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A Direct hit
If Mike Ashley were to write a book I think it should be called, ‘HOW TO LOSE FRIENDS AND SABOTAGE YOUR OWN INDUSTRY'. And one of the chapters could be entitled: ‘The way to make a small fortune is to start off with a big one!'
"A huge ethical con"
Now don't get me wrong; Mike Ashley is a genius in what he did with Sports Direct initially, but some may take the view that it was mostly a huge ethical con for the public to lap up. Come on, ‘70% off' what exactly? Karrimor Approach shoes with £50 off? Do you honestly believe these shoes were specified from day one with all the features and benefits of an authentic £70 shoe? No, neither do I, but the public lapped it up, just as they did the Lonsdale shoe at £22.95, with £50 off.
£70?! In yer dreams mate! If you don't believe me, you could ask an experienced shoe designer to pull these shoes apart and cost it all out (while remaining anonymous). In my opinion, the truth would be laid bare for all to see; that these shoes were actually specified to an SRP of approximately £15, on a good day.
Meanwhile, Joe Public out there thinks he is saving a small fortune when in reality, he is, in many cases, receiving quite poor value for money, in terms of making a strict comparison between branded products, side by side.
Brand suicide
Another point is that brands are brands for a reason. Part of that is the quality of materials and design that go into the product. A Rolex and a Timex both tell the time, but it's the Rolex that makes you feel better and the quality of engineering and materials costs money, lots of it.
In my view, Reebok, among others, virtually committed brand suicide by pouring millions of pounds of product into Sports Direct, only for key products like the Classic to be sold at about £20. Can you believe that the trade price used to be £26.60! So, how can any other retailer be expected to buy this product and make money? The truth is that they can't, and so they deserted Reebok in their droves.
Kath Smith, MD of Reebok, is faced with a very tough job to make Reebok a ‘must have' brand once again, especially when so many retailers and consumers alike have deserted the brand. It's a crying shame that the people before Kath allowed this to happen, and they should be ashamed. Any 22-year-old marketing student will tell you that the strategy Reebok and others employed is known as a ‘brand exit strategy': dump all you products into the big box category killer, enjoy the short term gains in turnover, and then watch the brand name get flushed down the corporate loo.
Mike Ashley also had a licence for Umbro (a licence now bought out by Nike) and his strategy was basically to stick the Umbro brand on virtually anything, with the inevitable result that Umbro was discounted enormously as a brand and sold to retailers like Peacocks. At least sense should prevail now that Nike is running Umbro. I look forward to seeing if Umbro can make a comeback in the independent trade.
Canterbury tale
Now, I can't talk about brands without mentioning Canterbury. Well come on, you didn't expect me not to mention it did you? Chris Stephenson, Canterbury's current MD, was previously appointed by the Kuwaiti Finance House as Finance Director some 18 months ago. Chris joined a company heading towards the ground at 500 miles per hour, burning through cash at a rate Mike Ashley would recognise! The inevitable happened and KFH ran out of patience and called in KPMG. What the previous management team carried out by its own volition was an utter disgrace. They totally screwed up just about everything, but luckily didn't kill the company. The bankers at KFH also need to have their heads examined, and I hope to God they were hauled across the coals for their total mismanagement of their investment in Canterbury. There is no excuse for letting people run amok. They should have recognised the signs much earlier, sacked the people they had in place and appointed a new team.
Chris, with Matt Davey and Ryan Pace, have very firmly got Canterbury on the right road again; sales are climbing, they have very few, if any, delivery problems (thank God) and best of all, they are in profit. JD bought the worldwide Intellectual Property rights and I know they are keeping a watchful eye on their new baby. Well, KFH's loss is very much JD'S gain and I suspect Canterbury will once again rise to be an excellent ‘must stock brand' and market leader, and a friend of the independent sports trade.
