RIP MFI and Woolworths (perhaps)

December 2008

It might have taken the early effects of the recession to push both of these brands over the survival precipice, but few in the business world will have been surprised at their downfalls – it’s been coming.

The media though – and with its instinctive trait of simplification for the supposed benefit of Joe Public – blames the demise of each pretty much all on the recession. But, in a brand sense, the reasons go back many years and actually were born in the boom years – and that’s the irony here relative to what the media tells us.

So what went wrong for these two great retail brand names? The reasons are surprisingly different, so worth looking at separately…

Starting with MFI, this was a brand which became synonymous with poor quality, missing parts, late delivery and flat-pack which didn’t go together – even after it raised its game and largely put those very tangible issues behind it. The problem was though, however hard they tried to change consumer perceptions about their brand, the reputation remained: If you said to someone that a product was ‘MFI quality’ they’d know just what you meant and it certainly didn’t suggest ‘every bit as good as Ikea’ (even though, quite probably, the reality of the situation meant it was comparable).

Where the board of MFI went wrong, was not to accept that they had a brand, the perceived negative values of which, could never be fundamentally changed for the better. Imagine, for example, that the brand name MFI was abandoned 10 years ago in favour of a trendy sounding Swedish name. Would they still be in business today? Quite possibly.

And there are some interesting parallels with the MFI story: Ever wonder what happened to the sixties-sounding name ‘Chelsea Girl’ and seventies-sounding name ‘Concept Man’? They both became River Island in the 80s. (Just imagine the futility of trying to keep afloat brand names such as Chelsea Girl and Concept Man once the respective relevance of their ‘time in fashion history’ names had passed…) And how about all those Ratners jewellery stores? If there wasn’t an H Samuel in the same town after the now legendary gaff by Mr. Ratner himself, there soon was one. (He also owned H Samuel selling much the same product…)

So the simple lesson is that, once tarnished and with absolutely no way back, some brand names are best abandoned and a fresh start made. You can still keep all or most of your tangible assets such as stores, warehouses and even stock, plus you have your staff and management already in place. So it isn’t like you’re launching a whole new business – just a more relevant brand (obviously it isn’t quite as simple as that).

Woolworths, though, is quite a different story and certainly there was nothing wrong with the brand name and certainly no need to change it. In fact – and as was proved by the reaction to the news of the Woolworths closure – there is a huge amount of affection for the brand (I even heard a government minister on Radio 4 express her sorrow about the closure – but not a sausage from her about MFI’s demise announced on the same day…).

No, where Woolworths went wrong was a retail offer which had largely become irrelevant. Even worse, when they tried to fix it the ill-thought-through remedy was an eclectic mix of core product ranges which, at best, you’d go into the store to buy one of but most probably not all.

Historically and ahead of out-of-town retail parks, the internet and supermarkets extending into non-food, Woolworths was where you shopped on the high street for, well, pretty much anything. It was a general store. The various range mixes they’ve tried since – e.g. confectionery, children’s’ clothes, music and toys – just wasn’t a good enough reason to go through the doors for most of us.

But as I write this the news is that Woolworths might yet be saved and possibly by one of the celebrity TV ‘Dragons’. I hope he succeeds. If he does, what might he do with the stores? Well the best high street general store is unquestionably Wilkinson. So he could certainly do well from taking a leaf out of their book, but, of course, central to a successful brand is differentiation and that’s where the real challenge will lie.

So two very different brands, different reasons for their demise, but with a common link in that their problems were born in the retail boom years and it took the early effects of the recession to push them both over the edge. My guess is that MFI is dead and gone (or if it remerges with a new owner it will be under a different name – so a lesson in branding finally learnt…), but Woolworths could yet have a future. And actually the timing could be good: we’ve all heard about the resurgence of the high street as we think more about sustainable lifestyles and shopping locally etc. So who knows – the brand name could just be strong enough to last the course.