Brand management in crisis

What do Tom Tailor, Esprit and Gerry Weber have in common? They have let go, overslept the structural change in the fashion industry – and now have to fight with declining customer and sales figures. All three fashion labels have ignored growing online competition for far too long. All three brands can not cope with the speed with which the competitors from Ireland and Spain bring the latest fashion trends into the business.

Brands can get into crisis for two reasons. Either, the brand is intact, but has overslept important innovations. Or: The brand has lost its appeal because management has not invested in brand development. The first case is a classic restructuring case. The second requires a revival of the brand. A look at Tom Tailor, Esprit and Gerry Weber shows: Both cases are true.

Successful offside

What you can give all three fashion labels: They have very successful decades behind them – and a fantastic founder story. Tom Tailor, founded by two Hamburg merchants. Esprit, launched by a hippie couple in San Francisco. And Gerhard Weber, who created the fashion group Gerry Weber out of nowhere. What the three brands also have in common is that they started with collections. That was her original business.

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The success has blinded companies to external threats. Instead: more shop space, more shops in shops and, in the case of Gerry Weber, its own logistics center. There was almost no time left to take care of the new collections. The tunnel vision of success has distanced the three companies from new customers – and ultimately sidelined them. One could also say that the companies have disregarded the old merchant rule: “Prepare the bad ones in good times and the good ones in bad ones.”

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Like Opel in the car market

The three fashion labels have aged with their loyal clientele. All three brands are dusty. In the weekly magazine “Spiegel” says Gerry Weber boss Johannes Ehling, “our fashion was too staid and stale”. Esprit boss Kristian Andersen said shortly after taking office: “We agree that the brand Esprit stands for nothing.” And Tom Tailor has baptized its restructuring program, which has been running since 2016, appropriately “Reset”.

The statements of the bosses are a reflection of the crisis of German fashion brands of the middle class. Tom Tailor, Esprit and Gerry Weber act as sandwiches between the trendy low-end and high-end premium brands like Opel in the car market. And even if the collection of Esprit does not even differ greatly from Zara: the latter is following the changing fashion trends much faster than Esprit. And speed is a value in itself in our digitalised world.

Mastering a brand crisis: three steps

Companies in crisis usually have to go through three steps to get back on track. In the short term, they have to save costs. In the case of the three fashion labels, this means closing shops and reducing staff. In the medium term, it’s about returning to its strengths and at the same time staying ahead. So for example, only make sports collections or say goodbye to certain business areas, such as logistics – and to focus more on the online trade. The third phase is to brutally continue the path that has been rediscovered.

Gerry Weber is currently in the first phase – Tom Tailor and Esprit somewhere between the first and second. And now for several years. What’s not quite clear yet: Are the companies getting back to the attributes that made their brands strong, to the founders’ stories and their roots? Or are you trying to breathe new life into your brands? Both are possible. Where a return is more useful. The brands are still intact so far that you do not have to recharge them completely.

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Brand management is always tedious

Those who do not constantly develop their brand, get into the crisis. Esprit, Gerry Weber and Tom Tailor still have a lot of work to do. Because with a austerity program alone, it is not done. It is important to make the brands attractive again. Those responsible need to rethink brand positioning: which customers do we want? How do we reach them? And: how do we want to be perceived? At the same time they have to make the following clear: perception is everything! A brand is what’s left over when you’ve forgotten everything else.

Gerry Weber, Tom Tailor and Esprit have failed. You have not worked permanently on the appearance. The lessons are being drawn. Very painful. The consequences are similar to the demise of Nokia or Kodak. Especially when things are going well, companies are constantly overlooking threats from the outside. Every entrepreneur should always be a bit schizophrenic.

Outlook: Do or Die!

Brand management is complex even in quiet times. In times of crisis, it requires the fullest attention of the management. Each crisis also offers opportunities. These should seek Tom Tailor, Esprit and Gerry Weber. The fashion market is contested – but at the same time offers enormous sales potential. Because: Customers buy clothes like never before. Restructuring may therefore be accompanied by a new brand alignment, which will bring a revival to the three brands – as long as they are prepared for more complex customer needs. But all labels have to risk something to survive.

Ulvi Aydin is a winner of the Interim Management Project 2018, called “People Mover” by customers. He is an experienced, results-oriented and international CEO and CSO. As a corporate developer and interim manager, he supports medium-sized companies and groups in brand and market development, repositioning, restructuring and sales excellence. More info: Here.

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