Earlier this month, Sears ended a nine-decade presence in Lincoln, Nebraska, when it closed its store at the Gateway Mall. So it was, too, at Park City Center in Lancaster, Pennsylvania, where that town’s Sears store was one of dozens shuttered nationally in yet another wave of contraction by the once-mighty retailer.
The closings set off the expected misty-eyed recollections about the legacy brand and the cherished place it occupied in hearts across the country. In Colorado, where Sears closed two stores in Colorado Springs and one in Pueblo, a columnist for the Gazette mourned the loss. But she also admitted that her February visit to report on the closing was the first time she had been to Sears in a decade. “I left empty-handed, and a little heavier-hearted,” wrote Stephanie Earls.
Among legacy brands, Sears is in similar, troubled company. Payless ShoeSource is liquidating its 2,100 U.S. stores. Toys “R” Us — where many a young American parent remembers buying his or her first Transformer or Super Soaker – closed its 730 locations last year and is struggling to come back in some form post-bankruptcy.
You might have expected that the pull of nostalgia would have protected these brands from the retail re-sorting underway. Customers have emotional connections to certain stores — places where their parents brought them as children and where they did their first Christmas shopping, and developed certain buying habits and loyalties.
So what was the breaking point for customers? Price? Experience? Convenience? Why, in the end, are customers abandoning their shopping heritage and breaking up with brands?
“It is more like these brands are breaking up with the customers. I think that at some point the customer decides to pack up and leave,” says Santiago Gallino, a Wharton professor of operations, information and decisions whose research focuses on retail. “To me, it looks like the brands are consistently giving the customer the signal that they are done with them, that they are not going … to give them what they expect from the brand and what they used to offer.”
At Sears, that once meant things the customer couldn’t get anywhere else, Gallino points out — the Kenmore brand, for instance. What Sears became was a store that lacked any sort of distinction, and the legacy part of its story just wasn’t enough. “[They are] losing touch with the customer and thinking customers will keep going to a particular retailer because their whole life they had an emotional connection [with it]. They do not understand why the customer is starting to buy other things at different places. And this, over time, erodes the relationship.”
It’s shocking to see big legacy brands like Gillette and Johnson & Johnson struggling, says Barbara E. Kahn, Wharton marketing professor and author of the new book The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption. Gillette, for instance, was blindsided by the Dollar Shave Club and Harry’s, which undermined Gillette with lower prices and a subscription model. Gillette now has its own subscription service, but “already the habit [of buying razors in a physical store]had been broken,” Kahn noted. “One of the reasons it can happen so fast is because with online digital marketing you can get to people directly. Digitally native vertical brands go right to the end user and can respond much faster; they collect data directly and not through intermediaries.”
Gillette “has responded for sure. But Dollar Shave Club is already there, so Gillette lost some market share forever.”
“I think as much as we like to keep our traditions and routines, nowadays with all the information and reviews out there we can quickly learn that a company is cheating us.”–Santiago Gallino
In many cases, Kahn says, legacy brands have failed to meet digital natives on their own turf, “and digitally native vertical brands go to millennials with an emotional, branded story that speaks to their lifestyles. Legacy brands didn’t see the change and didn’t change fast enough.”
To wit, as one shopper matter-of-factly told a LancasterOnline reporter on the last day of business for Sears at Park City: “Retail changes, and unfortunately, Sears didn’t keep up.”
A Bright Future for the Past
But nostalgia still motivates buyers and remains an important consideration, Kahn says. “I think nostalgia will always be around. People tend to become more nostalgic during recessions; they long for the good old days and have a positivity bias about the past. They only remember the good things, so you see it in advertising, and market share of nostalgic brands picks up in less prosperous times.”
Nostalgia does appear to help loosen purse strings, according to one study. “We wondered why nostalgia is so commonplace in marketing. One reason could be that feeling nostalgic weakens a person’s desire for money. In other words, someone might be more likely to buy something when they are feeling nostalgic,” wrote the authors of a paper published in the Journal of Consumer Research in 2014. In fact, the study confirmed that people were willing to part with their money when feeling a sense of nostalgia.
“We found that when people have higher levels of social connectedness and feel that their wants and needs can be achieved through the help of others, their ability to prioritize and keep control over their money becomes less pressing,” wrote Jannine D. Lasaleta, Constantine Sedikides, and Kathleen D. Vohs.
Some companies have become good at having their cake (offering cutting-edge product substance) and eating it, too (acknowledging history). “Nike, Apple, and Patagonia are all great examples of brands that are tending to current trends, but also often invoke their nostalgia and roots,” says Wharton marketing professor Jonah Berger. “They are often innovative on the product front, but their core identity and emotional connection has been consistent over time, and they often leverage their roots as a way to drive current action.”
“Digitally native vertical brands go right to the end user and can respond much faster; they collect data directly and not through intermediaries.”–Barbara E. Kahn
The products themselves are new, he says, but campaigns telegraph nostalgia with images like 1972 Olympics track star Steve Prefontaine or the original Nike shoe, or by trumpeting the year of their founding.
Others brands, however, haven’t been as quick to figure out how to marry legacy with the evolving preferences and vibe of today’s customer. “I think Macy’s is probably in a challenging spot,” says Gallino. “They have a really large footprint they need to handle and manage. I think the structure and legacy system can hurt you when it prevents you from adapting to customers’ needs.”
Kohl’s is a good example of a company that has been able to leverage its past success and adapt it to today’s customers’ needs, Gallino notes. Kohl’s has a large footprint in non-mall locations that tend to be closer than mall locations, which allows customers to visit more easily and make a trip to the store more intentional. Compared to other chains with similar business models, Kohl’s has been more active in renovating the exterior as well as interior layout of the stores, which makes the visit more gratifying, he adds. And Kohl’s has developed a number of house brands internally across different categories, such as Apt. 9 and Sonoma Goods for Life, that are valued by their customers.
These factors allow Kohl’s “to attract new customers while keeping their ‘old’ customers happy,” says Gallino. “To have a healthy business, retailers need to be able to be relevant to their existing customers while attracting new customers to their stores.”
With an emphasis on a vast inventory and discounts decipherable only by parsing text-heavy fine print, Macy’s may be sending out a message that is contrary to what many shoppers are yearning for today. “ATTN: 1,000s of specials to brighten your day!” blared the subject line of one recent email from the retailer. But who has that kind of time?
The Trusted Retailer-curator
In fact, says Gallino, “what these retailers who are struggling or failing have lost track of is the curator role” — the idea that seeing a product on the shelf means knowing that the retailer has vetted it for quality and will stand behind it. “That has a lot of value.”
A good model of retailer as trusted curator is Costco, says Gallino. “They are very thoughtful about what they bring into the store to offer their customers,” he says, “and if you go to Costco and talk about Costco with other customers, it’s clear that the role of the retailer as curator is very prominent. They will trust something Costco sells just because it’s there.”
Gallino points out that Costco’s authority is such that online reviewers will often assess the low quality of a particular product by saying that it does not meet Costco’s standards and they are surprised to see that another company is offering it.
“They have developed a very strong brand. There are many categories where the Costco brand is more expensive than the outside option. It’s not necessarily a cheap brand, but they stand by what they offer the customer,” Gallino says.
“Nike, Apple, and Patagonia are all great examples of brands that are tending to current trends, but also often invoke their nostalgia and roots.”–Jonah Berger
Gallino says that legacy and the idea of a family tradition of buying in a certain store as part of a certain routine is still very relevant. But one countervailing factor now is the abundant and easy availability of information about what other stores are offering.
“Years ago, if you were a Sears customer or a Macy’s customer, you might have known what other companies were doing, but it was not as prevalent as it is today,” Gallino noted. “If you were offering not-so-great service or not so up-to-date stores, you could get away with that easier than today. I think as much as we like to keep our traditions and routines, nowadays with all the information and reviews out there we can quickly learn that a company is cheating us.”
If legacy brands were once efficacious to consumer fidelity, then social media has added an element of “promiscuity” to the retail environment, says Americus Reed, Wharton marketing professor and identity theorist. “It’s like being on Tinder — there are thousands of objects you can get connected with,” he said, referring to the dating app.
“The legacy brands no longer have a stranglehold because physical experiences can be replaced by digital experiences. Legacy brands don’t have the only ability to create that moment of aha, of delighted joy,” Reed said. “That creates a natural fluidity with consumers being exposed to a lot more things, and that really helps break the spell. Going to Toys ‘R’ Us used to be a big deal, but now you’ve got a million retailers online.” Other factors competing for customer affection with the nostalgia-legacy factor have multiplied in recent years: concerns about a company’s politics and ethical behavior, its policies on environment concerns and child labor, or the sourcing and composition of ingredients.
Johnson & Johnson, for instance, noticed late in the game that sales of its classic baby shampoo were dropping off, Kahn said. While touting “no more tears” on the label was good enough to captivate customers for generations after the product’s introduction in 1953, by the second decade of the 21st century parents were finding the shampoo’s golden glow too artificial-looking to massage into the scalps of their little Jades, Maxes and Sophias.
“What makes that shampoo iconic are the additives, and these people weren’t interested in it,” says Kahn. “Johnson & Johnson hadn’t been monitoring online shopping, they had been mostly paying attention to physical stores. So they missed a huge trend because they weren’t paying attention to changing consumer behaviors.”
“The legacy brands no longer have a stranglehold because physical experiences can be replaced by digital experiences. Legacy brands don’t have the only ability to create that moment of aha, of delighted joy.”–Americus Reed
On Reed’s list of legacy companies that have not done a good job of making a leap with customers: Campbell Soup. “They are iconic, and now young people do not care. Digital natives do not know who Andy Warhol is. They don’t have those legacy memories of the brand connected to experiential moments and milestones from their childhood. In fact, suddenly, younger consumers have this idea that you can’t possibly get something healthy in a can.”
Among historic brands that have changed with the times: Barbie, which now has a “Shero” line of she-heroes in the likeness of inspirational figures like Misty Copeland, the first African-American principal dancer for American Ballet Theatre; NASA mathematician Katherine Johnson; artist Frida Kahlo and others – as well as Barbies of varied body types, skin tones, and a handi-capable Barbie.
Says Reed: “How do you attract new customers to the Barbie brand? The whole world is changing, and if you are a store or a brand you have to reflect what these changes are.”
Tastes are always evolving, and some brands respond well, says Kahn. “Look at Coca-Cola. People are just moving to water. Next thing you know, they’ll probably move to Coca-Cola-flavored water.”
This article first appeared in www.knowledge.wharton.upenn.edu
Seeking to build and grow your brand using the force of consumer insight, strategic foresight, creative disruption and technology prowess? Talk to us at +9714 3867728 or mail: firstname.lastname@example.org or visit www.groupisd.com