Business / Business Tips

Is The Era of Loyalty To Consumer Brands Over?

"Brand loyalty"Low Prices Have Killed Brand Loyalty

Darlene Quinn knows what it’s like to be loyal to a brand name.

Quinn, a former senior executive with the Bullocks Wilshire department store chain understands the inner workings of the fashion retail industry as well as she does consumer trends, and her conclusion based on what she’s seeing in the marketplace aren’t encouraging for some of America’s oldest brands.

“Some of our most recognized and best-loved brands are falling victim to an economy in which price is the paramount concern for consumers,” said Quinn, author of Webs of Fate, a novel about the retail fashion industry from Greenleaf Book Group (www.darlenequinn.net). “We’ve ended the era of the brand-loyal consumer, and entered the age of low prices.”

Quinn’s argument is that major national brands and some regional brands will soon watch their final sunsets as the hunt for low prices currently outweighs old-fashioned consumer brand loyalty.

“Brand loyalty used to mean something in the retail business,” Quinn said. “We are now hardwired to look at paying less than full price. The status symbol has become ‘how much did you save?’ Although there are many of us who are less than happy with the outcome and who are willing to pay more for quality and service, it will take a long time, if ever, for a reversal. I would love to see the return of brand loyalty, but with the economic outlook starting to dim again, I don’t see it happening.”

Brands recently targeted by the Wall Street Web site 24/7 for fading away include two great American traditions:

• A&W Grills – A&W Restaurants is owned by Yum! Brands, a fast food holding company that also owns KFC, Pizza Hut, Taco Bell and Long John Silver’s. A&W was originally founded in 1919, and the company helped introduce the “drive-in” fast food concept. It was so successful that they started selling their sodas in cans in 1971, a side of the business that was sold to Dr. Pepper/Snapple a decade later. After World War II, the chain had 450 franchised locations, which has since dwindled to 312 US stores by last year. In the era of the mega franchises, like Subway and McDonalds with about 35,000 locations each, A&W can’t survive. The brand has been for sale since January, and if a buyer isn’t found soon, the drive-in could be closed forever.

• Sears – Sears, officially named Sears, Roebuck and Co., is an American chain of department stores which was founded by Richard Warren Sears and Alvah Curtis Roebuck in the late 19th century. As Wal-Mart became the dominant department store during the 1990s and 2000s, Sears began to struggle, so the company merged with Kmart in early 2005, creating the Sears Holdings Corporation. The problem is that joining forces strengthened market share, but not revenues. Two dying giants who merge only create one larger dying giant. The competition between the two brands continued, simply under the same roof, with Sears losing the battle. Kmart reported a 1.6 percent decline in sales in the first quarter of 2011, while Sears dipped 5.2 percent. The end result? Look for New CEO Lou D’Ambrosio to shutter the lesser performing brand, Sears, and use the additional resources to bolster Kmart.

Darlene Quinn is an author and journalist from Long Beach, California. Her novel, Webs of Fate is set in the mid-eighties before the greatest onset of LBO’s which ended up bring Wall Street to its knees. A time when the greatest completion for department stores was other department store merchants who drastic dropped the price on merchandise which just hit the sales floor in order to gain market share. A time when we still had regional department stores which were not named Macy’s and before the status symbol became how much did you save.

As part of a nine-member management team for the Bullocks Wilshire Specialty Department stores, Quinn has the insider’s perspective on the rise and fall of major department stores. She is currently embroiled in the battle for Macy’s to restore the Marshall Fields store brand stores that they purchased and turned into Macy’s locations in Chicago.

 

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