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Macy’s vs. Martha Stewart: The tensions between distribution, brands and public persona

Posted by: Bill Chidley on March 08, 2013

Martha StewartAlmost exactly 10 years ago I had the surreal experience of touring a Kmart store in Michigan with Martha Stewart. We were engaged with Kmart doing strategic work on their retail prototype design, and collecting Martha’s input on the current state of affairs was a required part of the process.

As I read the coverage of her court testimony in the Macy’s/JC Penney/Martha Stewart Living Omnimedia proceedings, I am not at all surprised by Martha’s apparent nonchalance in casting off or minimizing her current retailer relationship. Now, as was 10 years ago, Martha is focused on execution and bringing her brand experience to life in the most controlled way, regardless of the consequences or the retailer's needs.

Former Kmart CEO Joseph Antonini had “discovered” Martha and enabled her persona and eventual brand to flourish there, yet during our store tour she was not sentimental. Instead she focused entirely on the way her brand was being positioned, merchandised and operationally supported. She was visibly frustrated that she had to abdicate control to Kmart where the experience of her brand mattered most- in the store.

I can respect why Martha Stewart saw Macy’s as a better fit for retail experience, shopper demographics, margins and overall creative extension of her brand’s potential as a style leader than Kmart. But the pesky issue of control has apparently lingered, and when Ron Johnson offered MSLO a shop concept at JC Penney, this represented the Holy Grail. The opportunity to create an in-store brand boutique, a pure Martha Stewart experience, inside of more than 1000 JC Penney locations wasapparently worth any risk of agitating Macy’s.

I can imagine the possible creative logic as well; this could potentially be good for Macy’s too. Perhaps if Martha could create a clear vision of her brand idea and grow demand for her merchandise, both JCP and Macy’s could benefit long term. The ends justify the means: better brand experience and brand clarity, with equal or maybe even additional points of distribution.

Regarding brands, it seems that Martha and Macy’s are misaligned on a core view of their respective businesses that is not uncommon at retail. Martha Stewart (and MSLO) thinks fundamentally as a brand and Macy’s thinks fundamentally as a merchant. One focuses on creating demand and the other on fulfilling it. Is Macy’s a brand? Absolutely. Is Martha Stewart a merchant? Sure. This is about bias, not polarity.

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Retailers see brands such as Martha’s as potential assets that drive traffic, or share of wallet, in highly brand-driven categories like fashion and home where style authority is important. Unique merchandise and exclusive brands can tip the scale with shoppers and add up to retailer preference at holidays and other peak selling seasons.

On the other hand, brands see retailers as points of distribution that ideally align with their target audience, delivering a steady stream of shoppers who will recognize their value, appreciate their design, and are willing to pay for it. But alas, over time each party desires more from the relationship.

Retailers want to leverage the traffic-driving power of the exclusive brands to expose shoppers to their own private label variants to maximize margins. Brands seek more control of the experience and merchandising to differentiate and sustain a premium. Brands such as Martha Stewart’s, which need the initial distribution that an exclusive deal promises, ultimately desire more distribution and, in Martha’s case, more control of their brand experience to create value for investors.

Often a brand’s desire for distribution results in an erosion of the brand’s value and accusations of being a “sell out” from its fans. Other times a brand that aggressively seeks additional retailer distribution will see a once friendly exclusive retail partner turn on them and introduce new competitors, or private label alternatives that co-opt their unique brand propositions.

For those of us in the branding world, Martha Stewart’s plight is a conundrum. It appears that her desire to move to JC Penney is not necessarily about distribution, but about being a better brand marketer and potential revenue.

Unfortunately Martha’s public profile and a society quick to judge via the media may do more damage to her brand than just a punitive settlement on the balance sheet. This could be one of those rare situations where a desire to drive brand could backfire dramatically.

So the plight of Martha Stewart and her brand leave us with a great illustration of the tension point between the need of a business to get distribution and the need of a brand to successfully manage the retail experience. Martha Stewart and her larger than life public persona is certainly a polarizing factor in this particular case and will cause a temporary setback for the brand that it will need time and commitment to overcome.

If this same scenario was playing out for a Brand like Calphalon, Swatch or Coach, would we be as focused on the ethics? Or would we be applauding them for trying to better manage their brand experience?

Bill Chidley is SVP, Executive Consultant, Interbrand Design Forum.

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