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Middle of the Road Retailers Are Failing


hourglassRetailing in today’s economy is tough. No news there. But why is it that some brands do well while others flounder?

Those that are struggling are often suffering from self-inflicted problems. Carrying the same brands, competing for the same customers, using the same techniques (high mark ups followed by sales), etc. They are doing nothing to attract today’s consumers.

The sweeter spots in retail are on the high and low ends. Columbia Business School professor Rita McGrath says we’re living in an “hourglass economy,” in which dollar stores and opulent Italian fashion houses thrive and stores like J.C. Penney die. How’s that for brilliant?

McGrath is on to something.

In a time when The North Face retails $300 down jackets – Eddie Bauer and Columbia Sportswear try to sell at half that price, but without the same success. Same for Under Armour. $90 for a synthetic t-shirt? No worries. But Target’s C9 by Champion – synthetic t-shirt retails for $25. Unfortunately no one wants to be seen sporting the C9 logo. Lululemon $100 yoga pants fly out the door. GAP’s yoga are under $20 but who shops at GAP any more?

The reality is that if brands want to compete at the upper end – branding and marketing are paramount. From those two functions come consumers perception. And perception, along with a dose of aspiration, make buying a $90 t-shirt a logical and high-value choice.

Over the past 5 years we’ve seen more middle-of-the-road retail brands struggle to gain traction or stability. Perhaps they should look in the mirror and ask – what are we doing to get into the top half of the hour glass.

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