International Retailing Success at Liberty - Case Study Example

International Retailing Success at Liberty Introduction Liberty is a rather upscale department store specialising in the sale of clothing, housewares, beauty and gifts. The company’s long operating history is strongly attached with consumer perceptions of London’s diverse history and importance in the UK, giving the business a strong brand which continues to emerge from periodic business difficulty. Some of Liberty’s largest problems, during its development into a global consumer brand, involved internal problems with marketing as well as external economic situations at the macro level. However, Liberty has always managed to emerge a key player in the department store sales environment, with most of these successes being attributed to innovative marketing and brand positioning. This indicates that, throughout the last several decades, Liberty has maintained a very knowledgeable and strategic-focused management which has guided liberty from simply a domestic department store to an international brand name with a positive reputation. This report offers a critical analysis of how Liberty became an international retailing success. What makes a successful retailer? A successful retailer understands the internal business environment and continuously scans the external macro environment for competitive movements in the marketplace and also conditions stemming from consumers and the economy. Retailing involves not only the physical distribution and sale of merchandise, but also considers the strength of the company’s economic portfolio or the ability to reach consumers through innovative promotions. A successful retailer understands issues of logistics capacity when considering the marketing mix in terms of distribution, therefore procuring supply chain networks which provide maximum value at least cost. For example, since Liberty is not operating in a fast fashion environment, they have diversity in their supply chain which allows them to order from multiple vendors. This gives them flexibility to change suppliers at short notice to launch new product lines, whereas a fast fashion retailer relies on a continuous and predictable supply chain in order to turn over fashion merchandise quickly and efficiently. In many respects, a successful retailer, such as Liberty, maximises the supply chain network and secures as many alliances as possible to reduce the costs of distribution, therefore satisfying the business’ profit margin. The costs saved in areas of the supply chain and distribution can be applied to other business areas at the operational level to increase manufacturing efficiency or other production-oriented improvements. In many respects, a successful retailer must understand their customers and target them with promotions that are relevant and meaningful. The first step is to hire competent leadership at the highest levels of decision-making who can make meaningful changes to the business model. When Liberty was having problems with sales in the early 2000’s, the company underwent a total brand transformation from “department store for Knightsbridge ladies to international fashion mecca” (Jardine, 2002, p.22). This was an attempt to remove the company from being considered outdated with the long-standing association with London history and emerge as a different brand catering to a more contemporary consumer audience. The question as to what makes a successful retailer can be answered by looking at Liberty who recognised that consumer sentiment about the business was failing and came up with innovative marketing which gave the company a new image on their consumer markets. Success in retailing is to provide a product which gives perceptions of value to the consumer and can be promoted to maximise consumer response. Liberty manages all of these functions at the brand-building level. Background and current position of Liberty As mentioned previously, Liberty has been a long-standing retailer in London since 1875. Since its inception, Liberty has provided luxury goods and has been associated with positive aesthetics for much of its merchandise. During a time period where Asian goods were considered to be top quality, the company relied on much of the designs of Asian materials, thus satisfying customer needs even during a time where marketing was not a known concept in business. Throughout the whole 20th Century, Liberty provided aesthetic designs, upscale merchandise, and used advertising which was relevant to the consumer lifestyle at the time. Some of these included resurgence of Art Nouveau styles (or other styles) with Liberty using promotion and advertising to stay with the current consumer trends. One author describes the basic leadership mentality which drove Liberty during its first 50 years of operations as one which: “Aimed at creating great design in manufactured, even mass-produced artefacts moved even farther from the late-Romantic emphases of the aesthetes and decadents and closer to the modern movement, which it helped engender” (Landow, 2009, p.1). Simply by description, Liberty was a company which managed to create positive social buzz during the time period and was considered a well-respected company name throughout its history and evolution to its modern brand philosophy. Much of the company’s ability to reach consumers in a way that is meaningful is how the company has managed to hold predictable market share into the modern era. Though Liberty has been able to hold much of its ground in its marketplace in recent years, the company did witness a considerable drop in available cash from 2007 to 2008 (Liberty, 2009). However, this was during a time where the company was developing its new Renaissance for Liberty campaign which, again, repositioned the company from strictly luxury to a more diverse group of niche market consumers with the financial means to purchase high-dollar merchandise. The company relies on its strong marketing appeal to its desired target markets and is able to deliver merchandise which satisfies their basic aesthetic needs and their reputational needs related to the company’s brand image and their peers’ opinions which drive much of the youth decision-making. When sales volumes have decreased, Liberty often uses promotional materials to bring in more consumers. For instance, the company has turned Thursday evenings into Menswear Thursdays which involve complimentary champagne and oyster bar, with different live bands or DJs to provide entertainment (liberty.co.uk, 2009). The special promotions are designed to cater to their male demographic consumer group in order to give incentives to explore the different merchandise selections available at Liberty. Further, the company uses promotions for their female consumer markets by offering a Scarf Spotlight which offers personal appearances from upscale scarf designers and those who produce cashmere (liberty.co.uk). This incentives-based promotion is necessary during a time when sales have declined or consumer interest in the brand has driven defection to a competing brand name. However, there is evidence that this strategy has been ongoing in the last several years at Liberty. “Discounting is a dirty word in this sector. Determined to avoid sale posters in stores, customers are invited to discreet events” (O’Connor, 2008, p.1). When the company’s reputation on the consumer market has been tainted or the brand appears no longer diverse, however the department store caters to a more sophisticated customer, these sales events are strategic efforts to boost sales volumes by personalising the shopping experience for individual markets. Liberty also manages to procure some of the best textiles for its products, allying with companies such as Outlast Technologies, Inc. and Kelheim Fibres GmbH for the unveiling of temperature-regulating viscose fibres (Borland, 2006). This shows a leadership group which looks for opportunities to provide better quality merchandise and build stronger relationships with suppliers within the company’s supply chain for textiles and other products related to fashion merchandise. A successful retailer recognises opportunities in areas of supply chain and Liberty manages this aspect of their business efficiently. The purchase of innovative or revolutionary fabrics also gives Liberty opportunities to expand their marketing to include spotlights on the textile merchandise as a unique selling point over other fashion brands in the same market environment. During the company’s history, it has also changed advertising consultants, thereby injecting new promotional blood into the promotional mix. In the late 1990’s, the company shifted advertising to TBWA GGT Simons Palmer and J Walter Thompson (Marketing Week, 1999, p.7). This strategy continues today, with the company seeking alternative options to reposition the company at the marketing level when the need for a new image arises. The company allows external consultants to assist in this aspect of advertising which seems to have brought Liberty ongoing success through this aspect of retailing. How can Liberty become a successful retailer? Liberty has managed to create a positive consumer perception about the company, evolving from what was referred to as “the dowager duchess of London department stores” to “the transformation of the aristocratic old girl into a cool chick” (Murray, p. 114). This shows how well the company manages to redesign itself on rather short notice, using promotion and in-store incentives marketing to bring the company more value both domestically and at the international level. The company’s international presence is relatively short-lived, therefore research information on whether the business fully understands its international consumers at the lifestyle level is not widely available. Liberty can continue to conduct consumer research, making it more concentrated and focused, by using focus groups of youths which fit the basic socio-economic background desired to provide more trendy products which fit their value systems. These qualitative studies can give new and ongoing insights into what is driving the younger markets, such as the 20-35 groups, in terms of fashion style and edge. The additional financial investment into this type of research is a recommended strategy to further enhance the business’ retail success through marketing efforts. “The name Liberty is known all around the world, and has not been given justice in terms of its presence in countries like the US and Japan” (Parker, 2007, p.18). The business also maintains opportunities to conduct preliminary research, in the form of focus groups and interviews, to address what drives values in certain demographic groups in the US and in Japan, therefore exposing consumers to the Liberty values and brand reputation prior to entering these markets (or continuing operations there). The goal of success in retailing is to understand what the consumer markets genuinely want in terms of fashion diversity, fashion aesthetics, and houseware goods at the upscale level. In order to improve their international competitive position, Liberty must understand how to position their brand or their products in foreign markets and research is the most logical means to undertake this strategic opportunity. One author writes about Liberty, “its half-timbered flagship store in London looks like it got about halfway through the millennium and gave up in the Elizabethan era” (Pitcher, 1997, p.25). This seems to have been the sentiment of many consumers and critics of this industry in the late 1990’s, however the business has emerged from this reputation through its diversification strategy to include outside advertising consultants and its focus on offering diverse products for specific markets rather than mass market focus like some competition in department stores. The company is also trying to find new investors to fund future expansion (Hall, 2009, p.1). This strategy for global expansion would also include potential joint ventures in order to secure funding. Much of this is likely due to the company’s current decline in cash availability which was noticeable in only a year’s period. However, in order to improve the company’s competitive position and their presence in the retail market, it is also important to understand the business-to-business marketing principles necessary to establish investor relationships. The company should invest more into promotion of the company’s economic strengths and their efficiency in the supply chain, using companies like Zara as a model for improvement in areas of distribution. Illustrating, in a press release or other media format, that the company is continuously devoting resources and investment into improvements to make the company more competitive can secure more investor interest prior to actual negotiations taking place. Liberty is not taking full advantage of the promotional benefits of press releases and should incorporate this into its promotional mix. It is also recommended that Liberty review its current promotional policy regarding the invitation of customers to attend in-store events with champagne and other food/music incentives. Consumers have access to these types of functions when they are in a higher-income demographic group and can easily secure a champagne evening through their social networks. Though the word discounting is not considered to be appropriate in this sales environment, changing the scope of these internal customer-focused events could bring higher sales. In tight economic environments, such as the one being experienced globally, even the more upscale consumer is faced with shrinking portfolios. Discounting, even at the level of companies such as Gucci or Dolce & Gabanna, is occurring and the company can provide similar discounts without necessarily using terminology which makes the practice seem dirty or inappropriate to the target consumer groups. These events can be restructured in a way that provides meaning to the clients, such as offering large discounts on a single piece of merchandise when multiple merchandise in specific categories is purchased. For instance, the purchase of a crystal vase entails 75 percent off any piece of merchandise valued £50-£200. These could be worked out at the internal level at to which merchandise to link with the incentives promotion, however using traditional direct mailing to promote these events. Even the more savvy client is bound to find a certain piece of merchandise which is eligible for further merchandise discounts if these are provided in an aesthetically-pleasing and visually-relevant weekly pamphlet. These promotional tools can provide Liberty with opportunities to reach multiple niche markets and would be a low-cost investment into changing the style of invitation-only in-store events. If Liberty intends on having a positive presence which provides considerable profit in international environments, the company must understand what factors might be driving down its sales performance. Many luxury fashion designers promote their products through word-of-mouth through elite social networks and allow their fashions to be displayed on famous individuals throughout the globe. However, it is clear that Liberty is looking for new strategic alliances in order to expand the business, which was evident with the new alliance-focused strategies for attracting new financing investors and partners. This provides a great opportunity for Liberty to exploit its association with different high-fashion and high-priced merchandise providers by creating strategic promotional partnerships with its many reputable designers. Rather than applying a celebrity-based promotion to the entire company, under the Liberty brand, spotlighting certain designers and their contribution to providing merchandise can give a closer association between the client and those who actually conceive their different fashion products. A who’s who of fashion design, always linked with the Liberty brand name, can explore the lifestyles and opinions of their favourite designers and manufacturers, thereby giving a new positioning for the business related to product. For the international consumer, who likely values the Western lifestyle and consumerism, coming to have a personal association with international designers can build a strong loyalty toward a particular fashion or merchandise brand. Through this partnership, the reputation of the designer’s brand is exploited and Liberty is provided a contracted financial benefit for the increased sales of the designer’s merchandise, on a form of commission-style contracted agreement. This is recommended since the company has devoted considerable time and labour into changing their historical links with London tradition and history and is exploring becoming a more modern-focused, upscale retail organisation. A final recommendation for improving the competitive position of Liberty is to further explore opportunities to diversify product offerings. The company has devoted much resources into promoting accessories, such as wallets, stationary, and handbags but seems to have lost some target focus on their core merchandise. It is likely that a retailer is not going to be known solely for its accessory pieces, therefore devoting this type of marketing investment into accessories focus does not make logical long-term sense. The core pieces are what has driven sales success since its inception in the late 1800s and this merchandise should be promoted heavily with a strong emphasis on product value, quality, and aesthetics. The unique characteristics of even the most mundane or ordinary piece of merchandise in-store can be spotlighted in regular promotion simply to build a strong recall of the Liberty brand name. Conclusion The largest success factors for Liberty lie in the company’s flexible promotion and marketing strategies, above and beyond most other business activities. Being a successful retailer means recognising opportunities for cost savings and for improving the competitive position of the company. This involves analysis of the external macro environment and recognising certain social or economic trends which could cause profit losses and lowered sales volumes. In many retailers, especially Liberty, analysis of supply chain efficiency and maintaining knowledge of consumer markets is vital to the firm’s success. The long-standing reputation for Liberty, and its close association with aristocrats, has both benefits and drawbacks for Liberty. The way that the business is perceived by its target consumers is extremely important for ensuring sales success both domestically and internationally. The company’s brand repositioning which has occurred several times in the last decade has given the company a strong competitive edge and has allowed them to remain strong in overall sales at the competitive level. However, the company must make sure that it does not allow the brand to appear outdated, therefore replenishment of fashionable and trendy merchandise is necessary to suit consumer needs. The business already has this focus and brings relevant fashions to the correct market audiences. Areas of promotion and how the company handles advertisement have been Liberty’s strongest competitive activity and has used these effectively to gain consumer loyalty in their desired markets. Though many of these advertising strategies which work domestically will be ineffective in different cultural markets, the company seems capable of providing international consumers with quality merchandise that can be promoted in a way that is meaningful to their lifestyle values and preferences. Liberty’s flexibility and willingness to consult with external experts in areas of advertisement also give the business added success as an international retailer. References Borland, V.S. 2006. Function joins fashion for 2007-2008. Textile World. 156(6), pp.48-52. Hall, James. 2009. Liberty undergoes strategic review to attract partners for global expansion. The Telegraph. 26 July. Jardine, Alexandra. 2002. The new fabulous. Marketing, London. 19 Sept, p.22. Landow, George P. 2009. Liberty and the evolution of the liberty style. The Victorian Web. Viewed 5 Nov 2009 at http://www.victorianweb.org/art/design/liberty/1style.html. Liberty.co.uk. 2009. Menswear Thursdays. Viewed 4 Nov 2009 at http://www.liberty.co.uk/fcp/content/newsarchiveitem11/newsarchive. Liberty.co.uk. 2009. Scarf Spotlight. Viewed 4 Nov 2009 at http://www.liberty.co.uk/fcp/content/Newsarchiveitem3/newsarchive. Liberty. 2009. Annual Report and Financial Statements. Establishing a global luxury brand. Viewed 3 Nov 2009 at http://www.liberty.co.uk/pws/images/investor/liberty_entire_07.pdf. Marketing Week. 1999. Liberty targets the high street with concessions. London, 22(8), p.7. Murray, Iain. 2002. It’s curtains for clergy girls at new and groovy Liberty, Marketing Week, London. 10 Oct, p.114. O’Connor, S. 2008. Luxury retailers resort to secret sales. Financial Times, London. 20 Dec, p.1. Parker, A. 2007. Liberty looks to expand internationally. Financial Times, London. 7 May, p.18. Pitcher, George. 1997. M&S-style strategy the advent of the first millennium. Marketing Week, London. 20(32), p.25. Read More