Sir Richard Branson at NRF: Are retailers looking outside the box?

Discussion
Kip Tindell and Sir Richard Branson - Photo: NRF
Jan 17, 2017
Tom Ryan

People who own retail stores should not think of only being retailers, they need to be entrepreneurial and spin off businesses off the back of the retailer to make them money to help the retail stores survive.”

That’s according to Sir Richard Branson, founder of Virgin Group, who spoke on Monday at an NRF keynote session, “Undying Brand Engagement in an Age of Continuous Disruption and Reinvention.”

The Virgin empire now extends to over 400 businesses including soft drinks, airlines and a soon-to-launch first commercial space line. But the business started in retail with the Virgin Megastores record chain.

In 2001, the iPod was launched and the company soon “saw the writing was on the wall on music retailing.” But Sir Branson recognized “we don’t have to stay a retailer just because we are a retailer,” and explored which products were selling well at the Virgin Megastore chain. The company moved into mobile phones and video games, both in the early stages of their growth cycle, and realized revenues “much, much bigger than our retail stores ever could have been.”

Sir Branson’s underlying point was that retail companies could explore other ways to help support the core retail side of their businesses.

In the fireside chat with The Container Store Co-Founder and Chairman Kip Tindell, Sir Branson did note he has made sure that any of Virgin’s extensions did not damage the brand’s overall reputation.

“Virgin is a way of life brand so people don’t mind if you’re trying and failing as long as they don’t leave people with debt and they keep their reputation intact. Fortunately, we’ve had more successes than failures.”

Sir Branson’s discussion stressed the importance of having a good staff, letting employees make mistakes and making sure they “enjoy coming into work in the morning.” He said capitalism today involves becoming “more than just a money making machine,” not just for societal reasons but for employee morale as well. Said Sir Branson, “People within the company will work that much harder if they feel they can be proud of the company.”

DISCUSSION QUESTIONS: In our disruptive business environment, do retailers need to be more entrepreneurial in exploring alternative revenue streams, including non-retail? Or would your basic advice be to stick to their core expertise?

Braintrust
"An entrepreneurial spirit is part of what creates the brand, but right now too many retailers simply have very little brand equity to leverage."
"As I have said in more speeches than I can count, THERE IS NO BOX!"
"Anyone can think outside the box, but it still takes transforming the crazy idea into reality, and that is the challenge."

Join the Discussion!

20 Comments on "Sir Richard Branson at NRF: Are retailers looking outside the box?"

Notify of

Sort by:   newest | oldest | most voted
Paula Rosenblum
BrainTrust

What Sir Richard has done is explain the power of a brand. I think an entrepreneurial spirit is part of what creates the brand, but right now too many retailers simply have very little brand equity to leverage.

For example, bankrupt retail brand names like CompUSA and Linens N Things have been scooped up with attempted re-invention. The only one I can think of that’s been remotely successful is Nordic Trak!

On the flip side, Porsche has slapped its name on a building going up on Miami Beach. We know immediately what comes to mind when we think of a Porsche-branded condo tower. Comfort, luxury, sexiness … to name a few characteristics.

So I think there’s a deeper issue that must be addressed first. Retailers must ask themselves what their brands stand for. Hopefully the answer rolls right off the tongue. Then start by licensing the brand in ONE key area to see how much equity there really is. I suspect in our era of commoditized retailing, too many find their answer will be “convenience and low price” and that is simply not a leverageable brand identity.

Jeff Sward
Guest

Equity … absolutely. But before there is brand equity there has to be a brand promise. Clear, concise, focused and, yes, rolls off the tongue because the consumer just knows what the promise is. It’s not just what they KNOW about the brand, it’s how they FEEL about the brand. Equity is built by keeping the promise over time.

Ian Percy
BrainTrust

Totally on board with Paula and Jeff here. But in the current craziness of this country, where everyone “promises” with abandon and little actual thinking, it seems to me “the promise” won’t cut it. We don’t believe promises any more. As Jeff says, it’s the “keeping” what we actually experience not what someone said we’d experience that means anything.

Dick Seesel
BrainTrust

Branson makes an excellent point. Amazon is of course the prime example of a retailer that has constantly looked for ways to expand its reach outside of its original business. (This continues with its web services and its movement into brick-and-mortar retail.) Costco is another great example of how to generate ancillary revenue outside of the products that it sells in its stores.

Just to brainstorm a bit, why hasn’t Macy’s figured out ways to generate revenue streams beyond simply buying competitors, expanding Bloomingdale’s and (now) developing an off-price strategy? Without getting entangled in too many unrelated ventures (like Sears did in the 1970s), Macy’s could easily leverage its brand equity by developing “experiential” businesses. (If Macy’s was ever in the travel business, for example, it licensed the category a long time ago.) Given that both Millennials and their parents are less interested in buying stuff, why not?

Jeff Sward
Guest

Macy’s could have extended The Cellar into its own catalog or e-commerce business and competed very, very successfully with Williams-Sonoma. Maybe even Starbucks. They could have kept Aeropostale, pushed it into the mall like it evolved anyway, and used the space in the stores for something else. Then, they could have …

Ryan Mathews
BrainTrust

I think that — depending on the category — there isn’t a lot of future in some kinds of retail to stick to. Of course, independent bookstores, music stores and even a film store or two seem to be undergoing a renaissance, but these are niche operations and aren’t likely to ever scale again. So, I’d say Sir Richard is right — with a caveat. Retailers not only need to become more entrepreneurial, “outside the box,” they ought to become more entrepreneurial inside it as well. Sticking to the core is great if you are Harry Winston but, long-term, may not be such a hot strategy for Barnes & Noble.

The interesting thing is that when you do look at a category like books you see retailers making the mistake of trying to “branch out” inside a traditional format. So Barnes & Noble, like Border’s before it, is now full of games, coloring books, films, vinyl, etc. That’s not the kind of inside-the-box entrepreneurism I have in mind. Remember Sir Richard’s warning about degrading your brand. I’d say they would be better off mining whatever is left in books while figuring out what their next corporate adventure will be.

Ben Ball
BrainTrust

Even in retailing, Branson concentrated on a core product area for clarity of brand — music. That focus is what enables a brand to create values that can be leveraged and transcend sectors. Paula’s example of Porsche imagery is a great one. Most of our U.S. retailers — especially grocery, mass, convenience and department stores have built their business on “being a place to buy other people’s stuff.” (Our relatively late realization of the role of proprietary brand versus private label being a feeble exception.) Other retailers have built stronger brand value through their focus. I know what I expect when someone tells me a retailer is an L.L. Bean or a Tiffany’s. But it takes that kind of imagery to have brand leverage and most U.S. retailers simply don’t have it.

Camille P. Schuster, PhD.
BrainTrust

Being entrepreneurial is an attitude and a way of looking at business. Most retailers approach their business as managers — overseeing an established process and way of doing business. That is why they are more “me-too” operations and not so innovative. Being entrepreneurial would mean having a clear understanding of what the brand stands for, knowing your customers well and being innovative inside the store as well as “outside the box.”

Gene Detroyer
BrainTrust

Yes! It is an attitude and a way of looking at the business. While I don’t like the “outside the box” phrase much anymore, it is very appropriate. For retailers to survive, they have to be systems thinkers. What are the connections that they can build? It is not about analytics, it is about synthesis. Look at the way Apple and Amazon have played dominoes to get to where they are today.

Ken Lonyai
BrainTrust

Paula makes some great points about brands. I’ll add that whether retailers have brand equity or not, spinning off new and often diverse businesses is no easy task. Richard Branson is a true entrepreneur, while the majority of retailers are corporations run by conservative businesspeople. These same retailers completely missed the promise of e-commerce (in the early days) that is now beating them into a frenzy. I want to be positive, but I do not see many being able to create supportive businesses in the way that Virgin has, that will be a net positive for their effort or brand. Especially not department stores.

Ian Percy
BrainTrust

As I have said in more speeches than I can count, THERE IS NO BOX!

This is a self-imposed and artificial limitation we made up out of fear. We’re afraid to think for ourselves — thus the addiction to “best practices.” We’re afraid to go first, to be different than others. And we are desperately afraid that we couldn’t handle success.

“Looking outside the box” is pointless. As long as you can see it, you’re still trapped in it.

Naomi K. Shapiro
BrainTrust

Great point!

Shep Hyken
BrainTrust

There is danger in leaving core expertise — as in, changing lanes. A clothing store doesn’t typically open a movie theater. Within the industry there are multiple ways to do business, with more and more new business models. As long as those models stay within our expertise, we should experiment, test and figure out ways to create multiple channels of revenue within the main focus of our business. The simple example is a brick-and-mortar retailer developing an online presence.

Naomi K. Shapiro
BrainTrust

It’s really important for retailers to be more entrepreneurial — easy for entrepreneurs like Richard Branson and Amazon to say and do, but not necessarily for others like Macy’s on down the list. That’s a sign of the times in our retail (r)evolution (my new word). It’s no longer a case of building a better mousetrap and sliced bread — retailers have to find ways to reinvent themselves. It’s quite challenging, maybe even impossible … so it will be interesting to see what’s going to happen.

Cynthia Holcomb
Guest

Entrepreneurial, a word synonymous with retailers?

A palatable version of an entrepreneurial activity, explore and understand the brand’s TRUE core competencies, the intangibles inspiring emotion, context, and desire on behalf of the intended customer. An emotional connection and a sensory engagement with each customer inspire brand love and loyalty. Humans buy a brand, secure in the knowledge they like how they look or how they feel or how they fit in the brand/product — like a dress or a car or a couch or a digital experience.

Ed Rosenbaum
BrainTrust

This conversation is dealing with Sir Richard Branson and his comments. Skip Tindell, co founder of The Container Store was also a part of this. The Container Store was built on the promise of exceptional service and quality merchandise. The guiding principles in which every employee is trained is based on making employees proud to be a member of the team.

There have been several comments about “thinking out of the box.” I agree with them. Especially Ian when he said “as long as you can see it, you are stilled trapped in it.” We should not be afraid of taking that chance, that first step.

Thomas Becker
Guest
5 months 10 days ago

“No plan survives the battlefield.” “Adapt or die.” YouTube was originally intended to be a dating site, Target used to be Dayton Dry Goods, and on and on … Branson does a great job of underscoring what is right in front of us everyday, but so often missed, forgotten or ignored. We just need to continually learn from and heed history.

Tony Orlando
BrainTrust
Anyone can think outside the box, but it still takes transforming the crazy idea into reality, and that is the challenge. Small businesses have many challenges, and being truly innovative is something my dad thankfully encouraged in me many years ago. Creating a brand today is vital for any of us, and it can be a combination of several things that make up who you are as a business, which is okay. Richard Branson and Amazon have a ton of capital to create these alternative revenue streams, where as small businesses do not. This should not discourage anyone, but you need to focus on enhancing the qualities that consumers keep coming to your store for, and make them better, and at times even 22nd century amazing which will put you in the category of the titans in business today. I have a lot of fight and tons of new ideas that I haven’t even thought of yet, and putting them into a workable product is what keeps me driven to succeed. Win or lose, you must take the attitude that you could be the next big thing by making something the customers can not get anywhere else, and I wish… Read more »
Dave Wendland
BrainTrust

Very inspirational. And any retailer (especially traditional brick-and-mortar formats) is advised to ignite their entrepreneurial drive or risk being driven over by competition. My recent article in Drug Store News, “Newfangled Collaboration,” shares a couple of ideas to inspire retailers to think outside their four walls.

Bart Foreman
Guest

Readers comments took Sir Branson’s comments to a new higher level. Congratulations to all. I have two thoughts. First, maybe we need more dialog about what it really means to be “entreprneurial.” I believe this has become another buzz word that has lost meaning and relevance. Does it mean small, nimble, energetic, risk taking, or what? I suspect every reader will have a different view just like we all have a different way to define and describe “marketing.” Camille got the ball rolling.

My second thought is to call out Ian Percy for his excellent dialog about promises not cutting it and box thinking. I have always said don’t go outside the box, make the box bigger. I believe he is saying tear down the walls.

wpDiscuz
Braintrust
"An entrepreneurial spirit is part of what creates the brand, but right now too many retailers simply have very little brand equity to leverage."
"As I have said in more speeches than I can count, THERE IS NO BOX!"
"Anyone can think outside the box, but it still takes transforming the crazy idea into reality, and that is the challenge."

Take Our Instant Poll

In general, how important is it that retailers be more entrepreneurial?

View Results

Loading ... Loading ...