The death of brands?
NYU professor and author Scott Galloway sees several trends that threaten consumer brands.
Walmart and Amazon are in a never-ending struggle to lower prices, which means squeezing suppliers’ profits to the point where they can no longer afford the advertising needed to build a brand.
Google search volumes for non-branded search terms (e.g. cat food) are growing at the expense of branded search terms (e.g. Meow Mix).
Alexa, the voice of Amazon in the home, will gladly take orders for batteries and similar consumer packaged goods. But whereas a search for AA batteries on the website will yield over 2,000 results on Amazon.com, Alexa will only provide a narrow set of possibilities, often prioritizing the Amazon house brand.
Ups and downs
If you are particularly observant and spend lots of time waiting in and around elevators, you’ve probably noticed some of them have badging to indicate they were built by elevator company Otis.
Can you name another elevator manufacturer?
According to statista.com, Otis is the world’s largest elevator company, followed by Mitsubishi Electric, Schindler, Kone and ThyssenKrupp. Are any of them familiar? Do you have a preference?
Ride hailing and sharing services threaten to make the automotive experience as anodyne as the elevator one. If asked to describe either after a journey you’d likely say it was a box that got you where you wanted to go with no recollection of who manufactured the elevator or the car.
Whose brand is it anyway?
When travelling from my home in Toronto to see my family in Ottawa, the drive justifies grabbing some fast food. My go-to is McDonalds. Say what you will about McDonalds, what other food can you eat without even looking at it as you bomb down the highway?
Branding builds a relationship of trust. I trust a Camry to run forever. I trust a Coke to be a Coke (even though it nearly blew it with New Coke). I trust Apple to make me fit in with the cool kids.
Increasingly, we are trusting Google, Amazon (sometimes Alexa) and their algorithms to find us the products we desire. This isn’t the death of brands – this is the emergence of super brands.
Yelp, Uber, AirBnB, Amazon and Google are now super brands. We let them make our choices of vendors for us.
Innovate amid super brands
This is a blog about innovation. I started it with the conviction that each individual and organization can find purpose and profit by finding a new way, an alternative the grind of race-to-the-bottom competitiveness.
So what to do about these super brands? Can we innovate to make a meaningful, rewarding product or service in competition or concert with Amazon and Walmart?
In the book Designing Your Life: How to Build a Well-Lived, Joyful Life, authors Burnett and Evans describe gravity problems as situations that are simply beyond our ability to change.
They say that gravity problems are “…not real problems. Why? Because in life design, if it’s not actionable, it’s not a problem… It’s a situation, a circumstance, a fact of life. It may be a drag (so to speak), but, like gravity, it’s not a problem that can be solved.”
Is Amazon a gravity problem? Can brands compete with Amazon, or merely compete on Amazon? Some, including Scott Galloway, call for Amazon to be dismantled with anti-trust legislation.
This is likely to happen if Amazon doesn’t find itself with credible competition.
Alternatively, Walmart may rally with the many brands who resent Amazon’s impact on their margins to form that competitor. While Walmart is behind on electronic commerce, it has a commanding lead on retail locations. It is entirely possible that Walmart and Amazon will find themselves battling for dominance in the clicks-and-bricks hybrid commerce arena.
Farmer Don Draper?
Some brands will surely survive to stand apart from Walmart and Amazon. High margin operations like Starbucks and Hermes will likely continue to devote these margins to engaging and delighting their consumers.
These will be edge cases. As I’ve talked about in these pages before, farming occupies dramatically less of humanity’s attention and effort than it did a hundred years ago. I predict that far less of humanity’s attention will be devoted to branding and retail in the near future.
Is this a bad thing?
If you are a retail worker or a brand manager, then yes, it’s definitely a dislocation.
For the rest of us it means that we can expect consumer goods to be provided with razor thin margins, unencumbered with the cost of vast retail palaces and advertising budgets intended to assure us that we are getting something of value. Instead, our ratings, purchases and algorithms will make these assurances.
Innovation will still be in demand.
Build a better mousetrap and Walmart and Amazon will sell it all day long, and you won’t need to pay for advertising, and distribution costs will be far lower than with traditional retail.
Build the same mousetrap as everybody else and you will struggle.
Build the same mousetrap and plan to build brand equity by stamping it “deluxe” and advertising it on broadcast TV and you will probably just be wasting your money. Nobody sits through the ads, anyway.
Imagine the products that will be available when we all devote ourselves to creating innovative, quality products at reasonable prices instead of gaming the attention of our consumers with branding.