that car buying and selling with Carvana does not drive you crazy like a dealership experience might, but drives you happy. 

Stouffer’s, the frozen food brand owned by Nestlé, wants you to feel “happyfull” when enjoying its offerings. Stouffer’s has a history of making people happy. At the turn of the 20th Century, Stouffer’s was a dairy, then a milk stand selling milk, buttermilk and sandwiches and then a restaurant offering buttermilk, sandwiches and the owner’s wife’s homemade Dutch apple pie. Stouffer’s is probably hoping that we lay off the meal deliveries and make do with the satiating, convenience of its frozen foods. Happyfull is: the first bite of mac and cheese, the smell of lasagna in the oven, a belly-full of lasagna, French bread pizza, a comforting meal that everyone in the family can agree on. Rather than worry about what is for dinner, we can now be happy with a freezer full of Stouffer’s.

Ice cream is a happy food. And DQ, aka Dairy Queen, wants you to remember that. Once an ice cream parlor, DQ is now a full-fledged fast food restaurant offering hamburgers, chicken, tacos and hot dogs alongside its soft-serve ice creams treats. DQ wants us to know that it is serving happiness because “happy tastes good.” Populated with smiling, shiny, happy people, DQ’s messaging is that DQ is the place for happy: “to Share your happy, Burger your happy, Flip your happy, Scoop your happy, Dip your happy, Dunk your happy, Cheer your happy, Red spoon your happy, Tuesday your happy. At DQ, we make happy.” 

Let’s not forget our dogs. Dogs were rescued and adopted in record numbers during the pandemic. If we had to be alone, let’s be alone with a dog who shows unconditional love. And, if the pandemic showed us one thing, it was that regardless of pestilence, we will do anything for our dogs. We want our dog to be happy. This premise is behind the messaging from Bark Box, a subscription service delivering dog products, services and experiences. With Bark Box, you will have and you will be “dog happy.”

Brands with happiness as a benefit are not a new selling approach. Disney has always had happiness as part of its brand. From the beginning, its purpose was to create happiness. McDonald’s began by telling us it was a “hap, hap, happy place.”  Zappos, the online shoe seller, is all about “delivering happiness” with boxes covered with the word happy. Hershey’s has registered “Hersheypark Happy” for its experiential activities. For its gift store, Hershey’s tells us that we can take home Hersheypark Happy through buying a souvenir or two. Some brands have identified “joy” – a close relation to happy – as a desirable benefit to deliver. Coke has used joy as a benefit. 

Just to be clear, in English, happy has a lot of meanings. Content, satisfied, delighted, blissful, glad, appropriate, willing (to do something), overjoyed, in high spirits are just a few of the meanings associated with happy. For a brand selling happiness, it is critical to know what kind of happy you are selling.

Brands that go all in with the happiness benefit must make sure that happiness is delivered. In the early 1990s a large bank billed itself as the friendly bank. Yet, when you went to the teller, all you saw was the top of the person’s head. United Airlines told us to Fly the Friendly skies of United, until those skies were no longer friendly.

Promise what you can deliver. Deliver what you promise. Know your unique, delightful type of happiness. If your goal is to make sure that we are happy, everything from people to product to service to price to place and to promotion must be focused on customer and employee happiness. The last thing your brand needs is to have customers who unhappy with your happy.

The Phoenix Brand: Toys “R” Us

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Guess what? The iconic world of Geoffrey the Giraffe, Toys “R” Us, is back. 

Toys “R” Us is a Phoenix Brand. 

A Phoenix Brand is a brand that has been burned to death yet attains new life and rises the next day. The mythology around the Phoenix is that it is a symbol of renewal. 

If any brand in the last ten years deserves the Phoenix Brand label it is Toys “R” Us. Toys “R” Us’ rising from the flames with renewed life supports the principle that brands can live forever if properly managed. And, now that Toys “R” Us is in the capable hands of a brand-focused firm, your toy shopping just became easier and more delightful.

It is an extraordinary turn-about. Five years ago, the Toys “R” Us brand was in a conflagration.

In 2017, an extraordinary debt load of $5 billion pushed the storied brand into Chapter 11. Reports are that 33,000 people lost their jobs. The 2017 bankruptcy filing set off a months-long effort to restructure the company in bankruptcy court. But, sadly Toys “R” Us liquidated. 

To make matters worse, creditors brought a lawsuit against Toys “R” Us executives claiming that the executives misled their suppliers about Toys “R” Us’ dire financial condition while the company tried to stay afloat in bankruptcy. Then, executives left these suppliers with more than $600 million of invoices. Furthermore, the creditors allege that millions of dollars of bonuses were dished out to 117 Toys “R” Us executives and managers just prior to the company’s 2017 bankruptcy. The suppliers allege that this was a breach of the former executives’ fiduciary duty. Former Chief Executive Officer David Brandon received the largest bonus totaling $2.8 million. The trial of the former executives is slated to begin now in 2022 after several years of legal wrangling.

The bankruptcy judge’s opinion supported Toys “R” Us creditors because sufficient questions surrounding the payment of executive retention bonuses and advisory fees to the company’s equity sponsors – including Bain Capital, KKR & Co. and Vornado Realty Trust – do appear to require the legal proceedings to continue.  The bankruptcy judge said:

“The evidence submitted by the trust, if proven, is sufficient to establish a prima facie case that the defendants violated their duties of loyalty and good faith in addition to their duty of care,” Judge Phillips wrote in his opinion, referring to the retention bonuses paid to 117 Toys “R” Us executives before the bankruptcy filing.

“Payment of the advisory fees was not endorsed by court order, as the payments were made prior to the bankruptcy filings. The evidence offered by the trust supports a finding that the defendants were not constrained by their contractual obligations to the sponsors and had other options available.”

From the ashes of this ugly situation, the Toys “R” Us brand is currently in revitalization mode. And, in a very clever manner.

The brand’s owner, WHP Global, partnered with Macy’s, another iconic retail brand, allowing Toys “R” Us to place Toys “R” Us shops inside all of Macy’s stores. Press reports indicate that by mid-October 2022, Toys “R” Us will open shops in all of Macy’s stores. When Toys “R” Us closed its stores, Walmart, Target and Amazon saw and leveraged the opportunities. Now, Macy’s sees an opportunity to sell toys increasing traffic and loyalty while Toys “R” Us sees the opportunity to rebuild its brand back to enduring profitable growth.

What both Macy’s and Toys “R” Us are implementing is a Combination Branding strategy; more specifically, a component brand approach to Combination Branding. With the component approach to Combination Branding, both brands maintain their own source of their promises. Combination Branding using a component brand approach is “a brand within a brand” not a brand with a brand. The latter would be a co-brand approach where the two brands share the identification of the source of the promise.

For Macy’s, having an iconic, beloved toy shop brand inside its stores provides the ability to compete for holiday shoppers and year-round shoppers in a retail environment currently led by Amazon for online purchases and by Target and Walmart for brick-and-mortar purchases. Toys “R” Us offers Macy’s (as the host brand) and Macy’s customers an additional benefit of a glorious, enchanting world of quality toys and toy shopping. 

For Toys “R’ Us, the partnership provides instant brick-and-mortar facilities, a reliable stream of shoppers and the ability to reinforce its brand with old and new customers. The benefits of Toys “R” Us do not replace Macy’s benefits; Toys “R” Us just enhances Macy’s with a new benefit. Toys “R’ Us does not delegate its brand management to Macy’s and Macy’s does not delegate its brand management to Toys “R” Us.

The chief merchandising officer of Macy’s told investors, “Macy’s cannot wait to bring the Toys “R” Us experience to life in our stores. We hope Toys “R” Us kids of all ages discover the joy of exploration and play within our shops and families create special memories together. The customer response to our partnership with Toys “R” Us has been incredible and our toy business has seen tremendous growth.”

Since Macy’s has been selling Toys “R” Us toys online and with the cascading in-store Toys “R” Us shops, Macy’s CEO, Jeff Gennette, said during its second-quarter conference call that first-quarter toy sales were 15 times higher than the comparable period prior to the Toys “R” Us partnership.

As for Toys “R” Us, the CEO and chairman of WHP Global, told CNBC, “We’re in the brand business and Toys “R” Us is the single most credible, trusted and beloved toy brand in the world. We’re coming off a year where toys are just on fire. And, for Toys “R” Us, the US is really a blank canvas.”

If all goes according to plan, this partnership should be a boon to both Macy’s and Toys “R” Us. Press reporting indicates that brands such as Hasbro are already stocking up inventory to avoid any supply chain issues this holiday season. Hasbro’s CFO confirmed that Hasbro is “well positioned” this year when it comes to inventory. Very good news for Macy’s and Toys “R” Us.

A component brand approach is gaining strength with retailers due to the pandemic. It does not always work out, however. J.C. Penney had a partnership with beauty brand Sephora. But, that relationship is ending to be replaced by J.C. Penney Beauty, an offering with more “mass” brands.

What is clear is that Toys “R” Us is alive and well and focused on rebuilding itself after years of fire and brimstone. Its partnership with Macy’s has a lot of brand potential. And, finally, the Toys “R” Us brand is being properly managed. Toys “R” Us is a story about a brand that is renewing itself. Toys “R” Us is today’s Phoenix Brand.