Now that electronics gizmo retailer Sharper Image has filed for bankruptcy, I think it suggests two broad observations we can all take to heart:
Beware of hidden drivers of your business, and don't let your branding confuse want with need.
Sharper Image has always offered a vast array of products. You can’t walk into a store without getting a sensory bombardment of beeps, flashing lights, and devices that flip, fly, or otherwise move around. There are hundreds of things to look at and wonder about.
But it turns out that the number of products it relied on selling for its profits could be counted on one hand.
It's no surprise that its financial woes got particularly woeful starting in 2005, the same year that Consumer Reports reported that the Ionic Breeze air purifier might pose a health threat. The product had accounted for over 1/4 of the store's entire sales, and perhaps even more of its profits. Sales plunged, and the store never recovered.
Now, is the Ionic Breeze a fun product? Is it cool and with-it, something that'll prompt a twenty-something who mistakenly thinks he or she has disposable income to think "hey, I want that thingee?"
Nope. I'd bet that it was something that particular consumer segments felt that they needed. Like parents, or smokers, or the elderly. The gizmo was promoted as an air purifier at one time, even though now it has come clean and admitted that it's really an air freshener. But I think people who bought it thought they needed it.
Imagine the Ionic Breeze customer working her way through the Sharper Image store (or wading through its web site). Do you think she also needed an electric poker chip stacker? A fiber-optic sculpture? A stretching massage robotic recliner?
The single most important driver of customer traffic was a need product, and Sharper Image stocked its store full of unnecessary, impulse want products. Its entire offering was the corollary of that popcorn and candy lining the checkout corridor at Blockbuster stores.
Management must have known about its leveraged dependence on a single product, right? My suspicion is that they misread the drivers of that success, and that's why they were unable to exploit or repeat it. And I imagine that branding had a hand in the confusion.
Sharper Image had (and has, to a great degree) a great, recognizable brand name, built in large part on the familiarity consumers had developed with Hammacher Schlemmer. If I had to guess the language that appeared in the company's mottos, mission statements, and the other branding blather that companies waste lots of time and money fine-tuning (although nobody ever hears them), I'd bet it wanted to be known as a retailer of products that were innovative, problem-solving, and unique. I'd also bet it saw in the Iconic Breeze the realization of this brand position.
Only the branding had nothing to do with what drove its profitable customers to the store.
There's not a single product listed on its web site that comes even close to offering the once-promised utility of the Ionic Breeze. Quite frankly, much of it is pretty much useless, throw-away technology, targeted at doing things slightly faster or better (or just differently, which means requiring batteries) than another more common product that 1) accomplishes the same work, and 2) is already in your kitchen, bathroom, or travel kit.
And a lot of the products don't even claim to have any utility whatsoever. They're "fun." Oh, and you can find the same products (or ones made by a factory in China that's next-door to the one Sharper Image used) from lots of other online and brick-and-mortar consumer electronics retailers.
Sharper Image confused what it wanted to be with what it needed to be.
Management drank their own Kool-Aid, and populated the store with products that somehow fit the aspirations of its branding, but didn’t even come close to meeting the needs of its customers.
It didn't have to be this way:
- What else would Ionic Breeze customers have wanted to buy? Some analysis of these purchasers based on their lifestyle needs and issues -- and not on their aspirations or emotions (or other branding nonsense) -- might have yielded product concepts that Sharper Image could have taken back to China to design and build. Hammacher Schlemmer has a line of ozone devices that kill bacteria on surfaces in the home; it could be doing this exact sort of research
- How could product offerings have been branded together? Instead of grouping its products by area of home, it could have organized them around need states -- healthy eating, in-home mobility, whatever -- which might have made multiple offers both apparent and relevant to its customers
- Could it have avoided selling toys? No retailer (except Apple) can resist the need to add at least one piece of garbage, especially at checkout, because of the odd chance that it might turn into a sale. I say don't go toward the light! Sharper Image’s stores could have made a lot more sense if they were a lot less filled with nonsense
In the end, or at it, Sharper Image is perhaps a case history of image not matching reality, either internally (in business processes and pursuits) or externally (in product offering and store experience).
I think somebody got distracted by its branding. Maybe lots of folks did.