In recent years, the face of High Street has changed due to closed stores owned by very high-profile brands, including Woolworths, HMV, Comet and Blockbuster. However, it hasn’t at all been doom and gloom for all businesses. In this blog, we share some stories from brands who have experienced a huge amount of financial success since 2007, in spite of the economic downturn.
What did they get right?
The world’s most-popular miniature yellow-brick manufacturer Lego has continued to grow from strength to strength. The Daily Express reported in February that in the last year, Lego’s annual operating profit jumped by 40percent to £900 million, and revenue by 25percent to £2.63 million. This means that sales have nearly trebled since 2007.
Obviously, Lego is a household name, but what set Lego apart?
In 2009 when announcing sales were up by a third, a statement by the Danish toy manufacturer explained that they believed the growth in popularity was due to parents looking for toys for their children that had an enduring appeal. UK Managing director Marko Ilincic added: “The continued strong growth in our classic product lines is particularly encouraging and suggests a demand among consumers for trusted quality, particularly in the current economic climate.”
How have they adapted?
In addition to classic lines seeing an upturn in sales, Lego have also adapted well to the 21st century, placing greater emphasis on their computer and smartphone games – including yellow-brick adaptations of huge franchises such as Harry Potter – and developing new product lines such as Friends to appeal to girls, both of which have been huge successes.
Just because money is tight, it doesn’t mean people stop buying clothes. It just means they get them from somewhere more affordable. Because of this, Primark last year reported that sales were up by 16percent. This is because shoppers endeavoured to get that designer look for a fraction of the price. Primark stores are often some of the first retailers to carry the newest lines of fashion from trends set out in fashion week events.
Primark is actually a subsidiary of the Associated British Foods group. Twinings tea and Silver Spoon Sugar are amongst their other successful brands.
What about the competition?
More upmarket high-street retailers such as M&S have struggled to compete with the competition presented by Primark as they cannot compete on price. But even more importantly, it is Primark’s speed at delivering new fashion lines that make them a worthy adversary for many fashion retailers.
A bright future
The cheap-and-cheerful clothing chain also stated recently that it expected operating profit for the six months to March 2nd to be considerably higher than the £412 million from the year before. Finance director John Bason told Reuters: “Primark has not stood still [and] has continued to improve the range of clothing that it offers, the fashionability and the store environment. I think we are getting new consumers.”
Ok, it may seem like a cop-out to include them, but Apple has consistently posted great figures since 2007. Although their Christmas 2012 sales didn’t hit their usual estimates, up until that point they had been posting regular 18percent year-on-year revenue growth.
Against all odds
Obviously, products such as iPhones, iPads and MacBooks are high-end, expensive consumer goods. These are products you wouldn’t expect to succeed in a recession. However, their gigantic sales figures and huge popularity show that well-made, innovative products will be a success in any financial climate.
This is for a number of reasons
Firstly, in times of recession, we are willing to pay more for a product that is easy to use and will last a long time. This is as opposed to buying a series of quick fixes. The second reason is the power of the brand. It took a while, but Apple has managed to get millions of people to buy into their brand. They have become fiercely loyal to it in the process. This shows that making sure your brand is as strong as possible is key to creating a successful business.
So, in a nutshell, what can we learn from these 3 brands?
If we were to take commonalities between these bands that represent very different industries, these are some very quick takeaways:
1. Sustain the quality that people trust
For a business of any size to be sustainable over time, a balance must always be made between coping with cost increases, and sticking to a product formula your customers trust.
2. Seek partnerships in related industries
Lego succeeded to align themselves with several trendy movies and tv shows over the last 5 years (as they have prior to that). With a product’s enduring appeal comes the strength of getting other brands to align their brand with yours. Look around for partnerships from other businesses near your location. These alliance partnerships don’t always need to cost a huge investment–get creative with contra deals.
3. Markets change – be constantly aware of trends that may affect you
Change is inevitable. Not everyone can predict trends, but we all have access to information that can help us understand what current trends might mean to our business pursuits. What are your competitors doing (or not doing)? The world doesn’t stand still and neither should you!