As a retail-focused agency we’re always watching this complex industry for trends and insights. And the parade of major retailers either closing vast swaths of stores–or closing up shop altogether–have offered up some doozies lately.

Most notably regarding the potential impact of so many store closings on the actual retail brands. That is: what will be the long-term effect of boarded up storefronts and empty mall spaces on certain brands? Which will recover their stature, identity and equities, and which may simply never be the same even under different ownership or renewed growth?

We’re in the wake of a perfect storm really, borne of two convergent forces unique to the past decade or so, namely:

-Vast, inexpensive retail space built faster than it could be leased or sold and now left empty and unmarketable, and

-A surplus economy that favored ‘experiences’ over ‘goods’ and often used stores as mere de facto consumer marketing vehicles (e.g. Ralph Lauren and Mac flagship stores).

Banks built branded kiosks and mini-offices anywhere they could fit them. Coffee shops popped up on every corner, often within a few hundred feet of themselves. Luxury retailers created theatrical productions rivaling 4-star resorts….But as to the actual sales revenues to support them? Sure (yawn). Nice if you could do some of that old-school cash-register stuff too.

So what will be the result of all of this? What’s to be learned from the brand detritus mounting daily in US strip-malls and gallerias? Only time will tell. But history dictates that, as with any major change, some will benefit and some will perish. And the resulting field will be more consolidated, focused and wise than before.

I’m reminded, in fact, of Hyundai and the lasting impact of its entry into the US car market in the late 1980′s, a record-breaking success story that turned into to brand-breaking cautionary tale: the fastest import ever to hit 1 million cars sold annually, Hyundai was the darling of the auto business—until about 900,000 of them began to experience serious quality problems and were pushed pulled or dragged back to dealers in droves by angry consumers. The market flooded with cheap inventory, the brand suffered massive damage to its reputation and Hyundai faded away as fast as it had arrived, taking nearly 20 years to fully recover in the US.

But the lessons it taught about brands–and the unintended consequences of their rapid, expansive or careless application–strongly influenced today’s strict QC philosophy for cars, electronics and most other branded products: that every interaction counts, every touchpoint matters and small mistakes are always easier to fix than big ones.

Will chain retailers establish similar new brand practices and controls from the current fall-out? We’ll see. But clearly there’s some valuable wisdom buried in the massive changes we’re experiencing. No matter how painful it may be to swallow.

Tags: hyundai, linens n things, office depot, retail store closings, starbuck's

This entry was posted on Friday, March 6th, 2009 at 6:58 pm and is filed under Marketing Plans, Strategic Planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.