We all like a bargain and, as always when the squeeze is on, there has been a surge in the fortunes of retailers who can pander to that need over the last few years.  TK Maxx built their UK reputation on the mountains of liquidated stock, over-orders and manufacturers over-production that were accumulating across Europe, but these days we are all more frugal and surplus stock is a rare sight.  Walk around you local TK Maxx these days and you’ll see stuff that is clearly straight out of the factory and looking suspiciously like re-specd versions of mainstream branded products.  It’s a bit of a let-down by the retailer, but what is this doing for the brands?

It’s understandable that, faced with a shortage of supply in certain categories, retailers like TK Maxx would go looking for alternative sources to support their “Designer labels for less” claim, but for me, at least in some departments, they are failing.  They’ve never been too strong in the footwear department for instance, but, I guess, having staked out their shoe pitch they probably feel its incumbant on them to protect their claim.  Unfortunately that seems to mean introducing minority brands or “brands” that nobody has heard of (because they are just labels that manufacturers slap on to inferior product to help them hood-wink the odd independent retailer into a purchase and not real consumer brands) and it seems to me, even ordering production runs in inferior materials to get the price down.  This might keep their shoe racks full, but it’s not even close to where TK Maxx have in the past tried to persuade me they stood.  It won’t be long before this development is acknowledged by enough consumers to represent a concern to the people running the business.  Somebody said to me only the other day that TK Maxx was a con, but this practice won’t only damage their business, it will reflect on the brands that have stooped to re-engineering their products to meet the retailer’s demands and even those legitimate brands that have constituted the genuine bargains that TK Maxx was built on.

Of course, there are a lot of brands with equity earned in the past that hasn’t been leveraged in recent years, often because the organisations that own them have abandoned them or shut up shop themselves.  SportsDirect is a retailer that has been quick to realise this and have built a very successful business on rebadging inferior Asian-made sportswear and equipment with famous labels from the past like Lonsdale, Kangol, Dunlop and Slazenger.  Don’t get me wrong, I’m all in favor of people being able to buy a pair of sports shorts for £5, but by sewing a Slazenger label onto them Sports Direct have surely done irreparable damage to this old brand.  Before long, consumers who have been reassured by the label will realise that all they have is a pair of shorts from a Vietnamese sweat shop and henceforth that’s the association Slazenger will have with everybody.

When its a case of retailers buying from independent manufacturers I expect they’ll excuse the practice with the claim that it’s at least keeping the a consenting manufacturer in business and I’m sure there are many willing victims, but when the retailer is buying the brands with the sole purpose of abusing them, it raises a whole new bunch of issues.  Sports Direct own Dunlop in the UK and you can buy Dunlop squash rackets for £30 in their stores that look very much like those used by the world’s top players who they sponsor.  However, the shop versions are just mass-produced rackets from an Asian factory and the similarity to the pro gear ends with the badge, as anybody gullible enough to buy one will soon discover.

It’s a neat route to a quick-buck for Sports Direct, but in the long-term, what they are doing is burning brands – squeezing the life out of them, discarding them and moving on to their nerxt victim.  I guess they have concluded that there are enough old brands with decent equity around to earn their founders the retirement they have their hearts set on and they’ll no doubt go on buying brands and squeezing the life out of them all the way to Dorset’s Sandbanks real estate, but I’m not so sure and anyway, I hate waste as much as I despise abuse and this practice smacks of large helpings of both.

Michael Weaver
August 25, 2010

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