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[phpostock]Liz Claiborne, 15[/phpostock]

Adapt to Changing Business Climate and Prosper Or Get Left Behind and Perish

by: Geoff Ficke 

Two business announcements this week reconfirm the unbelievable pace of change the world business climate is undergoing. Visionary fashion designer Liz Claiborne died and her Company announced that it would sell or close 16 divisions. And, pioneering retailer Leslie Wexner announced that his firm, Limited Brands, Inc. would put up for sale the Limited and Limited Express chains.

The nature of retail, like most other industries, has undergone radical change. Big box category killers like Staples and Best Buy have evolved into dominating international success stories. Tesco, WalMart and Carrefours offer enormous scale, one stop shopping unimaginable a generation ago. Specialty retailers such as Wet Seal, Aeropostiale, Abercrombie and Fitch, L’Occitaine and Talbots attack specific niches.

Consolidation, bankruptcy and liquidation have allowed fewer and fewer national department store and supermarket chains. Macy’s has consolidated nationally after absorbing numerous regional department store chains such as Lazarus, Bullocks, Burdines and Marchall Field. W.T. Grant, Montgomery Ward, AyrWay, Venture and Gold Circle are only a few examples of once strong groups that no longer exist.

The Limited began in 1963 as a single clothing store in Columbus, Ohio. Leslie Wexner saw an opportunity to create an amazing retail growth story by replicating designer clothing designs, mass producing offshore and selling tailored business clothing to the rapidly emerging population of female businesswoman. He became a billionaire by leveraging and extending The Limited to numerous additional store brands including Limited Too, Victoria’s Secret, Henri Bendel and Bath and Body Works.

Despite the huge past success of the ready to wear concept pioneered by The Limited stores, times change and Mr. Wexner reacted accordingly. Work patterns have changed, women’s fashion taste, always fickle and subject to unexpected trends, have become even more unpredictable. His decision to sell the chain is prudent and will result in a stronger Company with redeployment of assets and full concentration applied to faster growing divisions. The decision to spin off his alpha divisions may have been difficult from an emotional standpoint, but future success requires staying ahead of the curve and Leslie Wexner will always strive for maximum success. 

Ms. Claiborne built her eponymous fashion house by creating high quality, suits and ready to wear that women loved for their cut, tailoring and detail, all the while keeping prices affordable. Though she had retired some years ago from active management, she and her husband remained involved in consulting on fashion direction for the Company. 

Nevertheless, as always, things never remain the same in retail. Department store consolidation has enabled groups like Macy’s to create in house private label brands that produce much more profit than designer brands like Claiborne, Polo and Nautica can offer. As more store space is dedicated to private label store brands the designer labels have to reinvent themselves. In the case of Liz Claiborne, 16 divisions will be jettisoned and total focus applied to the namesake men’s and women’s brands, accessories, shoes and fragrances.

These are only two examples of successful, well managed, mature Companies adjusting to the business realities they confront. W.T. Grant did not react to change and died. Thousands of independent stores have not reacted to change and they no longer exist. Local and regional chains that did not adjust to market realities are gone.

Ice houses, barrel makers and bicycle manufacturers are non-existent today, though they thrived in the 19th and early 20th century. Dozens of auto manufacturers folded in the past century and the remaining “Big 3” are in real trouble because they have not adjusted to market realities. Numerous airlines have failed, been through bankruptcy or been purchased by stronger, better-managed lines. Change is inevitable and is best confronted and embraced, not fought.

Every day in my consulting business we are introduced to people offering products, services and business opportunities seeking a way to successfully commercialize their offerings. Invariably, the dream of the entrepreneur is to secure placement in WalMart. Yes, the same WalMart so scorned by so many as a small business and small town killer. I often think that the people so opposed to WalMart would be proponents of home delivered ice instead of refrigeration if alive a century ago.

These Luddites can not recognize that WalMart is only the latest, most significant, agent of change. Does WalMart put mom and pop stores out of business. I contend they do not. Business owners that do not recognize the change that WalMart represents, adjust accordingly and create new services that offer real value for their customers do close. Failure is never pretty, but is usually accompanied by solid reasons and an unwillingness to change.

WalMart has spent billions of dollars trying to perfect a ready to wear clothing business. They have failed to date miserably. WalMart has grown a huge food business, however, traditional chains such a Kroger and Safeway are more profitable and growing faster. They have added organic food departments, exciting bakeries and deli’s and a much broader range of products than WalMart. They evolved, changed and keep a step ahead of WalMart.

Thousands of small, independent clothiers, florists, grocers, butchers, pharmacies and auto repair shops do compete successfully with neighboring big box retailers. They do so by offering goods and services that are highly targeted, providing better customer service, a faster shopping experience, customizing offerings, home delivery and personalizing the buyer/seller relationship. These successful small retailers do not like the big bullies, but they recognize reality, confront the changes they face and compete. They do not whine, sit idly awaiting disaster or quit. They work smarter and compete.

Change is coming, always. It is good. We all live better lives because of change. Our children will as well. If we do not embrace change we will be left behind to perish. This is true for people, companies, organizations and societies.

About the Author

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.

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[phpzon]Liz Claiborne, 10[/phpzon]

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